Recently, in Cochise Consultancy, Inc. v. United States ex rel. Hunt, the Supreme Court resolved a circuit split and clarified in a unanimous decision that the statute of limitations period for qui tam actions where the Government declines to intervene could extend to ten years, if the plaintiff can show when the Government knew or should have known of the material facts related to the alleged false claim. The Supreme Court noted that under the False Claims Act, 31 U.S.C. § 3731(b), civil actions must be brought either (1) within six years of when the alleged violation occurred; or (2) “[three] years after ‘the official of the United States charged with responsibility to act in the circumstances’ knew or should have known the relevant facts, but not more than [ten] years after the violation . . . .” And, whichever period is later qualifies as the limitations period, even if the Government chooses not to intervene in the action.
The first issue before the Supreme Court in Cochise Consultancy concerned whether the second limitations period (which centers around the Government’s knowledge) applies when the Government elects not to intervene. The Supreme Court held that the second limitations period applies even if the Government chooses not to intervene, which resolves the circuit split regarding this issue. The practical implication of Cochise Consultancy is that, in qui tam actions where the Government does not intervene, a relator may have up to ten years after a false claim violation occurs to bring suit.
Additionally, the Supreme Court’s decision concerned whether the qui tam relator that filed the action qualified as the “official of the United States” when claiming timeliness under the second limitations period. Such a reading would ostensibly provide for a three-year limitations period. The Supreme Court found no support for this argument and rejected it.
The Cochise Consultancy decision also represents a change in the law for government contractors that operate in the Fourth Circuit, which includes Virginia, West Virginia, Maryland, North Carolina, and South Carolina. Prior to the Supreme Court’s decision last week, the Fourth Circuit imposed a six-year statute of limitations on a relator’s claim in a False Claims Act case where the Government declines to intervene.
For advice on the False Claims Act, including how to put your business in the best position to avoid a False Claims Act investigation or lawsuit, the attorneys in PilieroMazza’s False Claims Act practice group are available to assist you. Please contact Timothy Valley at tvalley@pilieromazza.com.