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By: Robyn Flegal
The Eleventh Circuit Court of Appeals (governing Georgia, Alabama, and Florida), recently held that the three-year statute of limitations for the False Claims Act (FCA) begins when the government learns of alleged violations of the FCA, rather than when a whistleblower/relator learns of alleged violations. As we previously explained in the FMGBlogLine, the FCA allows whistleblowers to bring claims for violations on behalf of the government in return for a share any recovery. In United States of America ex rel. Billy Joe Hunt v. Cochise Consultancy, Inc. d/b/a The Parsons Corporation, a former employee alleged that certain contractors defrauded the Department of Defense out of millions of dollars for work performed pursuant to a wartime contract in Iraq. According to the Complaint, an Army Corps of Engineer officer forged contract documents after accepting bribes and gifts. The United States declined to intervene in the lawsuit.
The United States District Court for the Northern District of Alabama dismissed the suit on the basis that Billy Joe Hunt (the employee) was outside of the three-year limitations period for FCA claims. FCA claims must be filed (1) within six years after the violation occurred, or (2) within three years of the time the appropriate government body is made aware of the violation and within ten years of when the fraud occurred. The Eleventh Circuit determined that this second, three-year limitations period applies even where the United States declines to intervene in a qui tam action. Indeed, although the employee knew of the fraud more than three years before he filed suit—his claim was timely because he filed the suit within three years of disclosing the underlying facts to the United States officials. Simply put, in the Eleventh Circuit, the limitations period begins to run when the relevant federal government official learns of the facts; when the whistleblower learns of the fraud is simply immaterial to the statute of limitations.
There is now a three-way circuit split in the Federal Courts of Appeals regarding the tolling deadlines for FCA claims. In contrast to the Eleventh Circuit’s holding above, the Fourth, Fifth, and Tenth Circuits have ruled that the three-year limitations period does not apply to whistleblowers at all. The Third and Ninth Circuits have held that the three-year period begins when the whistleblower learns of the fraud. As there is a split in the circuits, this particular action could be ripe for a decision by the Supreme Court if the defendants petition for a writ of certiorari.
As such, we will continue to monitor developments in this area. For questions please contact Michael Bruyere at email@example.com, Robyn Flegal at firstname.lastname@example.org, or Ali Sabzevari at email@example.com.