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Supreme Court Exposes FCA Defendants To Decade-Old Relator Suits

May 15, 2019

When the Supreme Court accepted the cert petition to resolve a Circuit split regarding the False Claims Act’s statute of limitations when the government does not intervene, it created the potential that the Court would extend the limitations period for private relators’ FCA actions. That is exactly what happened. The Supreme Court unanimously ruled that a relator can bring suit within three years after a government official knows, or should know, about a potential FCA violation—up to 10 years after the underlying event—and the relator does not count as a government official. Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315 (U.S. May 13, 2019). FCA defendants may, therefore, face more qui tam suits reaching further back into their memories and records.

Before the Eleventh Circuit ruling below, no Circuit had fully extended the statute of limitations for qui tam actions in which the government does not intervene to match the statute of limitations when the government does intervene. But the Supreme Court unanimously sided with the Eleventh Circuit, holding both that (1) a relator can bring suit within three years of when a government official knew or should have known the underlying facts and (2) the relator does not count as a government official. It is immaterial how long the relator knew the facts, even if the relator knew immediately and waited until three years after a government official found out.

The Court considered the first question “controll[ed]” by “the clear text of the statute,” which does not distinguish between “[g]overnment-initiated suits… and relator-initiated suits” in outlining the applicable limitations period. It rejected the defendants’ argument that Congress intended for the longer potential period to apply only when the government intervenes because its tolling provision focuses on government knowledge, explaining that such an interpretation of Congressional intent was impossible because it was not based on a “plausible interpretation of the text.” The Court gave a less detailed treatment to what it considered the defendants’ “fallback argument,” briefly explaining why it makes no sense to consider “a private relator” to be an “official of the United States” and tie that three-year period to the realtor’s knowledge. In eliminating this Circuit split, the Supreme Court gave realtors the same statute of limitations as the government, a statute of limitations that could potentially extend out to 10 years.

This decision may lead to more, and more complicated, qui tam suits because whistleblowers will have expanded time in which to file. It will also make it more difficult to defend FCA suits by placing decade-old events at issue. In order to adequately prepare for potential FCA suits, companies that are in a heavily federally funded sector—such as health care—should proactively revisit document and employee information preservation.

For more information, please contact Jonathan S. Feld at 312-627-5680 or jfeld@dykema.com, Andrew VanEgmond at 734-214-7603 or avanegmond@dykema.com, Donna O'Connor at 248-203-0720 or doconnor@dykema.com, or your Dykema relationship attorney.

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