Where the government chooses not to intervene in a whistleblower (qui tam) False Claims Act (FCA) suit, what is the statute of limitations? The federal statute governing the statute of limitations in FCA cases, 31 U.S.C. § 3731, provides that a claim must be brought by the latter of: (1) six years of the violation, i.e., the date of the false claim to the government, or (2) three years from the date that material facts “are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances.” Claims brought under the three-year “discovery” limitations period must be brought within 10 years after the date on which the violation is committed.
Because a qui tam action is brought by a private citizen and not the United States, and the three-year limitations period runs from the date of the government’s knowledge or constructive knowledge of the claim, there had been some debate in the courts whether a qui tam suit had to be brought within six years of the allegedly false or fraudulent claims, or whether a qui tam suit could be timely based on the three-year limitation period calculated from the date of the government’s knowledge of the fraud. A relator relying solely on the three-year limitation period faced dismissal of the suit on timeliness grounds, as the defendant would argue that claims that were over six years old when the suit was brought had already prescribed. The general assumption seemed to be that the three-year “discovery” limitations period proviso would apply in a qui tam suit brought six years after the alleged conduct if the government intervened in the suit because the government was actively acting on its knowledge of the wrongdoing. Less clear was the application of the three-year “discovery” period to claims brought after the six-year statute of limitations but within three years of the government’s learning of the conduct in nonintervened cases—i.e., those cases that the government declined to prosecute.
Resolving the split in the federal circuit courts, a unanimous Supreme Court on May 12, 2019, handed down its decision in Cochise Consultancy, Inc. v. United States ex rel. Hunt, ___ U.S. ___ (May 13, 2019), which resolved this very issue. In Cochise, the Court held that a qui tam suit brought by a qui tam relator in which the government declines to intervene is timely filed even if it is filed after the six-year statute of limitation period set forth in 31 U.S.C. 3731(b)(1), as long as it is filed within three years of the government’s knowledge of the conduct and within 10 years of the alleged conduct, and thus timely under 31 U.S.C. § 3731(b)(2). Applying the “fundamental rules of statutory interpretation, the Supreme Court noted that, under 31 U.S.C. § 3731(b), the statute of limitations applied to “[a] civil action under” 31 U.S.C. § 3730. The Court rejected the notion that a declined qui tam could be considered a “civil action under Section 3730” only if the government chose to intervene in the action. A relator-initiated, nonintervened suit arises under 31 U.S.C. 3730(b) and thus qualifies under both provisos of the statute of limitations. The Supreme Court further noted that such an interpretation furthered the goals of the recovery for civil fraud, stating that “[W]e 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 and will receive the bulk [i.e., 70-85%] of any recovery.”
Written By: Catherine M. Maraist