An extended limitations period—up to ten years, in some circumstances—is applicable to actions by private plaintiffs under the False Claims Act (FCA) even when the government declines to intervene, according to a recent Eleventh Circuit decision, United States ex rel. Hunt v. Cochise Consultancy, Inc., 2018 WL 1736788 (11th Cir. Apr. 11, 2018). In so holding, the court staked out a position on a contentious statutory provision that embodies a more expansive view of FCA liability than other circuits that have considered the issue.
A little background is in order. The FCA is intended to root out fraud by government contractors. Actions under the FCA can be brought by the Attorney General, or by a private party—known as a “relator”—on behalf of the United States. When a relator brings a suit on behalf of the United States (known as a qui tam action), he or she must notify the government, which may elect to take over the action (often referred to as “intervening”). If the government does not take over the action, the relator may proceed alone. A successful relator is entitled to a percentage of the recovery.
In Hunt, the relator had worked for an army contractor in Iraq. The relator alleged that in 2006 the contractor awarded a subcontract after receiving bribes—costing the United States several million dollars more than it would have paid under the most competitive bid. In 2010, the FBI interviewed the relator about a separate kickback scheme (for which he later served jail time). During this interview, he told agents about the 2006 fraud. In 2013, after his release from prison and within three years of his 2010 interview, the relator filed the qui tam action. The United States declined to intervene.
The FCA has a bifurcated limitations provision. Actions must be brought within “6 years after the date [of] the violation,” 31 U.S.C. § 3731(b)(1), or within “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 violation,” id. § 3731(b)(2).
Because more than six years had passed since the alleged fraud, the action was untimely under section 3731(b)(1). But (on the facts alleged in the complaint) the action would be timely under section 3731(b)(2), because the relator had filed within three years of revealing the relevant facts to government officials and within ten years of the underlying events. The district court dismissed the case, however, holding that section 3731(b)(2) is inapplicable when the government declines to intervene or (in the alternative), if section 3731(b)(2) did apply, then the three-year period began to run when the relator learned of the fraud.
The Eleventh Circuit reversed. Writing for the court, Judge Jill Pryor reasoned simply that nothing in the text of the statute excludes non-intervened cases from the limitations period set out in section 3731(b)(2). The defendants—relying on decisions from other circuits—argued that allowing the relator to take advantage of section 3731(b)(2) in non-intervened cases would produce an absurd result. See United States ex rel. Sanders v. N. Am. Bus Indus., Inc., 546 F.3d 288, 293–94 (4th Cir. 2008); United States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 726 (10th Cir. 2006). The court held that it was not absurd to peg the limitations period to the knowledge of the United States (a non-party) because the United States remained the real party in interest with a significant financial stake in the litigation, powers of supervision, and the possibility of intervention.
Similarly, the court relied on the statute’s plain language to conclude that the relevant knowledge in determining the limitations period under section 3731(b)(2) was not that of the relator, but that of “the official of the United States charged with responsibility to act in the circumstances.” In so doing, the court rejected—as unsupported by the statutory text—the approach of the Ninth Circuit, which had adopted the legal fiction that a relator suing on behalf of the United States was effectively an agent of the government. See United States ex rel. Hyatt v. Northrop Corp., 91 F.3d 1211, 1217 & n.8 (9th Cir. 1996).
Posted by Nick Boyd.