The FCA’s statute of limitations, 31 U.S.C. § 3731(b), has been a source of confusion and disagreement amongst the courts and litigants for years. The disagreement is focused primarily on whether a relator in a non-intervened case can take advantage of the three-year government knowledge/ten-year lookback provision under subsection (b)(2) or whether the relator is limited to the six-year limitation in subsection (b)(1). The majority of courts have held that the relator is bound by the latter provision, and cannot take advantage of the 10-year lookback period in cases where the government has declined to intervene.
This split was recently expanded by the 11th Circuit, which found in U.S. ex rel. Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081 (11th Cir. 2018) that a relator could take advantage of the longer statute of limitations period in subsection (b)(2) even where the government has declined to intervene.
Hunt involved an allegedly fraudulent award of a government defense subcontract for the clearing of excess munitions in Iraq that were left by retreating or defeated forces. While the underlying allegations are sordid – including assertions that a blind military officer was allegedly deceived into signing the wrong contract – the salient allegations are as follows: Defendant Parsons was awarded a government contract to clear excess munitions and sought subcontractors to provide the attendant security services. The contract was initially awarded to ArmorGroup, but this selection was overridden through the efforts of an officer who had allegedly been bribed to award the contract to Defendant Cochise – the purveyor of the bribes. From February 2006 to September 2006, Cochise performed the subcontracting services.[1] The relator – who worked for Parsons – informed the government about the scheme in 2010, but waited until November 27, 2013 to file his claims under the FCA.
The government declined intervention and the defendants subsequently moved to dismiss on statute of limitations grounds, arguing that the claims were untimely under the six-year provision in subsection (b)(1). The district court agreed with defendants and dismissed the action.
On appeal, the Eleventh Circuit reversed, holding that while the claims were facially barred under subsection (b)(1), the relator could rely upon the longer statute of limitations period in subsection (b)(2) despite the government having declined to intervene. The defendants argued that allowing the relator to rely on subsection (b)(2) would lead to absurd results as the limitations period is triggered by the knowledge of the government, which is not a party to the litigation in a declined case. The court rejected this argument, reasoning that in the “unique context” of an FCA action the government remains the real party in interest and retains control over the action. The court explained that the government stands to obtain the majority of the recovery even in declined cases, is allowed to intervene at a later date upon a showing of good cause, and remains actively involved in the case by receiving filings and discovery.
The court also reasoned that nothing in the text of subsection (b)(2) indicates that it is inapplicable where the government has declined to intervene. Furthermore, the court found that its conclusion was bolstered by the absence of legislative history indicating that subsection (b)(2) is inapplicable where the government has declined intervention.
In so holding, the Eleventh Circuit recognized that its decision was at odds with decisions from the Fourth and Tenth Circuits, but rejected these holdings, arguing that these appellate decisions were not persuasive because they failed to account for the “unique role the United States plays even in a non-intervened qui tam case.”
The Cochise opinion crystallizes the circuit split that exists in connection with the FCA’s statute of limitations in non-intervened cases. This divide is particularly notable in light of the importance of the statute of limitations as both a potential defense and as a means to cut off liability as to dated claims. This is an issue that should ultimately be resolved by the Supreme Court (or by a statutory amendment to clarify the statute of limitations), but, in the interim, it bears monitoring this area of law carefully and being cognizant of the applicable authority in the jurisdiction in which a case is pending.
[1] Cochise’s services were limited to seven months because the bribed officer was rotated out of Iraq in September 2006 after which the contract bidding was reopened and awarded to ArmorGroup.
