Eleventh Circuit Extends FCA’s Ten Year Limitations Period to Non-Intervened Cases, Creating Circuit Split

The False Claims Act provides that a case must be brought within the later of (1) six years after the date on which the alleged violation is committed, or (2) three years after “the date when the facts material to the right of action are known or reasonably should have been known by the official of the United States with responsibility to act in the circumstance, but in no event more than 10 years after the date on which the violation is committed.”  31 U.S.C. § 3731(b).  When the government has declined to intervene in an FCA action and a relator files a qui tam suit more than six years after the violation, the Fourth and Tenth Circuits have held that the relator’s suit is time-barred and the relator cannot take advantage of § 3731(b)(2)’s more generous statute of limitations.  Last week, in United States ex. Rel. Hunt v. Cochise Consultancy, Inc., __ F.3d __, 2018 WL 1736788 (11th Cir. Apr. 11, 2018), the Eleventh Circuit split from the Fourth and Tenth Circuits, holding that § 3731(b)(2) “applies to an FCA claim brought by a relator even when the United States declines to intervene.”  And departing from the Ninth Circuit, the Eleventh Circuit further held that because the period “begins to run when the relevant federal government official learns of the facts giving rise to the claim, when the relator learned of the fraud is immaterial for statute of limitations purposes.”

Billy Joe Hunt, a former employee of defendant The Parsons Corporation, alleged that his former employer defrauded the United States Department of Defense for work performed under a $60 million defense contract to dispose of excess munitions left behind by enemy forces in Iraq.  Hunt claimed that, in exchange for kickbacks, another Parson employee awarded a subcontract for security services to Defendant Cochise Consultancy.  For security services provided by Cochise from February 2006 through September 2006, the government paid Cochise millions more than it would have paid to Cochise’s competitor, ArmorGroup. On November 30, 2010, Hunt reported the alleged fraudulent scheme to the FBI and, nearly three years later, on November 27, 2013, filed an FCA claim against Defendants.

After the government declined to intervene and the complaint was unsealed, Defendants moved to dismiss the complaint as time-barred under the six-year limitations period.  Hunt did not dispute that his complaint was untimely under § 3731(b)(1).  Instead, Hunt argued that he timely filed under § 3731(b)(2) because “he had filed suit within three years of when the government learned of the fraud at his FBI interview and ten years of when the fraud occurred.”  The district court granted Defendants’ motion to dismiss, concluding that § 3731(b)(2) did not apply because the government declined to intervene and, in any event, § 3731(b)(2)’s three-year period began to run at the time Hunt learned of the fraudulent conduct and that period had since expired.

In a unanimous opinion, the Eleventh Circuit reversed.  Agreeing that Hunt failed to timely file within § 3731(b)(1)’s six-year period of limitations, the Court set out to determine whether § 3731(b)(2)’s period of limitations applied to his complaint.  That issue turned on two questions: (1) Is the limitations period of § 3731(b)(2) applicable to a relator’s action when the United States declines to intervene?; and (2) Is the limitations period triggered when the relator knew or should have known facts material to his claim, or is the period tied to the government’s knowledge of the purportedly fraudulent conduct?

The Eleventh Circuit concluded that Congress intended that § 3731(b)(2)’s limitations period be available to relators, even when the government has not intervened in the case.  Relying heavily on its view of the plain language of the statute, the Court reasoned that “[t]he text of § 3731(b)(2), when viewed in context, shows that § 3731(b)(2) is available to relators when the government declines to intervene” and “nothing in § 3731(b)(2) says that its limitation period is unavailable to relators when the government declines to intervene.”  Nothing in the legislative history, the Court further reasoned, undermined its interpretation of § 3731(b)(2).

Defendants argued that allowing relators in non-intervened cases to rely on § 3731(b)(2)’s limitations period could lead to “absurd” results because “the limitations period is triggered by a federal official’s knowledge,” and the government is a non-party in declined cases.  The Eleventh Circuit not only rejected Defendants’ argument but also contrary rulings by the Fourth and Tenth Circuits.  Criticizing those circuits’ “reflexive[]” application of “the general rule that a limitations period is triggered by the knowledge of a party” to the suit, the Eleventh Circuit concluded: “Given [the federal government’s] unique role [in non-intervened qui tam cases], we cannot say that it would be absurd for Congress to peg the start of the limitations period to the knowledge of a government official even when the United States declines to intervene.”  “Even in a non-intervened case, the relator brings the suit as the partial assignee of the United States and asserts a claim based on injury suffered by the United States as the victim of the fraud,” the Court reasoned.

The Court also rejected Defendants’ argument that its interpretation of § 3731(b)(2) would render the alternative six-year limitations period superfluous.  Defendants argued that if relators were to have three years from the date that the government learned of the fraud to file suit under § 3731(b)(2), relators would “always delay [in] telling the government about the fraud [in order] to increase the damages in the case.”  The Court disagreed, noting that other FCA provisions, such as the public disclosure bar, adequately incentivized relators to promptly report fraud to the government.

On the second question of whether the limitations period is triggered by the relator’s knowledge or the government’s knowledge, the Court again relied on the plain language of § 3731(b)(2): “Given that the language is plain, we cannot rewrite the statute to say that the limitations period is triggered when the relator knew or should have known about the facts material to the fraud.” In so holding, the Court departed from the Ninth Circuit’s holding in United States ex rel. Hyatt v. Northrup Corp., 91 F.3d 1211, 1217 (9th Cir. 1996), which the Eleventh Circuit labeled as “creat[ing] a new legal fiction” whereby “because the relator ‘sue[d] on behalf of the government’ the relator became a government agent and the government official charged with responsibility to act.”  “Again, we find nothing in the text of § 3731(b)(2) or the statutory context to support this legal fiction,” the Court concluded.

The Eleventh Circuit’s opinion in Hunt undoubtedly opens the doors wider for relators whose qui tam complaints would have otherwise been considered untimely under § 3731(b)(1)’s six-year limitation period.  But Hunt also sets up a clear circuit split on two critical statute of limitations issues.  The Eleventh Circuit all but invites the Supreme Court to weigh in on these important issues.

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