November 18, 2019

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U.S. Supreme Court Extends Statute Of Limitations for Privately Initiated False Claims Act Lawsuits

Prior to today’s ruling, there was a consensus among the courts and the parties that regardless of who initiates an FCA civil action—DOJ or a private relator—at a minimum, the six-year limitations period of 31 U.S.C. § 3731(b)(1) applies. Likewise, the parties agreed that if DOJ brings an FCA claim, then the limitations period may be extended to up to a total of ten years post-violation under 31 U.S.C. § 3731(b)(2), if late discovery of the violation does not enable compliance with the six-year rule. However, based on the drafting of the statute of limitations provisions, it was unclear whether the extension (or “equitable tolling”) provision of subpart (b)(2) was also available to a private relator who brings a claim without the involvement or intervention of DOJ. Last month, the Court heard oral argument in the matter of Cochise Consultancy, Inc. et al. v. U.S. ex rel. Hunt to address this issue that had been the subject of a circuit split.

The Court’s decision, as expected, based on the Supreme Court justices’ questions during the Cochise Consultancy oral argument, confirmed that the Court was sympathetic to the view previously adopted by the Eleventh Circuit, which is that there is no persuasive basis for distinguishing between DOJ-initiated and relator-initiated FCA cases with respect to the statute of limitations.

In explaining its rational for holding that the limitations period in §3731(b)(2) is available in a relator-initiated suit in which the government has declined to intervene, the Court declared that the plain meaning of the text dictated this outcome. According to the Court, both government-initiated suits under §3730(a) and relator-initiated suits under §3730(b) are “civil action[s] under section 3730” and the “plain text of the statute makes the two limitations periods applicable in both types of suits.” The Court rejected Cochise’s reliance on Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, emphasizing that interpretations that would “attribute different meanings to the same phrase” should be avoided. The Court also noted that the statute provides no support for the argument that a realtor in a nonintervened suit is the official of the United States whose knowledge triggers § 3731(b)(2)’s 3-year limitations period.

In light of the Court’s ruling, companies must be aware they are now vulnerable to belated realtor FCA claims for an even longer period of time.

 

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About this Author

Thomas Kelly Litigation Attorney Drinker Biddle
Partner

Thomas J. Kelly represents clients in white collar defense matters, including Foreign Corrupt Practices Act investigations, procurement fraud cases, and cases under the False Claims Act. He has represented corporations, directors and officers, employees, and individuals in high-profile criminal and administrative matters throughout the United States.

Much of Tom’s defense work has centered on clients who are under investigation for alleged violations of environmental criminal laws and workplace safety regulations. These clients have included corporations and...

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Joseph A. Rillotta, Drinker Biddle, Tax lawyer
Partner

Joseph A. Rillotta assists clients at all stages of various government investigations, with a particular emphasis on tax controversies. He has significant experience in both prosecution and defense, having served as a trial attorney with the U.S. Department of Justice, Tax Division, and as counsel to professionals and corporate officers on IRS and grand jury investigations.

Joe joined the firm from the Internal Revenue Service where he was Counselor to the Commissioner. In this capacity, he advised the IRS Commissioner and Chief Counsel on allegations of misconduct by IRS personnel and oversaw agency responses to Congressional and Inspector General inquiries. Prior to his time at the IRS, Joe was counsel at a leading Washington, D.C., litigation firm, where he advised clients facing government investigations, conducted internal investigations, and represented clients in criminal and civil litigation. Prior to that, he spent six years in the Tax Division at the U.S. Department of Justice where he investigated and prosecuted tax and financial crimes in matters ranging from large-scale grand jury investigations to jury trials, bench trials and appellate proceedings.

202-230-5636