As readers of this blog well know, the False Claims Act allows individuals who become aware of fraud committed against the federal government to bring a lawsuit on the government’s behalf. Although there are a variety of restrictions, the whistleblower (also called a relator) files the case under seal, allowing the government to decide if it wants to actively join in litigating the case or simply allow the relator to proceed alone on the government’s behalf. If the government joins as an active participant, it is called an “intervened” case, but if the government does not join in that role, the case is termed a “declined” or “non-intervened” case.
Statute of Limitations
One of the issues that arises in some declined cases (where the government chose not to play an active role) is whether an extended statute of limitations could still be applied. The statute of limitations is a time restriction on how quickly a party has to file suit after the alleged wrongdoing occurred.
Under the False Claims Act, as set forth in 31 U.S.C. § 3731(b), the statutory time limit is as follows:
A civil action under section 3730 may not be brought—
(1) more than 6 years after the date on which the violation of [the False Claims Act] 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.
Stripped of its somewhat confusing verbiage, this means that a case must be filed within 6 years of the alleged wrongdoing, but that time period can be extended to 10 years if the government was not reasonably aware of the misconduct. Once the material facts were “known or reasonably should have been known” by the appropriate government official, however, the suit must be filed within three years of that knowledge. Either the six year or the ten year period can apply, depending on which provides the longer window for filing.
Conchise Consultancy, Inc. v. United States ex rel. Hunt
The question of whether the longer statute of limitations could be applied arose because the relator filed a complaint in 2013 for alleged fraudulent conduct by a defense contractor dating back to 2007 and earlier, and the government declined to intervene in his case. The relator alleged, however, that no “official of the United States charged with responsibility to act in the circumstances” had been aware of the alleged fraud until relator himself disclosed information in November 2010, when he was interviewed by federal officials about an unrelated contract fraud in Iraq. He filed his case just barely within three years of that interview. Accordingly, if the longer statute of limitations applied, his action was timely, because it was within three years of any relevant government knowledge and was within the ten year cut-off for any actions. If he was restricted to the six year period, however, his action would be dismissed.
In a unanimous decision in Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315 (U.S. May 13, 2019), the Supreme Court held that his case could proceed. The Court resolved two issues about the FCA statute of limitations in cases that were declined by the government. First, the Court held that qui tam relators are entitled to the extended, ten-year limitations period in § 3731(b)(2) even in a declined case. Second, the Court ruled that a relator is not “the official of the United States charged with responsibility to act in the circumstances,” meaning that the relator’s own knowledge of wrongdoing does not trigger the three year period.
Interpreting the Statute of Limitations
At the trial court level, the court had considered three potential interpretations of the FCA statute of limitations provision:
1) that the ten year period in §3731(b)(2) does not apply to an action in which the Government has declined to intervene;
2) that the ten year period can apply in a declined action, but the three year provision begins when the relator knew or should have known the relevant facts; or
3) that the ten year period applies in declined actions, and the three year limitations period begins when the Government official responsible for acting knew or should have known the relevant facts.
The trial court rejected the third interpretation, and the complaint was ordered dismissed as untimely. On appeal, the court applied the third interpretation and reversed the trial court, because the allegations were that no relevant government official had known of the fraud until less than three years before the complaint was filed and the filing met the overall ten year period.
In upholding the appellate court decision to allow the case to proceed, the Supreme Court stuck closely to the plain language of the False Claims Act:
Section 3731(b) sets forth two limitations periods that
apply to “civil action[s] under section 3730.” Both
Government-initiated suits under §3730(a) and
relator-initiated suits under §3730(b) are “civil action[s]
under section 3730.” Thus, the plain text of the statute makes
the two limitations periods applicable in both types of suits.
Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315 (U.S. May 13, 2019), slip op. at 5. The Court further explained that “[i]f the Government intervenes, the civil action remains the same – it simply has one additional party. There is no textual basis to base the meaning of ‘a civil action under section 3730’ on whether the Government has intervened.” Id.
Additionally, the Court held that the relator in a non-intervened case is not “the official of the United States” whose knowledge triggers the FCA’s 3-year limitations period. Notably, the statute provides no support for such a reading. As the Court described, a private relator is neither appointed as an officer of the United States nor employed by the United States and the FCA itself refers to qui tam suits as “Actions by Private Persons.” Id. at 9. Further, the statute refers to “the official charged with responsibility to act in the circumstances,” which could not be intended to refer to any private relator. Id. And, “more fundamentally, private relators are not ‘charged with responsibility to act’ … as they are not required to investigate or prosecute a False Claims Act action.” Id.
False Claims Act cases brought by whistleblowers face many challenges, but this latest Supreme Court ruling will save at least some cases from being dismissed on the basis of an expired statute of limitations. These can be difficult issues to understand, so always consult experienced FCA counsel if you believe you might have a claim to assert.
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