Court Rules That Only DOJ’s Knowledge is Relevant for Statute of Limitations Defense, But Permits Discovery of Communications That Should Have Put DOJ on Notice

The ability to invoke the FCA’s statute of limitations defense often hinges on the timing of when “the official of the United States” knew or should have known of the alleged fraud.  Most courts have sided with the government’s interpretation of “the official of the United States” as meaning only the Attorney General or his or her designees.  A district court recently sided with the majority interpretation, but in so doing, affirmed avenues of discovery outside of DOJ Civil that should have put the government on notice of a potential FCA claim.  See United States v. Kellogg Brown & Root Services, Inc., No. 12-cv-04110 (C.D. Ill. Sept. 16, 2016).

The FCA’s statute of limitations bars the government from filing a suit “more than 3 years after the date when facts material to the right of action are known or reasonably 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.”   On November 19, 2012, the government filed a suit against Kellogg Brown & Root Services (“KBR”) alleging violations of the FCA and breach of contract relating to conduct occurring in 2004.  Accordingly, if “the official of the United States” knew or should have known of the allegations before November 19, 2009, then the government’s suit must be dismissed.

KBR argued that the government’s claims are time-barred and sought discovery extending to any federal government official who may have had knowledge of the allegations prior to November 19, 2009.  In support of its position KBR cited a similar statute of limitations applicable to government breach of contract suits, which bars suits after a certain period of knowledge “by an official of the United States charged with the responsibility to act in the circumstances.”  Unlike in the FCA context, courts have interpreted this provision to apply to a broad range of government attorneys.  The district court justified these divergent outcomes by emphasizing the difference between “an official” and “the official.”  In particular, the FCA’s statute of limitations is directly preceded by a section discussing the “[r]esponsibilities of the Attorney General,” who is the only official who can file an FCA suit for the government.  In contrast, the breach of contract provision applies to lawsuits filed by a broad range of government entities, and as such, the court explained that the term “an official” must correspondingly reach across this spectrum of attorneys.

Nonetheless, simply because the relevant knowledge for purposes of the statute of limitations is constrained to DOJ Civil does not mean that discovery can be limited to DOJ Civil:  “[W]hat matters is whether DOJ Civil received information that would have put it on notice (inquiry or otherwise) of a potential FCA claim.”  The court agreed with KBR that because many agencies have a duty (as set forth in the United States Attorney’s Manual) to report certain misconduct to DOJ Civil, communications between DOJ Civil and other agencies—whether public or private—that would have created notice of a potential FCA claim are relevant.  Similarly, participation by DOJ Civil lawyers in a relevant grand jury proceeding or requests for materials from that proceeding also are relevant.

A copy of the district court’s opinion can be found here.