Supreme Court Grants Certiorari On False Claims Act Limitations Period After Eleventh Circuit Deepened Circuit Split

Supreme Court Grants Certiorari On False Claims Act Limitations Period After Eleventh Circuit Deepened Circuit Split

Regulatory
December 18, 2018

The U.S. Supreme Court recently granted cert to resolve a circuit split deepened by the Eleventh Circuit’s holding that the statute of limitations period for False Claims Act (FCA) suits runs from the date the government first learns of the alleged violations, whether or not the government intervenes. See United States of America ex rel. Billy Joe Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081 (11th Cir. 2018). We previously discussed the Eleventh Circuit decision on the Whistleblower Wire blog here.

The Eleventh Circuit’s holding exacerbated an already existing circuit split. On the one hand, the Fourth, Fifth and Tenth Circuits have held that 31 U.S.C. § 3731(b)(2) applies only when the government intervenes. On the other hand, the Third and Ninth Circuits have held that a relator may rely on § 3731(b)(2) even when the government does not intervene, and the limitation period begins to run when the relator has knowledge of the alleged fraud. The Eleventh Circuit, departing from both views, held that a relator may rely on the § 3731(b)(2) even when the government does not intervene, but the limitation period begins to run when the government – not the relator – has knowledge of the alleged fraud. With the granting of cert, we can anticipate that the split will be resolved in the not-too-distant future.   

Petition for a Writ of Certiorari

In their petition for writ of certiorari, the Petitioners asked the Court to determine whether a relator in a FCA qui tam action may rely on the statute of limitations set forth in § 3731(b)(2) when the United States declines to intervene and, if so, whether the relator constitutes an “official of the United States” for purposes of that section. The Petitioners urged the Court to grant review to “restore uniformity” to the FCA, noting that the relator Hunt’s claim would have been time-barred by the other circuits that have considered this issue under two different rationales. Under the Fourth, Fifth and Tenth Circuit approach, Hunt would not be able to rely on § 3731(b)(2) because the government did not intervene. Under the Third and Ninth Circuit approach, Hunt would not be able to rely on § 3731(b)(2) based on the time when he, as the relator, had knowledge of the alleged fraud. Because Hunt’s claim would have been time-barred under both of these approaches, the Petitioners did not take a position on whether the Court should adopt one approach over the other.

Furthermore, the Petitioners claim that the Eleventh Circuit’s holding in favor of Hunt is at odds with the Supreme Court’s decision in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 545 U.S. 409 (2005). The Petitioners argue that the Eleventh Circuit disregarded the Supreme Court’s ruling in Graham, which they say directed courts to construe provisions of the FCA within the broader context of the whole statute and in a way that will avoid absurd results.

Finally, the Petitioners highlight the importance of review by the Supreme Court, stating that, of the hundreds of FCA claims filed each year, the government intervenes only 25% of the time. As a result, courts are left to grapple with this statute of limitations question in the remaining 75% of cases. Without Supreme Court review, the Petitioners allege, FCA claims will proceed in certain jurisdictions, while being time-barred in others. In sum, the Petitioners assert that the Eleventh Circuit’s decision will generate forum-shopping, uncertainty, confusion, and arbitrariness.

Opposition to the Petition

Although the relator, Hunt, agrees with the Eleventh Circuit’s holding in his favor, his response brief also sought Supreme Court review to establish uniformity for FCA claims. In his view, the Eleventh Circuit correctly considered the other circuits’ approaches and appropriately departed from those rationales by construing § 3731(b)(2) by its plain meaning. Hunt also rejects the Petitioners’ argument that the Eleventh Circuit’s ruling is inconsistent with Graham, noting that a result is not absurd merely because it creates an unfavorable result for a party or class of parties. Hunt’s response also rejects any notion that the Eleventh Circuit’s holding will encourage relators to wait to bring their claims because other provisions of the FCA encourage relators to promptly report fraud. Finally, Hunt acknowledges that there is an urgent need for Supreme Court review, demonstrated by the pervasive, ongoing confusion about § 3731(b)(2)’s proper meaning and application.

U.S. Chamber of Commerce Amicus Brief

In an amicus brief, the U.S. Chamber of Commerce addresses the three-way circuit split created by the Eleventh Circuit’s holding and argues that the Eleventh Circuit’s interpretation of § 3731(b)(2) was incorrect. The Chamber states that the Eleventh Circuit’s holding imposes a significant burden on its members and other FCA defendants for three reasons. First, there is significant uncertainty about whether a claim is timely depending on where the claim is filed. Second, the Eleventh Circuit’s holding is unfair to FCA defendants and deprives them of the certainty and stability that statutes of limitations are designed to promote. As a result, FCA defendants will be forced to settle non-intervened suits, regardless of the merits of the case. Third, FCA defendants will face reputational harm and substantial financial risk by having to defend against claims that may be up to a decade old.

However the Supreme Court resolves this circuit split, relators and businesses alike will enjoy greater certainty as a result. The Whistleblower Wire will continue to follow this important case and provide additional updates on later stages of this litigation.

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