On May 13, the U.S. Supreme Court unanimously affirmed a decision by the U.S. Court of Appeals for the 11th Circuit, holding that the False Claims Act’s (“FCA”) limitations period in 31 U.S.C.(b)(2) applies to “relator-initiated actions” in which the Government declines to intervene and that a relator in a nonintervened suit is not “the official of the United States” whose knowledge triggers Section 3731(b)(2)’s limitations period. Cochise Consultancy Inc. v. United States, ex rel. Hunt, No. 18-315 (May 13, 2019) (“Cochise”).
The FCA contains two applicable limitations periods for actions alleging that a person presented false claims for payment to the Government. Under the statute, an action cannot be brought (1) more than six years after the violation was committed, or (2) more than three years after “the official of the United States charged with responsibility to act in the circumstances” knew or should have known the relevant facts, but in no event more than 10 years after the violation was committed—whichever period occurs last. 31 U.S.C. § 3731(b)(1) & (2).
The relator in Cochise, Billy Joe Hunt, acknowledged that his suit fell outside Section 3731(b)(1)’s six-year limitations period, but argued that his complaint was timely under 31 U.S.C.(b)(2) because his suit was filed within three years of his interview with federal agents about the defendant’s alleged fraud and within 10 years after the violation occurred. The defendant, Cochise Consultancy, argued that Hunt’s qui tam action was barred by the six-year statute of limitations under 31 U.S.C. § 3731(b)(1). Alternatively, Cochise argued that a relator in a declined FCA suit should be considered “the official of the United States charged with responsibility to act in the circumstances.” The district court agreed with defendants and dismissed Hunt’s suit as untimely. The 11th Circuit reversed, holding that Section 3731(b)(2)’s three-year statute of limitations period: (1) does apply to relators in a qui tam action in which the government declines to intervene; and (2) does not begin until the government learns of the alleged fraud without regard to when the relator may have learned about the fraud.
Before the Supreme Court’s decision in Cochise, federal courts had been divided over whether the three-year equitable tolling provision applies in qui tam cases where the government did not intervene. Courts were also split over whether the tolling provision in relator-initiated cases was triggered by the relator’s knowledge or a Government official’s knowledge.
The Supreme Court’s decision settles both circuit splits, citing the plain text of the statute. First, Justice Thomas, writing for a unanimous court, rejected the defendant’s argument that the Hunt’s qui tam action was barred by the six-year statute of limitations, holding that Section 3731(b)(2)’s limitations period applies equally to cases initiated by relators or the Government. Second, the Court held that the relator in a nonintervened case is not “the official of the United States” whose knowledge triggers the 3-year limitations period.
The Court’s holding is significant because, in certain circumstances, it exposes potential FCA defendants to a longer limitations period for relator-initiated cases. The case also provides defendants with an added incentive to disclose potential FCA violations to responsible Government officials. In addition to bolstering a defendant’s substantive defenses in an FCA action, such disclosures can also potentially shorten the applicable statute of limitations for nonintervened cases.