Last month, in a unanimous decision, the U.S. Supreme Court ruled that the analysis of the applicable statute of limitations under the False Claims Act (FCA) as set forth in 31 U.S.C. § 3731 is the same regardless of whether the government intervenes in the action or not. While the decision is not likely to affect either the government or relator conduct, it will encourage defendants to expand the scope of discovery to better gauge whether the action may be time barred.
Under the FCA, an action must be brought within: (1) six years of the date on which the violation was committed [31 U.S.C. § 3731(b)(1)]; or (2) three years of the date on which “the 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, whichever occurs last.”
In the FCA case at issue, the relator brought suit on November 27, 2013 against two companies alleging that they defrauded the government in connection with a Department of Defense contract to provide security services in Iraq from “some time prior to January 2006 until early 2007.” A little less than three years prior to filing suit, during an interview with the government on November 30, 2010, relator disclosed the alleged wrongdoing. Subsequently, the government declined to intervene in the lawsuit and the companies moved to dismiss the complaint as time barred, as it was filed more than six years after the alleged wrongful conduct.
Until this decision, the various circuit courts were divided as to the proper interpretation of Section 3731 and had reached three different conclusions. The Ninth Circuit had ruled that Section 3731(b)(2) applies in non-intervened cases, and the statute of limitations period begins to run when the relator knew or should have known the relevant facts. The Fourth and Tenth Circuits, however, found that when the government declines to intervene, only Section 3731(b)(1) applies and the relator must file a complaint within six years after the violative conduct. Finally, unlike the Fourth, Ninth and Tenth Circuits, the Eleventh Circuit found that in non-intervened cases, the statute only begins to run from when “the official of the United States charged with responsibility to act in the circumstances” knew or should have known of the violative conduct.
The Court found that the appropriate interpretation was that of the Eleventh Circuit, and ruled that in non-intervened cases, the statute of limitations will begin to run from when the appropriate government official had or should have had knowledge of the fraudulent conduct. In delivering the opinion, the Court chose to leave open the question of who qualifies as the appropriate “official of the United States” under Section 3731(b)(2). The decision only ruled out a private relator as the appropriate “official” under the statute.
Nonetheless, in light of this decision, defendants will be wise to seek extensive discovery on the timing and subject matter of information provided to government officials in order to refute a relator’s reliance on Section 3731(b)(2)’s ten year limitations period and dismiss the case for failing to meet the shorter three year statute of limitations.