Government Contracts Update
The Supreme Court has the opportunity to resolve a three-way circuit split concerning the application of the statute of limitations under the False Claims Act (FCA) for non-intervened qui tam actions. See Petition for Writ of Certiorari, Cochise Consultancy v. United States, ex rel. Hunt, 887 F.3d 1081 (11th Cir. 2018), petition for cert. filed (U.S. Sept. 7, 2018) (No. 18-315), docketed U.S. Sept. 11, 2018. The FCA prohibits making false claims for payment to the United States and is unique in that claims under the FCA may be brought not only by the attorney general but also by a private plaintiff, a relator, through a qui tam action in the name of the United States.
The FCA has two limitation periods for filing. 31 U.S.C. § 3731(b). Under section 3731(b)(1) there is the familiar limitations period of six years after the date the violation is committed. But under section 3731(b)(2), an action may be brought three 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." Thus, assuming that five years after a violation occurred, an official of the United States charged with responsibility to act learns of the violation, there are an additional three years within which a false claim can be filed.
The wrinkle is whether a relator in a non-intervened case can invoke the three-year limitations period. Specifically, the Fourth, Fifth, and Tenth Circuits have interpreted the language concerning the date when the official of the United States learns of the violations as limiting the three-year period to FCA claims brought either by the government or where the government has intervened. In contrast, the Third and Ninth Circuits allow relators to invoke the three-year period as long as the complaint is filed within three years of when the relator knew or should have known about the violation. In this respect the Third and Ninth Circuits have interpreted the relator as standing in the shoes of the government official. Recently, however, the Eleventh Circuit created a three-way split by holding that a relator in a non-intervened case could invoke the three-year limitations period.
In Cochise Consultancy, the alleged violation occurred in 2006, the relator informed the government in November 2010, and the relator filed his complaint in November 2013, within three years of telling the government but more than six years after the violation. After the government declined to intervene, the district court held that the section 3731(b)(2) three-year period was unavailable under either interpretation because the government had not intervened and the relator had known about the fraud in 2006. Consequently, the lower court dismissed the action. In reversing the lower court, the Eleventh Circuit held that the triggering event for the section 3731(b)(2) limitation period is informing the government of the alleged fraud. Thus, because the relator filed his FCA claim less than three years after he informed the government, it was timely. In rejecting the reasoning of every other circuit that had addressed this issue, the Eleventh Circuit placed special importance on the unique nature of qui tam actions. Specifically, while the government may decline to intervene in an FCA qui tam action, if the relator is successful the government still benefits.
On September 7, 2018, the defendants in Cochise Consultancy filed a petition for certiorari with the Supreme Court. The petitioners, two defense contractors, noted that the three-way split will foster forum-shopping by plaintiffs seeking the longest limitations period and will subject defendants to different limitations periods, depending on the jurisdiction in which they are sued. Ideally, either the Supreme Court or Congress will address the language of section 3731(b)(2). In the meantime, contractors should be aware that the statute of limitations defense may have different outcomes, depending on the jurisdiction.