On March 19, 2019, the Supreme Court heard arguments in Cochise Consultancy Inc. v. United States, ex rel. Hunt regarding how the False Claims Act’s (FCA) statute of limitations applies in qui tam actions brought by a private relator in which the government declined to intervene. The Court heard lively arguments regarding a statute that has undoubtedly confused many. After oral argument, the Court appears poised to conclude that relators may appropriately take advantage of a longer limitations period.

FCA Statute of Limitations Raises Questions Regarding How and When It Should be Tolled

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:

  1. more than six years after the date on which the violation of section 3729 is committed, or
  2. more than three 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.

In Cochise, the relator filed suit in 2013, more than six years after the alleged fraud occurred. The relator has argued that his case should not be considered time-barred because it was filed less than three years after an “official of the United States” learned of the fraud in 2010. In reviving the suit, the Eleventh Circuit held that Hunt could rely on § 3731(b)(2)’s longer limitations period even where the United States declined intervention and regardless of when the relator learned of the fraud. Our previous post described the three different approaches to the statute of limitations that the various circuits have adopted.

Justices Argue Over Who Should Benefit From Longer Limitations Period

At argument, the defendants stressed that reading the statute to allow for a longer limitations period based on the knowledge of the government would incentivize relators to “lay in the weeds” and let the damages “pile up” while they amass additional evidence. The defendants stressed that lengthy delays could negatively impact litigation overall where “memories fade, people — witnesses die.”

The justices did not appear phased by these potential implications. Justice Sotomayor noted that the overall purpose of the FCA “is to ensure that when some fraud has occurred against the U.S., that there is recovery for the United States.” Where the purpose of the FCA is to benefit the United States, it would make sense for the statute of limitations to relate to the government’s knowledge.

Further, Chief Justice Roberts noted that relators already have an incentive to bring claims promptly because of the possibility that another relator or the government might file an action based on the same allegations, thereby preempting the would-be relator’s claim. Instead, he stated that delays are only an “academic concern” and the theory of a prospective relator “waiting in the weeds I think is not a realistic one.”

Justice Alito was quick to identify the real problem at hand —“This is a terribly-drafted statute. It may serve wonderful purposes, but – [if] I were to grade whoever drafted it — anyway, I’ll pass that.” While he passed on laying blame for the statute’s language, Justice Alito did pepper counsel for the relators and the United States with several questions about why relators should be able to benefit from a longer statute of limitations than even the government in some instances.

The Solicitor General’s Office argued in support of the relator’s position, stressing the United States’ position as the ultimate benefactor in all FCA litigation: “The United States is the injured party in all of these cases. The United States is a real party in interest regardless of whether or not it elects to intervene in the action, the majority of any recovery would go to the United States. And in that context, it made good sense that Congress chose to make the tolling rule in (b)(1) applicable based on the knowledge of the injured party; that is, the United States.”

Consistent Statutory Interpretation Appears as Preeminent Consideration

Overall, the Justices appeared to question any interpretation of the statute that would require them to “split the baby,” as Justice Gorsuch noted, by applying § 3731(b)(2) only in cases in which the government intervened and where the statute does not explicitly make that distinction. They also appeared comfortable that the policy implications of a longer statute of limitations were appropriately cabined by other protections within the statutory framework.

This likely offers little comfort to potential defendants in FCA lawsuits. The difference between a six- and 10-year statute of limitations could easily encompass standard document retention policies regarding internal audits, medical records, or other documents that could be critical to defending a case. An expanded statute of limitations could operate as a significant expansion of relators’ ability to bring cases.

We would expect a final decision in this case before the end of term in June. Subscribe to this blog or contact a member of Bass, Berry & Sims Healthcare Fraud Task Force for updates on this important case and other FCA litigation.