Supreme Court Unanimously Decides Relator May Use Ten-Year Limitation Period In Declined FCA Case

The Supreme Court today unanimously decided that a relator may take advantage of the longer ten-year statute of limitations under the False Claims Act in a case in which the United States has declined to intervene, as long as the action is brought within three years of Government knowledge of the alleged fraud.  Cochise Consultancy, Inc. v. United States ex rel. Hunt.

The Timing of the Alleged Fraud, Disclosure to the Government, and the Complaint

In his FCA complaint, Relator Billy Joe Hunt alleged that two defense contractors defrauded the Government by submitting false claims for payment under a subcontract to provide security services in Iraq. Relator alleged that the fraud occurred “from some time prior to January 2006 until early 2007.” Relator filed a False Claims Act complaint on November 27, 2013, more than six years but less than ten years after the date of the alleged fraud.

Relator asserted that he disclosed the alleged fraud to the Government in a November 30, 2010 interview, which was within three years of his filing of the complaint.

The False Claims Act Statute of Limitations Provision

The False Claims Act contains two limitations periods for an action asserting that a defendant has presented false claims to the Government, in two subsections of 31 U.S.C. § 3731(b).

1. Within six years after the statutory violation occurred, or
2. Within three years after the responsible United States official knew or should have known the relevant facts, but not more than ten years after the violation.

The Court’s decision on the applicable subsection would determine the fate of the complaint: time-barred under the six year limitation period, but timely under the ten year period. Relator conceded that the six-year period did not apply, so the issue presented for the Supreme Court was whether a relator in case declined by the Government can take advantage of the ten-year statute of limitation in 31 U.S.C. § 3731(b)(2).

A Relator Can Take Advantage of the Ten-Year Limitation Period in a Declined Case

Justice Thomas wrote for the Court, beginning with a textual analysis of the False Claims Act statute. The two limitations periods apply to “civil action[s] under section 3730,” which includes suits initiated by either the Government or a relator. As “the plain text of the statute makes the two limitations periods applicable in both types of suits,” the ten-year period applies to relator-initiated actions, as long as the action is brought within three years of Government knowledge of the alleged fraud.

The Court rejected the defendants’ argument that the ten-year limitation period is a default rule of tolling, and should only apply when the Government has intervened as a party. Justice Thomas wrote that this reading was “at odds with fundamental rules of statutory construction.” He noted that a single use of a statutory phrase must have a fixed meaning, and interpretations that would attribute different meanings to the same phrase should be avoided. “There is no textual basis to base the meaning of ‘[a] civil action under 3730’ on whether the Government has intervened.”

The Relator Is Not the “Official of the United States” Whose Knowledge Triggers the Three-Year Period from Knowledge

The Court also rejected the defendants’ fallback argument, that a relator in a non-intervened case should be considered the responsible “official of the United States” within the meaning of section 3731(b)(2), so that the three-year period for bringing an action starts when the relator—and not the Government—knew or should have known of the fraud. Justice Thomas reasoned that a relator is not an “official of the United States” in the ordinary sense of that phrase; the statute’s use of the definite article “the” referring to “the official” suggests Congress did not intend for all private relators to be that official; and private relators are not “charged with responsibility to act” because they are not required to investigate or prosecute a False Claims Act action.

Here, the action was brought within three years of knowledge by the responsible Government official, and less than ten years after the alleged fraud, so it was timely under 31 U.S.C. § 3731(b)(2).  Under this ruling, a relator commencing an FCA action within three years of Government knowledge will be able to reach back ten years for alleged False Claims Act violations.