The U.S. Supreme Court ruled unanimously in favor of a whistleblower suing a Defense contractor on the government’s behalf in a decision that extends the statute of limitations for whistleblowers whose False Claims Act cases the Justice Department declines to join.
The May 13 ruling allows whistleblowers the same grace period enjoyed by the federal government, extending the statute of limitations for filing a False Claims Act lawsuit by up to 10 years when the government decides not to intervene in the case.
As Bloomberg Law explains, under the False Claims Act, a case must be filed within six years of when the violation occurred, or three years after the date when the material facts are known or reasonably should have been known by a relevant government official “with responsibility to act in the circumstances,” but nevertheless within 10 years of the alleged violation, whatever the situation.
The Supreme Court ruling holds that a whistleblower pursuing a False Claims Act case on behalf of the federal government enjoys the same amount of time to file a case as the government would have if acting alone or in coordination with a whistleblower.
Up until the Supreme Court’s decision, courts provided varying interpretations of the statute of limitations in cases the government has declined to join. The False Claims Act allows whistleblowers to continue to pursue their claims even when, after investigating, the government chooses not to intervene. Because of the different interpretations, the statute of limitations has varied in such cases.
In the case at the center of the Supreme Court’s decision, Cochise Consultancy v. U.S. ex rel. Hunt, whistleblower Billy Joe Hunt sued his former employer Parsons Corp. and subcontractor Cochise Consultancy Inc., alleging that they defrauded the government while performing a $60 million munitions clearing contract in Iraq, according to Bloomberg Law.
Mr. Hunt alleged that Cochise landed the subcontracting work from Parsons by providing illegal gifts to an Army official – a violation of the False Claims Act that rendered the companies’ billings to the government for the contracted work false. Mr. Hunt alleged the fraud started sometime before 2006 and continued until early 2007.
A district court tossed the case saying it had failed to satisfy the False Claims Act six-year statute of limitation period because Mr. Hunt couldn’t rely on the government’s three-year knowledge period when it declined to intervene.
According to Bloomberg Law, “The defense contractors that were the defendants in the underlying case argued that the original statute of limitations of six years from the time of the alleged violation should apply – not a second, more lenient statute of limitations passed by Congress in 1986 out of concern that frauds were not coming to light in time.”
The 1986 statute permits suits up to three years after “the official of the United States charged with responsibility to act in the circumstances” learns about the alleged fraud but not more than 10 years after the events.
Among other issues, the defendants argued that the longer statute of limitations would encourage whistleblowers to “lie in the weeds and conceal from the United States” their knowledge of fraud, hoping for a bigger whistleblower award in the end.
Justice John Roberts refuted that argument, saying that whistleblowers “know that if they don’t move promptly, the government itself might find out before they have a chance to file.” or someone else might find out about the fraud and file suit, thereby preempting any action a whistleblower could take.
Beasley Allen has a whistleblower litigation team experienced in handling these often complex cases. If you feel you have first-hand knowledge of fraud being committed against the government, you may be able to bring a claim. It is important to talk to a lawyer before you take any action. Contact Lance Gould, Larry Golston, Leslie Pescia or Tyner Helms in our Consumer Fraud Section for a confidential evaluation of your claim.
Additional source: Supreme Court