Courts Split on False Claims Act Deadlines.

Author:Guy, Andrew
Position:Government Contracting Insights

When does a private party need to file a qui tam action under the False Claims Act? Such a seemingly simple question has resulted in three different answers from six different courts.

On Nov. 16, the Supreme Court announced it would resolve that split by granting a request to review the Eleventh Circuit's decision in United States ex rel. Hunt v. Cochise Consultancy, Inc. The case will merit close attention, as the outcome could help protect government contractors from intentional and prejudicial delay in litigation.

Under the False Claims Act, the United States can bring a suit against a defendant accused of submitting false claims. In addition, a private citizen--known as a "relator"--can bring a qui tam action against that defendant in the name of the United States (31 U.S.C. [section] 3730).

The act includes a statute of limitations provision, 31 U.S.C. [section] 3731(b), which states that a civil action may not be brought: (1) more than six years after the date on which the violation is committed; or (2) more than three 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.

This provision has proven controversial. Imagine a relator who files a qui tam action more than six years after the alleged fraud--but the government only learned of the alleged facts two years ago. If the government declines to intervene in the case, can the relator nevertheless rely on the date that the government learned of the facts and argue that the action is timely?

The answer to this question has divided federal appellate courts and resulted in three distinct approaches. The first is that relators must file within six years. The Fourth Circuit, Tenth Circuit and Fifth Circuit have held that section 3731 (b)(2) applies to the United States and not to relators. Therefore, relators must file their claims within six years of the alleged fraud.

As these courts have noted, the statutory language refers to the government's knowledge of "facts material to the right of action," and not the relator's knowledge. Accordingly, it would be absurd to apply such a provision when the government is not even party to the suit.

Moreover, it would lead to troubling outcomes. If the longer statute of limitations applied to relators, then they...

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