The U.S. Supreme Court has granted a writ of certiorari to address a Circuit Court split concerning whether False Claims Act (“FCA”) relators may rely on the statute of limitations in 31 U.S.C. § 3731(b)(2)—a limitations period which is triggered by the government’s knowledge of the fraud—when the government does not intervene. The Supreme Court granted cert on November 16, 2018, to review the Eleventh Circuit’s decision in U.S. ex rel. Hunt v. Cochise Consultancy, Inc. The Eleventh Circuit reversed the Alabama District Court, reviving the relator’s complaint by giving the relator the benefit of the longer limitations period in § 3731(b)(2).
At the center of the matter is the interplay between the two limitations periods in the FCA after which a “civil action under section 3730” is time-barred: (1) “6 years after the date” of an alleged violation, see 31 U.S.C. § 3731(b)(1); or (2) “3 years after the date” when material facts “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 more than 10 years after the date” of the alleged violation, see 31 U.S.C. § 3731(b)(2). The relator in Cochise Consultancy filed his claim more than six years after the alleged fraud occurred, but within three years of his disclosure of the fraud to FBI agents who had interviewed him about his role in a separate kickback scheme, to which he ultimately pled guilty and served time in federal prison.
In reviving the relator’s claim, the Eleventh Circuit held that a non-intervened action was a type of “civil action brought under 31 U.S.C. § 3730” to which both limitations periods in the FCA applied. The Court rejected the defendants’ argument that allowing a relator to file suit three years after the fraud is known by the government—a nonparty to the action—created an absurd result. The Court reasoned that even in a non-intervened case, the government is the real party in interest, retaining control over the litigation and recovering the bulk of any damages, whereas the relator’s role is that of a “partial assignee” of the government. In this “unique context,” the court held it was not absurd to apply a limitations period triggered by government knowledge.
The Eleventh Circuit also considered whether a relator constitutes “an official of the United States” whose knowledge triggers the statute of limitations in § 3731(b)(2). The Court held that the language of the provision was plain and that the limitations period begins to run only when the government knew or reasonably should have known of the material facts concerning the fraud. The Court stated that there was nothing in the statute to support the “legal fiction” that because a qui tam relator sues on behalf of the government, it becomes a government agent and the government official charged with responsibility to act.
In granting the Cochise Consultancy defendants’ petition for certiorari, the Supreme Court implicitly recognized that the answer to the question of whether an FCA suit has been filed before the expiration of the statute of limitations now depends on the jurisdiction in which the case is filed. In the Fourth, Fifth, and Tenth Circuits, a relator must bring suit within six years of the alleged violation pursuant to § 3731(b)(1), and may not rely on § 3731(b)(2) in cases in which the government has not intervened. The Third, Ninth, and Eleventh Circuits permit a relator to rely on the limitations period in § 3731(b)(2) in non-intervened cases. Unlike the Eleventh Circuit, the Third and Ninth Circuits consider a relator an “official of the United States,” whose knowledge of material facts triggers the running of the limitations period.
The Cochise Consultancy defendants’ petition for certiorari provides the Supreme Court with a cogent preview of the arguments in favor of adhering to the Fourth, Fifth, and Tenth Circuit decisions. Among the most compelling are that: (1) the text of § 3731(b)(2) refers only to the United States and not to relators, indicating that Congress intended for it to apply only in cases in which the government has intervened; (2) the Supreme Court previously ruled in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 545 U.S. 409 (2005) that the phrase a “civil action brought under 31 U.S.C. § 3730” did not include FCA retaliation claims, and therefore, the phrase did not in fact cover all civil actions under the Act; (3) the statute of limitations in a non-intervened action would depend upon determining the knowledge of a nonparty to the action, an absurd result; and (4) if § 3731(b)(2) applied in non-intervened actions, it is not clear when the six-year limitations period would apply, rendering it insignificant, if not superfluous.
Regardless of the outcome, the Supreme Court’s review has practical implications for the 75 percent of FCA cases in which the government declines to intervene. It should provide a conclusive answer to whether a relator can rely on § 3731(b)(2), and, if so, whether the cause of action accrues based on the relator’s or the government’s knowledge. The Supreme Court’s decision will provide uniformity in the Circuits, reduce forum shopping, and give defendants a greater degree of predictability about whether FCA cases brought against them are timely.