Eleventh Circuit Deepens Circuit Split on False Claims Act Limitations Period, Possibly Setting Stage for SCOTUS Decision

Eleventh Circuit Deepens Circuit Split on False Claims Act Limitations Period, Possibly Setting Stage for SCOTUS Decision

Regulatory
May 18, 2018

A recent decision from the Eleventh Circuit underscores the importance of keeping accurate records of disclosures to the federal government regarding potential non-compliance with regulations and contract requirements by government contractors, healthcare providers and others doing business with the federal government.

The Eleventh Circuit held that the limitations period for suits under the False Claims Act (“FCA”) runs from the date the government first learns of the alleged violations, whether or not the government intervenes. See United States of America ex rel. Billy Joe Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081 (11th Cir. 2018). In so holding, the Eleventh Circuit departed from a line of cases more defendant-friendly in their interpretation of the FCA’s statute of limitations, thereby deepening a circuit split on this issue.

According to relator Hunt’s Complaint, an Army Corps of Engineer officer forged contract documents in exchange for bribes and gifts. Hunt became aware of the alleged conduct in 2006, and notified the government on November 30, 2010 after FBI agents interviewed him about his role in an unrelated kickback scheme. Hunt did not file his FCA suit until November 27, 2013 – over six years after becoming aware of the alleged conduct, but less than three years from the date he informed the government. The United States declined to intervene in the lawsuit, and Defendants moved to dismiss on limitations grounds, citing 31 U.S.C. § 3731(b), which states that a civil action under the False Claims Act 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.

Defendants argued that because the government declined to intervene, the six-year limitation under (b)(1) should apply, barring Hunt’s claim. The Eleventh Circuit disagreed, however, holding that Congress intended the limitations period under (b)(2) to be available, even when the government declines to intervene. The court held that, “because the FCA provides that this period begins to run when the relevant federal Government official learns of the facts giving rise to the claim, when the relator learned of the fraud is immaterial for statute of limitations purposes.” In so holding, the Eleventh Circuit rejected defendants’ argument that the application of the limitations period under (b)(2) would lead to an absurd result in that the limitations period would depend on the knowledge of a nonparty – the government – because despite declining to intervene, the Government “remains the real party in interest and retains significant control over the case.”

The Eleventh Circuit acknowledged a circuit split with the Fourth and Tenth Circuits, each of which has held that the three-year limitations period under (b)(2) does not apply to whistleblowers at all, only to government parties. The Court similarly acknowledged that its holding diverged from Ninth Circuit precedent, which holds that a relator becomes a government agent when filing suit under the FCA, and thus 3731(b)(2) imposes a three-year statute of limitations on the relator. 

This circuit split is ripe for clarification, and could very well be the subject of a U.S. Supreme Court decision in the near future.

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