11th Circuit Rules on False Claims Act Statute of Limitations Period

The Eleventh Circuit recently ruled on whether a relator in a qui tam action could rely on a more generous statute of limitations, even when the government declines to intervene.  The Appellate Court held that a relator may use the statute of limitations that allows a False Claims Act (“FCA”) claim to be brought within three years from when the facts of the violation are made known to a government official with the responsibility to act on the violation.

The FCA has two different limitation periods: six (6) years after the date on which the violation is committed; or three (3) years after the date when facts of the alleged false claim are made known to, or should have been known by, the official of the United States charged with responsibility to act, but in no circumstances shall a claim be brought ten (10) years after the events in question.  Previously, the Fourth and Tenth Circuits had held that the second limitations period could only be used when the government decides to intervene in the case, meaning that a private party bringing an FCA suit when the government does not intervene must bring it within six years of the underlying events.

In ex rel. Billy Joe Hunt v. Cochise Consultancy, Inc., a qui tam relator filed an action against his former employer, claiming they had defrauded the U.S. Department of Defense for work performed as a defense contractor in Iraq.  However, the relator brought the action more than six years after the alleged fraud occurred, but within three years of when he disclosed the fraud to the government.  In moving to dismiss, the defendant-employer invoked a statute of limitations defense, arguing that since the relator had waited over 6 years from the date of the alleged fraud, and the government did not intervene in the case, the case should be barred.  The lower court agreed and dismissed the case.  The relator appealed to the Eleventh Circuit.

The Eleventh Circuit overruled the lower court, and held that the three year statute of limitations may apply to a relator’s filing even when the government declines to intervene.  In finding in favor of the relator, the Court of Appeals relied on two primary arguments: 1) that since a relator generally stands in for the United States and the government maintains significant interest and control over the case—even if it declines to intervene—applying the three year limitations period is not an “absurd” result; 2) other sections of the FCA incentivize relators to promptly report fraud to government officials, addressing a potential argument that relators may withhold information from the government to elongate the time allowed to file a lawsuit.

Finally, having determined that the three year limitations period is applicable even when the government does not intervene, the Court held that it is the knowledge of the government official, not the relator, which triggers the limitations period.