Supreme Court Maximizes Statute of Limitations for Relators Suing Under the False Claims Act

31 May 2019 Health Care Law Today Blog
Authors: Lori A. Rubin Kristen M. Maryn Jaime Dorenbaum Lisa M. Noller Pamela L. Johnston Thomas F. Carlucci Byron J. McLain Jennifer Z. Belveal Michael J. Tuteur Lawrence M. Kraus Michael P. Matthews Judith A. Waltz Melissa B. Coffey

Health care providers, government contractors, and others who receive money from the federal government are at greater risk of suit under the False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq., following the Supreme Court’s May 13 decision in United States ex rel. Hunt v. Cochise Consultancy, 587 U.S. ___, 139 S.Ct. 1507 (2019). The Supreme Court’s decision in Hunt maximizes and expands (in some circuits) the time in which a private party may bring suit under the FCA – in some cases, up to 10 years from the date of the alleged violation to file an FCA claim.

The FCA and its Statute of Limitations

The FCA allows either the United States government or a private party called a “relator” to bring a civil action against one who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to the federal government, and for other, similar violations. 31 U.S.C. § 3729(a)(1). When a relator brings an action, the government, after investigation, must choose whether to intervene in the suit. If the government intervenes, the government controls the litigation. If the government declines intervention, the relator may proceed with the action on behalf of the government. 31 U.S.C. § 3730(b)(4).

There are two relevant statutes of limitations in the FCA, and whichever one provides the later date serves as the applicable statute of limitations. An FCA action must be brought within either (1) six years of the date of the alleged violation or (2) three years of the date when facts material to the action are “known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances,” whichever date is later. 31 U.S.C. § 3731(b). Regardless of whether subsection (b)(1) or (b)(2) applies, the action may not be brought more than 10 years after the alleged violation. Id.

United States ex rel. Hunt v. Cochise Consultancy

At issue in Hunt was the applicable statute of limitations for declined FCA suits (i.e., cases for which the government declined to intervene). Relator Billy Joe Hunt brought an FCA suit against two defense contractors (collectively, “Cochise”), alleging they defrauded the government by submitting false claims under a subcontract to provide security services in Iraq. The relator filed suit more than six years after the alleged conduct, surpassing the statute of limitations period of subsection (b)(1). He argued, however, that the suit was filed within three years of when he told federal agents about the alleged fraud, and within ten years of that alleged fraud. Thus, the relator argued the action was timely under subsection (b)(2). In response, Cochise argued that (b)(2) was only available in a relator-initiated suit if the government intervenes and that relator’s case was time-barred because the government declined to intervene.

The primary question for the Supreme Court was whether subsection (b)(2) applies in declined cases. Ultimately, the Supreme Court affirmed the Eleventh Circuit in holding “yes.” The Supreme Court’s reasoning was straightforward. In holding that subsection (b)(2) applies regardless of whether the government intervenes, the Supreme Court relied on a plain-text reading of the statute. The Supreme Court held there “is no textual basis” in the FCA to apply (b)(2) only to intervened cases.

What Does Hunt Mean for Future FCA Suits?

In effect, Hunt means a relator could have up to 10 years to file an FCA claim. This holds true even if the relator knew of the alleged misconduct for more than three years and even if the alleged misconduct occurred more than six years ago, as long as three years have not passed since the “official of the United States” knew or should have known of the misconduct. The longer statute of limitations makes it easier for would-be relators to take time to gather evidence to support their claims and lay in wait before pulling the trigger on filing a lawsuit. There is still good news. Under the right circumstances, defendants will be able to argue the limitations period under (b)(2) has expired by focusing on whether it has been more than three years since an official “knew or should have known” the material facts. For example, if an agency conducted an audit, or there was a public disclosure of the conduct, the government should have been on notice and the limitations period would have begun. Of course, the statute of limitations will never be fewer than six years because of subsection (b)(1), but this strategy may help limit the applicable statute of limitations to six years, rather than up to 10 years.

Foley Summer Associate, Whitney Swart, was a contributor to this article.

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