False Claims Act Statute of Limitations: Relators Now Get Up to 10 Years to File Suit

Whistleblowers now have more time in which to bring their qui tam suits following the much-anticipated U.S. Supreme Court decision in Cochise Consultancy, Inc. et al. v. United States ex rel. Hunt, No. 18-315, 587 U.S. __ (May 13, 2019).

The False Claims Act, 31 U.S.C. §3729 et seq., allows private-citizen whistleblowers, known as relators, to file a civil fraud suit in the name of the government seeking treble damages plus statutory per-claim penalties. In exchange for bringing the suit, known as a "qui tam" action, the relator is entitled to a portion of the proceeds obtained during settlement or after trial. Relators are required to file their qui tam suits under seal. The U.S. Department of Justice (DOJ) evaluates the case and determines whether it will intervene (i.e., take over the case). If DOJ declines to intervene, the relator may proceed with the action and is entitled to a greater share of the recovery.

In a unanimous decision, the Supreme Court affirmed relators' right to take advantage of a tolling provision that grants an additional three years to bring False Claims Act suits. The Act provides that suits 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.

– 31 U.S.C. §3731(b)

Most people familiar with the False Claims Act are aware that suits generally must be brought within six years of the violation. The government enjoys the benefit of an additional tolling provision when it intervenes and takes over the case. This tolling period can extend the statute of limitations for up to 10 years.

The Cochise case presented to the Court two issues that impact the time available to relators to file suit: (1) whether relators can take advantage of the tolling provision where the DOJ declines to intervene, and (2) if so, whether it is the relator or the government's knowledge that triggers the limitation period.

The following interpretations had been considered, creating a split among the U.S. Circuit Courts of Appeals:

1. The tolling provision does not apply to qui tam suits in which DOJ declines to intervene
2. The tolling provision applies in qui tam suits even where DOJ declines to intervene, and the limitations period begins when the relator knew or should have known the relevant facts, or
3. The tolling provision applies in qui tam suits even where DOJ declines to intervene, but the limitations period begins when the government knew or should have known the relevant facts

According to the Supreme Court's decision, the third interpretation governs and relators now have up to 10 years to file qui tam suits.

Relators Entitled to Use Tolling Provision

The Court first held that relators may take advantage of the tolling provision even when the government elects not to intervene. This interpretation rejects concerns that relators could wait to file their qui tam action, thus increasing the potential number of claims and granting them more time than even the government in which to file suit. While relators still are incentivized by the public disclosure bar (which prevents cases that are based on certain publicly available facts), the government action rule (which prevents cases that are duplicative of government actions on the same issue), and the first-to-file rule (which prevents duplicative relator suits on the same issue) to bring suits early, this new interpretation will undoubtedly increase discovery burdens and allow for a protracted exposure period in some cases. It will also allow relator suits that would have otherwise expired, such as the one brought by relator Hunt, to proceed.

Government's Knowledge Triggers Provision

The Court also held that the relator's knowledge does not trigger the limitations period. The statute refers to knowledge of "the official of the United States charged with responsibility to act in the circumstances[.]" Had the Court interpreted this provision to include relators, fears of protracted tolling by relators would largely dissipate because the qui tam action would have to be filed within three years of the relator's knowledge or six-years of the violation, whichever is later. The Court rejected this approach, finding the express reference to "the" government official excludes private citizen relators. The Court held it is the government's knowledge that triggers the limitations period.

The Court, however, left unanswered the question of which government official's knowledge triggers the limitations period. The government argued in its briefs and at oral argument that such official is the Attorney General or delegate. As we have noted in prior posts (see Holland & Knight's Government Contracts Blog, "Self-Disclosure and the FCA Statute of Limitations: Cochise Consultancy, Inc. v. United States v. ex. rel. Billy Joe Hunt," March 27, 2019), there is a broader question as to whether knowledge by governmental actors outside of DOJ, including knowledge trigged by self-disclosure, should start the limitations period. The Court evaded ruling on this question, though its decision hints at an interpretation that includes only the Attorney General. If true, DOJ becomes the sole repository for disclosures that trigger the limitations period. That is, unless defendants can argue that DOJ "should have known" of the violation when investigative bodies such as the Office of Inspector General or the FBI have actual knowledge of the violation ... more on this latter issue is sure to come. 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.