Supreme Court Acts Quickly in Cochise, and Now Relators Don't Have To
Less than two months after argument, the Supreme Court held in Cochise Consultancy, Inc. v. United States ex rel. Hunt that the False Claims Act's statute of limitations tolling provision applies in non-intervened qui tam cases and only the government's knowledge counts. In other words, relators can now bring suit after the expiration of the FCA's normal six-year statute of limitations so long as the government "official . . . charged with responsibility to act" does not know (and should not reasonably have known) of the alleged fraud.
Focusing narrowly on the statutory text, the Court was unmoved by concerns that its interpretation would incentivize relators to lie in wait—allowing the government's losses (and their eventual recovery) to mount. The FCA provides that "a civil action under section 3730" may not be brought more than six years after the date on which the violation is committed or more than three years after the facts are known or reasonably should have been known "by the official of the United States charged with responsibility to act in the circumstances," up to the maximum ten-year statute of repose. Most courts of appeals had previously held that only the government could rely on the alternative "three year" tolling provision. The Eleventh Circuit disagreed and the Supreme Court granted certiorari to resolve the split.
The Supreme Court first held that the FCA's alternative limitations provision is available in non-intervened qui tam cases, reasoning that both government-initiated suits and qui tam actions are "civil actions under section 3730" and thus "the plain text of the statute makes the two limitations periods applicable in both types of suits." This means that relators, like the government, may take full advantage of the three-year provision.
Yet the Supreme Court did relators one better. Unlike the government, for which tolling stops once the requisite government official knows of the fraud, relators can take advantage of the full ten years irrespective of their own knowledge provided the government remains in the dark. The Court held the term "official of the United States charged with responsibility to act in the circumstances" does not include relators, and therefore only an actual government official's knowledge counts for purposes of the tolling provision. The Court reasoned that relators are not government "official[s]" "in the ordinary sense of that phrase" and a relator is not "charged with responsibility to act" in that he is not required to investigate or prosecute a FCA action.
The Court dismissed concerns that its interpretation could lead to "counterintuitive results" and incentivize relators to sleep on their rights, reasoning that there is "nothing unusual" about extending a relator's limitations period despite the relator's actual knowledge of fraud because "the Government is the party harmed by the false claim and will receive the bulk of any recovery." Although not addressed in the opinion, several justices had remarked at argument that relators have other incentives to bring suit promptly (such as the first-to-file and public disclosure bars and the possibility of a reduced relator's share for being dilatory in filing). We can only hope that those other mechanisms encourage relators to act quickly, given the statute of limitations seemingly will not.
© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.