CHICAGO – (January 10, 2019)— DRI – The Voice of the Defense Bar has filed an amicus brief with the U.S. Supreme Court in Cochise Consultancy, Inc. and the Parsons Corporation v. U.S. Ex. Rel. Billy Joe Hunt. The brief was filed by DRII’s Center for Law and Public Policy.
Billy Joe Hunt filed a qui tam lawsuit under the False Claims Act (“FCA”) alleging The Parsons Corporation and Cochise Consultancy, Inc. defrauded the United States in connection with work they performed as defense contractors in Iraq in 2006. The Supreme Court accepted review of this case to determine the proper deadline for filing such a claim.
The FCA allows a private citizen to sue companies allegedly defrauding the federal government. But citizens must first notify the government of the claim, allowing it an opportunity to intervene in the lawsuit on its own behalf, assuming the claim appears meritorious. Hunt reported his claim to the FBI in 2010. The government declined to intervene, and Hunt filed suit in 2013.
Defendants moved to dismiss, arguing the action was barred by the FCA statute of limitations, which provides that a civil action under section 3730 may not be brought
(1) more than 6 years after the date on which the violation of section 3729 is committed, or
(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last. 31 U.S.C. § 3731(b).
Defendants argued Hunt’s claim was barred by the six-year limitations period in Section 3731(b)(1). Hunt argued his action was timely under Section 3731(b)(2) because it was brought less than three years after he notified the government of the alleged fraud. The district court ruled that Hunt could not rely on Section 3731(b)(2), either because the United States had declined to intervene or because the limitations period began to run when Hunt learned of the alleged fraud in 2007. The district court therefore dismissed the action as untimely.
On appeal, the Eleventh Circuit reversed, holding that Hunt could rely on Section 3731(b)(2) and file suit within three years after the government learned of the claim, even though the government chose not to intervene. Circuits are split on this interpretation.
The DRI brief asserts that the language in Section 3731(b)(2) that considers when the United States became aware of the claim is not applicable in a case in which the United States does not intervene. In fact, the Eleventh Circuit’s ruling incentivizes private plaintiffs to delay notifying the government of their claims, which runs contrary to a fundamental purpose of the FCA. The FCA authorizes citizen lawsuits “to combat fraud quickly and efficiently by encouraging relators to bring actions that the government cannot or will not—to stimulate actions by private parties should the prosecuting officers be tardy in bringing the suits’”
DRI’s position also considers the history of the FCA, its harsh penalties, and its susceptibility to what the Supreme Court has called “parasitic lawsuits.” The practical consequences of the Eleventh Circuit’s ruling, if not reversed, will be to revive stale claims, make adjudication of the statute of limitations at the motion-to-dismiss stage essentially impossible, and increase the amounts of third-party discovery in FCA cases. All of these developments increase the costs of litigation and the pressures to settle non-meritorious claims, which ultimately increase the cost of providing government services.
Brief author Zach Chaffee-McClure of Shook, Hardy & Bacon LLP of Kansas City, MO is available for interview or expert comment through the DRI contact information above.
For the full text of the amicus brief, click here.
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