The Supreme Court Decides that a Relator May Have More Than Six Years to File a Qui Tam False Claims Act Complaint
In Cochise Consultancy, Inc. v. United States ex rel. Hunt, 139 S. Ct. 1507 (2019), the Supreme Court of the United States interpreted the statute of limitations (“SOL”) provision of the False Claims Act (“FCA”) to allow a relator’s qui tam action to proceed even though he filed more than six years after the alleged violations occurred (i.e., after the standard SOL period expired). This decision may restrict SOL defenses for FCA defendants because it confirms that, even if the Government does not intervene, a relator may have up to ten years to file a qui tam action, depending on when “the official of the United States charged with responsibility to act” (to quote the language of the statute) learned the material facts of the right of action.
Specifically, the Supreme Court considered the meaning of 31 U.S.C. § 3731(b)(2) in the circumstance when a relator initiates the lawsuit and the Government declines to intervene. Section 3731(b)(1) of the FCA provides that an action must be brought within six years of the date of the violation of the FCA. However, section (b)(2) provides a potentially longer period of three years from the date that “the official of the United States charged with responsibility to act” obtained knowledge of the relevant facts, but no more than 10 years after the violations occurred. Previous decisions by Courts of Appeals had differed on whether a relator can take advantage of section (b)(2), and how to calculate the applicable limitations period. The Supreme Court resolved some of these issues when it concluded that (1) a suit initiated by a relator does fit within the scope of section (b)(2) even if the Government does not intervene; and (2) in that situation the relator is not considered “the official of the United States charged with responsibility to act in the circumstances.” Below is a discussion of the case, and the interpretation unanimously reached by the Supreme Court.
In Cochise, the relator claimed he had knowledge of federal contactors defrauding the U.S. Government in Iraq. On November 30, 2010, in an unrelated investigation, federal agents interviewed the relator about his role in contracting fraud in Iraq. The relator asserted that during this interview he revealed to federal agents his allegation that sometime prior to 2006 until early 2007 two federal contractors (collectively “Defendants”) defrauded the U.S. Government by submitting false claims for payment under a subcontract to provide security services in Iraq. The relator waited until November 27, 2013 to file a complaint alleging a violation of the False Claims Act. He thus filed his complaint more than six years after the alleged FCA violations occurred.
After the United States declined to intervene in the relator’s FCA action, Defendants moved to dismiss the action on grounds that it was untimely under section 3731(b)(2). Defendants argued that (1) the relator could not rely on section (b)(2), contending that the provision was only available when the Government intervenes; and alternatively (2) the relator should be deemed the “official of the United States” under section (b)(2) because the Government declined to intervene, which would render the relator’s complaint untimely because he had knowledge of material facts more than three years before filing his complaint.
The Supreme Court disagreed with each of Defendants’ arguments. Each argument will be discussed in turn below.
First question: Was the limitations period in section 3731(b)(2) available in a relator-initiated suit in which the Government had declined to intervene?
The Supreme Court decided Yes. A relator-initiated lawsuit qualifies as a civil action under section 3730, and is within the scope of 3731(b)(2), even when the Government elects not to intervene. The Court accepted that the period in (b)(2) could give the relator more time than (b)(1). The Court stated, however, “we see nothing unusual about extending the limitations period when the Government official did not know and should not reasonably have known the relevant facts, given that the Government is the party harmed by the false claim and will receive the bulk of any recovery.”
Second question: Since the Government did not intervene, should the relator be considered “the official of the United States” whose knowledge triggers section 3731(b)(2)’s three-year limitations period?
The Supreme Court decided No. The Supreme Court found the plain language of the statute did not support Defendants’ second, “fallback argument.” First, a private relator is not an “official of the United States”. Second, the statute refers to “the” official “charged with responsibility to act in the circumstances,” so the Court found that 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 any and all private relators to be considered ‘the official of the United States.’” Third, “private relators are not ‘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.”
Conclusion. The Supreme Court decided that section 3731(b)(2) applies to relator-initiated suits even when the Government does not intervene, and that the relator in that situation is not considered “the official of the United States charged with responsibility to act in the circumstances.” This may allow a relator more than six years to file an FCA complaint, depending on the circumstances. The Supreme Court did not reach the question of who would be “the official of the United States charged with responsibility to act” for purposes of section 3731(b)(2). In this case, whether “the official” was a federal agent or investigator, the U.S. Attorney who reviewed the relator’s complaint, or possibly some other “official of the United States,” the relator’s lawsuit was permitted to proceed.