On November 16, 2018, the U.S. Supreme Court granted certiorari in Cochise Consultancy, Inc. v. U.S. ex rel. Hunt, agreeing to decide how the FCA’s statute of limitations applies in qui tam actions brought by a private relator in which the government declined to intervene. The Court’s decision in Hunt should bring sorely needed clarity to a question that has deeply divided the federal courts of appeals.
The Supreme Court Will Review the Eleventh Circuit’s Interpretation of 31 U.S.C. § 3731(b)(2)
The FCA’s statute of limitations provision, 31 U.S.C. § 3731(b), states that a civil action may not be brought under the FCA:
more than 6 years after the date on which the violation of section 3729 is committed, or
more than 3 years after the date when facts material to the right of action are known or 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.
The specific question presented in Hunt is whether § 3731(b)(2), which operates as a tolling provision to the six-year limitations period of § 3731(b)(1), applies to FCA actions brought by a relator in which the government declined to intervene, and if so, whether the government’s knowledge or the relator’s knowledge is the relevant trigger for the limitations period.
In Hunt, the Eleventh Circuit reversed the district court’s decision that § 3731(b)(2) is inapplicable where the government declined to intervene, holding instead that the alternative three-year limitations period may apply to a relator’s qui tam claims in such a scenario. In reaching that conclusion, the Eleventh Circuit explained that the FCA’s three-year limitations period was triggered by the government’s knowledge of the alleged fraud—not the relator’s knowledge—and therefore, that the relator’s knowledge of the alleged fraud was irrelevant to the analysis. The Eleventh Circuit’s decision was significant because it potentially revived the relator’s otherwise time-barred claims, as the relator had not filed his action within the six-year limitations period of § 3731(b)(1).
Federal Appellate Courts Have Taken Three Distinct Approaches to the FCA’s Statute of Limitations
The Eleventh Circuit’s decision in Hunt deepened an existing split among the nation’s federal appellate courts, which the Supreme Court now appears poised to resolve. Indeed, as a result of the Eleventh Circuit’s decision, there now are three distinct approaches to the § 3731(b)(2) tolling provision among the circuit courts.
Under the first approach, which has been adopted by the U.S. Court of Appeals for the Fourth, Fifth and Tenth Circuits, § 3731(b)(2) applies only in FCA cases filed by the government or in which the government has intervened. Courts adopting this approach have emphasized that the statutory language refers only to the United States, and not to the relator, suggesting that § 3731(b)(2) does not apply in cases in which the government is not a party. In addition, these courts have noted the practical difficulty that may result from basing the starting date for the limitations period on the knowledge of a non-party to the action. Under this approach, the relator must file within six years of the alleged fraud or the relator’s claims will be time barred.
By contrast, under the second approach, endorsed by the U.S. Court of Appeals for the Third and Ninth Circuits, a relator may rely on § 3731(b)(2)—even in a non-intervened case—but the limitations period begins on the date that the relator knew or should have known the facts relevant to the right of action. These courts have relied on the lack of any statutory language expressly limiting § 3731(b)(2) to actions in which the government is a party. Yet, they also have reasoned that because a qui tam relator stands in the shoes of the government, § 3731(b)(2) should apply as if the relator were the relevant government “official” whose knowledge triggers the running of the limitations period. By allowing the tolling provision to apply to claims brought by a relator and potentially tying the running of the limitations period to that relator’s knowledge, these courts have adopted a more expansive view of potential FCA liability.
The third approach, endorsed by the Eleventh Circuit in Hunt, is effectively a hybrid of the first two approaches. In the Eleventh Circuit’s view, although a relator may invoke § 3731(b)(2)’s extended limitations period, that period begins to run when the government knew or should have known of the fraud. Depending on the relevant facts, that could trigger the limitations period either earlier or later than in cases governed by the second approach.
The Supreme Court’s Decision in Hunt Should Clarify an Important Issue for FCA Defendants
The Supreme Court’s impending decision in Hunt should clarify an issue of critical importance to potential FCA defendants. At present, the extent to which a relator may invoke the extended limitations period set forth in § 3731(b)(2) differs depending on the circuit in which the action is brought, which may encourage forum shopping by relators. As Hunt illustrates, the same allegations that would be dismissed at the pleading stage in one jurisdiction might be the basis for a significant judgment in another.
By elucidating a uniform national standard, the Supreme Court can eliminate any threat of forum shopping, while also offering fairness and predictability to potential defendants. And, to the extent the Court holds that § 3731(b)(2) is unavailable to relators in non-intervened cases, its decision in Hunt could operate as an important check on the scope of defendants’ potential liability.