High Court Will Take on False Claims Timeliness Uncertainty

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By Daniel Seiden

Two defense contractors convinced the U.S. Supreme Court to take on a three-way circuit split involving a False Claims Act timeliness rule they said has serious practical ramifications for litigants.

By ruling that a whistleblower timely accused the contractors of perpetrating a bid-rigging scheme, the U.S. Court of Appeals for the Eleventh Circuit exacerbated the split with other circuit courts that would have rejected the case, the contractors’ petition said.

Inconsistent application of the act’s statute of limitations allows plaintiffs to forum-shop and unfairly subject defendants to different timeliness rules depending on where they are sued, the petition said.

Defendants should not be subjected to “potentially devastating False Claims Act liability in a suit filed in Miami or Los Angeles that would have been time-barred had it been filed in Charlotte or Denver,” the petition said.

Whistleblower Billy Joe Hunt backed the Eleventh Circuit’s decision to let his case proceed, but he also agreed that the case provided the Supreme Court with an opportunity to establish nationwide uniformity on false claims timeliness.

Competing interpretations “have left litigants and judges entirely at sea,” Hunt said.

The Split

A plaintiff may file a False Claims Act complaint within six years of the date on which a violation occurred, or three years after date when facts material to the alleged fraud are known or reasonably should have been known by a relevant government official.

Contractors Parsons Corp. and Cochise Consultancy Inc. said in their petition that Hunt’s case would have failed in the Fourth, Fifth, or Tenth circuits, which don’t allow a whistleblower to rely on the three-year period if the government hasn’t intervened against a defendant.

A case filed in the Third or Ninth circuits may rely on the three-year period as long the complaint is filed within three of years of when the whistleblower knew or should have known about the alleged fraud. Hunt’s case wouldn’t have survived in these circuits because he didn’t satisfy their three-year rule interpretation, the petition said.

The Eleventh Circuit standard conflicts with the first group of courts by allowing whistleblowers to invoke the three-year period even though the government didn’t intervene, the petition said.

And it conflicts with the second group of courts by saying that the three-year period doesn’t begin to run until the U.S. government—as opposed to the whistleblower—knows about the alleged fraud, the petition said.

The case is Cochise Consultancy v. United States ex rel. Hunt, U.S., No. 18-315, petition granted 11/16/18.

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