The U.S. Supreme Court granted certiorari in Cochise Consultancy Inc. v. United States, ex rel. Hunt to address a three-way circuit court split regarding the application of the False Claims Act’s statute of limitations in cases in which the government does not intervene. The FCA’s qui tam provision allows individuals, referred to as relators, to sue on behalf of the government to recover for alleged fraud. The relator must file his complaint under seal, and the government is allowed to investigate the claim and determine whether it will “intervene” by proceeding with the action itself, or decline to take action.
The relator, Billy Joe Hunt, asserts that his former employer, Parson Corporation, and its sub-contractor, Cochise Consultancy, Inc., defrauded the Department of Defense by bribing an Army Corp of Engineers officer and steering a sub-contract for security services to Cochise. The alleged events took place “sometime prior to January 2006 until early 2007.” Hunt, who learned about the alleged scheme at the time it took place, told the FBI about it in November 2010 while he was interviewed in connection with a separate kickback scheme.
The statute at issue, 31 U.S.C 3731(b), creates two distinct limitations periods by prohibiting actions filed:
(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.
Hunt filed his case in 2013, seven years after the alleged fraud took place but within three years of telling FBI agents about the scheme. The district court dismissed the case finding that the statute of limitations in (b) (2) only applied when the government intervened in the case. The Eleventh Circuit reversed, acknowledging that its decision was contrary to those issued by two other circuits.
The questions the Supreme Court will address are whether (a) a relator in an FCA qui tam action may rely on Section (2) of the statute in a lawsuit where the U.S has declined to intervene and, if so, (b) whether a relator constitutes an “official of the United States” for purposes of Section (2).
The circuits have adopted three distinct applications of sub-section (b)(2)’s three-year limitations period:
(1) the Fourth, Fifth, and Tenth Circuits found the government must intervene to trigger 3731(b)(2);
(2) the Third and Ninth Circuits have ruled that the three-year statute may apply even if the government does not intervene, but it begins to run from the time the relator knew or should have known the facts material to the claim, thus treating the relator as the “government agent”; and,
(3) In Hunt, the Eleventh Circuit, like the Third and Ninth, applied 3731(b)(2) when the government did not intervene, but it started the clock when the FBI agents not the relator, had the requisite knowledge.
The need for the Supreme Court to weigh in here is evident as the current state of the law creates the risk of potential forum shopping. The ramifications for the potential resolutions are significant. First, if the Court agrees with the Fourth, Fifth, and Tenth Circuits and finds the government must intervene to invoke section (b)(2), a relator must file suit within the six years of the alleged violation as he won’t be able to count on the government intervening to potentially save an otherwise untimely case.
If the Court adopts the approach followed by the Third and Ninth Circuits, a relator could have up to ten full years to file suit, provided he acts within three years of finding out about the alleged violation because he/she is considered the “government agent.”
If the Supreme Court follows the Eleventh Circuit’s approach, a relator could take advantage of the full ten-year tolling period, even if he knows about the alleged fraud early in that period because his knowledge will not be imputed to the government.
It is obvious each of these interpretations leads to different results. Resolving this three-way circuit split to create consistency in the interpretation and application of FCA, an Act that has been around since the late 1800s is a compelling reason to grant certiorari.