Yesterday, the Supreme Court issued its decision in Cochise Consultancy, Inc. et al., v. United States, ex rel. Hunt, No. 18-315 (May 13, 2019), resolving a circuit split on the application of the statute of limitations for False Claims Act (FCA) cases brought by a relator but not pursued by the Department of Justice (DOJ). When the DOJ declines to intervene in an FCA case, a relator may still pursue the action and any recovery belongs to the government, minus up to a 30% share for the relator. The False Claims Act, 31 U.S.C. § 3729 et seq., contains a six year statute of limitations, however that period may be extended up to 10 years in circumstances where the “official of the United States charged with responsibility to act” did not know, and reasonably should not have known, of the facts giving rise to the violation. 31 U.S.C. § 3731(b)(2). The question in Cochise was whether a relator could utilize the discovery rule extension provided in 31 U.S.C. § 3731(b)(2) if the DOJ declined to intervene and pursue the action.
The Supreme Court held that 31 U.S.C. § 3731(b)(2) does apply in a relator-initiated suit in which the government declines to intervene. In addition, the Court rejected defendants’ argument that the relator was himself the “official of the United States charged with responsibility to act” and therefore 31 U.S.C. § 3731(b)(2) would not apply as he had knowledge of the facts underlying the allegations.
The Supreme Court’s decision is unlikely to have far-reaching effect, as the number of False Claims Act cases that are: 1) brought by a relator more than six years after the violation occurred; 2) investigated and declined by the DOJ; and 3) still pursued by the relator notwithstanding the DOJ’s declination, are few and far between. However, the decision does put whistleblowers on equal footing with the DOJ in non-intervened cases when defendants raise statute of limitations defenses. In addition, the decision makes it more challenging for defendants to promptly dispose of a category of cases that are unlikely to succeed in the end, conduct that is both old and that the DOJ declines to pursue.
Perhaps of most significance is what the Supreme Court’s decision did not do. Unlike the Supreme Court’s 2016 decision in Escobar, in which the Court veered into unexpected territory that caused shockwaves to reverberate through the FCA landscape, the Cochise decision was short, measured, and did not stray beyond the issues in dispute.
Derek Adams is a former Trial Attorney with the Department of Justice, Civil Fraud Section, and is a partner in the firm’s False Claims Act practice. Derek has extensive experience with False Claims Act matters, and can be reached at email@example.com or (202) 466-8960 if you have any questions or need help with FCA compliance, investigations, or litigation.