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SCOTUS delivered a unanimous opinion on May 13, 2019 affirming an Eleventh Circuit ruling that (1) the extended limitations period of up to 10 years applies to whistleblower-initiated False Claims Act lawsuits in which the government has declined to intervene and (2) whistleblowers in nonintervened cases are not "the official of the United States" referred to by the statute. This decision resolved a three circuit split.

Explaining the False Claims Act Statute of Limitations

The False Claims Act statute of limitations reads as follows:

31 U.S. Code §3731. False Claims procedure

(b) A civil action under section 3730 may not be brought—

(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.

To state it more simply, here are two scenarios illustrating the deadlines imposed by the statute of limitations for a False Claims Act violation occurring in the year 2000:

  1. Scenario 1: Applying §3731(b)(1)
    • 2000: FCA violation occurs
    • 2006: deadline to bring action under §3731(b)(1)
  2. Scenario 2: Applying §3731(b)(2)
    • 2000: FCA violation occurs
    • *Year X*: material facts are made known to the United States official charged with responsibility to act
    • 3 years after *Year X*, no later than 2010: deadline to bring action under §3731(b)(2)

The "whichever occurs last" provision ensures a minimum of 6 years. If scenario #2 resulted in a deadline earlier than 2006, then scenario #1 would apply instead. However, scenario #2 becomes more complicated when considering government nonintervention—if the U.S. official charged with responsibility to act chooses not to, should §3731(b)(2) still apply?

Three Circuit Split

Circuit Courts have not ruled consistently on the statute of limitations for nonintervened False Claims Act cases from the past decade. This caused a three circuit split, with (1) the Fourth, Fifth, and Tenth Circuits in one camp, (2) the Third and Ninth Circuits in another, and (3) the Eleventh Circuit agreeing and disagreeing in part with the Third and Ninth Circuits.

  1. The Fourth, Fifth, and Tenth Circuits held that §3731(b)(2) applies only to cases filed directly by the government or whistleblower cases where the government has intervened.[1]
  2. The Third and Ninth Circuits held that §3731(b)(2) applies to all cases, including nonintervened whistleblower cases, but the 3-year limitations period is triggered by the relator’s knowledge of the fraud, not the government’s knowledge.[2]
  3. In a recent case, the Eleventh Circuit agreed with the Third and Ninth Circuits that §3731(b)(2) applies to whistleblower cases even if the government declines to intervene, but disagreed that the relator counts as "the official of the United States" whose knowledge triggers the 3-year limitation.[3]

Supreme Court Resolves the Split

The Supreme Court granted certiorari in the recent Eleventh Circuit case, and affirmed the decision of that court that §3731(b)(2) does apply to nonintervened cases, reasoning that the plain text of the statute makes the limitations periods in both §3731(b)(1) and §3731(b)(2) applicable to all civil actions under section 3730, which includes both Government-initiated and relator-initiated suits.

Relator Hunt's complaint alleged that two defense contractors (collectively, "Cochise") submitted false payment claims to the Government for providing security services in Iraq up until early 2007. Hunt filed his action more than six years after the alleged fraud occurred, but within 3 years of an interview with federal agents about the fraud and within 10 years after the violation occurred.

The Supreme Court also affirmed the Eleventh Circuit's decision that the relator does not count as "the official of the United States" referred to in §3731(b)(2), under the logic that a private relator is not required to investigate or prosecute False Claims Act actions, and they are neither appointed nor employed by the United States. Thus, the 3-year limitation period in §3731(b)(2) should not be triggered by a relator-initiated nonintervened suit:

The relator in a nonintervened suit is not “the official of the United States” whose knowledge triggers §3731(b)(2)’s 3-year limita­tions period. The statute provides no support for such a reading. First, a private relator is neither appointed as an officer of the United States nor employed by the United States. Second, the provision au­thorizing qui tam suits is entitled “Actions by Private Persons.” §3730(b). Third, the statute refers to “the” official “charged with re­sponsibility to act in the circumstances.” Regardless of precisely which official or officials the statute is referring to, §3731(b)(2)’s use of the definite article “the” suggests that Congress did not intend for private relators to be considered “the official of the United States.” Nor are private relators “charged with responsibility to act” in the sense contemplated by§3731(b), as they are not required to investigate or prosecute a False Claims Act action. [internal citations omitted]

This will likely put a lid on Appointments Clause challenges to the FCA, at a time when Attorney General Barr's antagonistic history on this matter has given new hope to defendants looking to get their cases dismissed. Just last month, Intermountain Medical Center and Intermountain Health Care, Inc. (collectively, "Intermountain") petitioned the Supreme Court for a writ of certiorari asking "whether the False Claims Act's qui tam provisions violate the Appointments Clause of Article II of the Constitution". [4] Intermountain and St. Mark's Hospital were allegedly complicit in and profited from fraudulent reimbursement requests to Medicare for medically unnecessary heart surgeries performed by Dr. Sherman Sorensen.

Goldberg Kohn's whistleblower attorneys are committed to helping whistleblowers fight fraud against the government, even if DOJ support cannot be obtained. If you are aware of fraud against the government, you may be eligible to blow the whistle in a False Claims Act lawsuit and may be entitled to a portion of the recovery. To find out more, contact Goldberg Kohn for a confidential consultation.

[1] U.S. ex Rel. Sanders v. North American Bus Industries, Inc., 546 F.3d 288 (4th Cir. 2008); U.S. ex rel. Sikkenga v. Regence BlueCross BlueShield of Utah, 472 F.3d 702 (10th Cir. 2006); U.S. et rel. Erkskine v. Baker, 213 F.3d 638 (5th Cir. 2000).

[2] U.S. ex rel. Malloy v. Telephonics Corp., 68 F. App’x 270 (3d Cir. 2003); U.S. ex rel. Hyatt v. Northop Corp., 91 F3d 1211 (9th Cir. 1996).

[3] Cochise Consultancy Inc. v. U.S. ex rel. Hunt, 887 F.3d 1081 (11th Cir. 2018).

[4] Intermountain Health Care, Inc., et al. v. U.S. ex rel. Polukoff et al., Supreme Court petition no. 18-911