Statute of Limitations Issues Under the False Claims Act
The Statute of Limitations in False Claims Act Cases
The statute of limitations for a qui tam action is found in Section 3731(b) of the FCA: “A civil action under section 3730 may not be brought-
(1) more than 6 years after the date on which the violation of section 3729 is committed, or
(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed,
whichever occurs last.”
Thus, under § 3731(b)(1), in a complaint filed in 2013, only kickback activity that occurred over the past six years would be actionable, because claims for violations more than six years old are time barred.
Are the Rules Different for Qui Tam Relators and the Government?
§ 3731(b)(2) is a tolling provision that allows claims that go back ten years if they are brought within three years of the date the federal government knew or should have known of the kickbacks. Some courts have held that § 3731(b)(2) applies to cases brought by relators, whereas a majority of courts have held that the tolling provision applies only in cases in which the government is a party (which, according to these courts, is only when the government intervenes).
Courts are split over whether a qui tam whistleblower is entitled to take advantage of the three-year tolling provision in Section 3731(b)(2). The majority of courts hold that the tolling provision is inapplicable to qui tam plaintiffs. See U.S. ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 725-26 (10th Cir. 2006); U.S. ex rel. Amin v. George Washington Univ., 26 F. Supp. 2d 162, 172 (D.D.C. 1998) (“The plain meaning of the statute supports the conclusion that the three year knowledge requirement contained in 31 U.S.C. § 3731(b)(2) only applies to cases in which the government intervenes.”); U.S. ex rel. Thistlethwaite v. Dowty Woodville Polymer, Ltd., 6 F. Supp. 2d 263, 265 (S.D.N.Y. 1998) (“By the clear statutory language, the Relator’s time is not extended to three years after the United States official learns of the violation. That provision only applies to the government.”). See U.S. ex rel. Colunga v. Hercules Inc., No. 89-CV-954 B, 1998 U.S. Dist. LEXIS 21811, 1998 WL 310481, at *3-4 (D. Utah Mar. 6, 1998).
The minority view is that the tolling provision in § 3731(b)(2) also applies to cases brought by relators. See U.S. ex rel. Hyatt v. Northrop Corp., 91 F.3d 1211, 1216 (9th Cir. 1996) (“[W]e conclude that Congress did not intend to restrict the tolling provisions of the [False Claims] Act to apply to suits brought by the Attorney General alone, but intended the tolling provision to apply to qui tam plaintiffs as well.”); U.S. ex rel. Downy v. Corning, Inc., 118 F. Supp. 2d 1160, 1170 (D.N.M. 2000) (adopting the Hyatt approach); U.S. ex rel. Bidani v. Lewis, No. 97 C 6502, 1999 U.S. Dist. LEXIS 3530, 1999 WL 163053, at *9 (N.D. Ill. Mar. 12, 1999) (“[Section] 3731(b)(2) is construed as applying to actions brought by a qui tam plaintiff and in which the government has not joined. In such cases, the three-year knowledge rule is measured by the knowledge of the qui tam plaintiff.”); U.S. ex rel. Colunga v. Hercules Inc., No. 89-CV-954 B, 1998 U.S. Dist. LEXIS 21811, 1998 WL 310481, at *3-4 (D. Utah Mar. 6, 1998) (§ 3731(b)(2) applies to private relators and the three-year period begins to run not when the relator has knowledge of the violation but when knowledge of that violation is communicated to the appropriate United States official).
The Fourth Circuit takes the majority view. See U.S. ex rel. Sanders v. N. Am. Bus Indus., 2008 U.S. App. LEXIS 22690 (4th Cir. Md. 2008) (“We hold that Section 3731(b)(2) extends the FCA’s statute of limitations beyond six years only in cases in which the United States is a party.”) If and when the government intervenes, then the ten year limitations period would apply. See U.S. ex rel. Carter v. Halliburton Co., 2011 U.S. Dist. LEXIS 145236, at *25 (E.D. Va. Nov. 29, 2011) (“Since the United States has elected not to intervene in this case, Carter is bound by the six-year limitations period set forth in § 3731(b)(1).”)
Thus, in a majority view jurisdiction, experienced qui tam lawyers pursuing cases under the False Claims Act should be sure to plead allegations extending back ten years so that both the government and the relator would be able to recover for the full ten year period.
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