An A.S. Pratt Publication FEBRUARY 2019 VOL. 5 NO. 2 pratt s Government Contracting Law Report Editor s NotE: CoNtraCtiNg ComplExitiEs Victoria prussen Spears BErry amendment s NoN-availaBility ExCEptioN trumps agency market research eric Whytsell BEtwEEN a (Cda) rock and a (Fasa) hard place: Court of FEdEral Claims decision highlights difficulties in ChallENgiNg government actions related to task orders Douglas C. proxmire and Christopher Griesedieck, Jr. gao recommends improvements to subcontracting under va s veterans First program Mitchell A. Bashur and Vijaya S. Surampudi gao Bid protests Fy18 protest statistics and a look ahead Hopewell Darneille moving relationship management to the ForEFroNt of CompliaNCE strategy Cheryl Nagowski in the Courts Steven A. Meyerowitz supreme Court grants CErtiorari to resolve CirCuit split on FCa statute of limitations Sara N. Gerber
PRATT S GOVERNMENT CONTRACTING LAW REPORT VOLUME 5 NUMBER 2 FEBRUARY 2019 Editor s Note: Contracting Complexities Victoria Prussen Spears 29 Berry Amendment s Non-Availability Exception Trumps Agency Market Research Eric Whytsell 31 Between a (CDA) Rock and a (FASA) Hard Place: Court of Federal Claims Decision Highlights Difficulties in Challenging Government Actions Related to Task Orders Douglas C. Proxmire and Christopher Griesedieck, Jr. 35 Supreme Court Grants Certiorari to Resolve Circuit Split on FCA Statute of Limitations Sara N. Gerber 38 GAO Recommends Improvements to Subcontracting Under VA s Veterans First Program Mitchell A. Bashur and Vijaya S. Surampudi 41 GAO Bid Protests FY18 Protest Statistics and a Look Ahead Hopewell Darneille 44 Moving Relationship Management to the Forefront of Compliance Strategy Cheryl Nagowski 47 In the Courts Steven A. Meyerowitz 51
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GOVERNMENT CONTRACTING LAW REPORT Supreme Court Grants Certiorari to Resolve Circuit Split on FCA Statute of Limitations By Sara N. Gerber * The U.S. Supreme Court has granted certiorari to resolve a Circuit court split concerning whether False Claims Act relators may rely on the statute of limitations in 31 U.S.C. 3731(b)(2) a limitations period which is triggered by the government s knowledge of the fraud when the government does not intervene. The author of this article discusses the Circuit split and the grant of certiorari. The U.S. Supreme Court has granted a writ of certiorari 1 to address a Circuit court split concerning whether False Claims Act ( FCA ) relators may rely on the statute of limitations in 31 U.S.C. 3731(b)(2) a limitations period which is triggered by the government s knowledge of the fraud when the government does not intervene. The Supreme Court granted cert to review the U.S. Court of Appeals for the Eleventh Circuit s decision 2 in U.S. ex rel. Hunt v. Cochise Consultancy, Inc. The Eleventh Circuit reversed the Alabama district court, reviving the relator s complaint by giving the relator the benefit of the longer limitations period in 3731(b)(2). BACKGROUND At the center of the matter is the interplay between the two limitations periods in the FCA after which a civil action under section 3730 is time-barred: (1) 6 years after the date of an alleged violation; 3 or (2) 3 years after the date when material facts 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 more than 10 years after the date of the alleged violation. 4 The relator in Cochise Consultancy filed his claim more than six years after the alleged fraud occurred, but within three years of his disclosure of the fraud to Federal Bureau of Investigation agents who had interviewed him about his role in a separate kickback scheme, to which he ultimately pled guilty and served time in federal prison. * Sara N. Gerber is an associate at Blank Rome LLP concentrating her practice on government contracts and general litigation matters. She may be reached at sgerber@blankrome.com. 1 https://www.supremecourt.gov/docketpdf/18/18-315/63033/20180907141346385_ Parsons%20-%20Petition%20for%20Certiorari.pdf. 2 Id. 3 See 31 U.S.C. 3731(b)(1). 4 See 31 U.S.C. 3731(b)(2). 38
FCA STATUTE OF LIMITATIONS THE ELEVENTH CIRCUIT DECISION In reviving the relator s claim, the Eleventh Circuit held that a nonintervened action was a type of civil action brought under 31 U.S.C. 3730 to which both limitations periods in the FCA applied. The court rejected the defendants argument that allowing a relator to file suit three years after the fraud is known by the government a nonparty to the action created an absurd result. The court reasoned that even in a non-intervened case, the government is the real party in interest, retaining control over the litigation and recovering the bulk of any damages, whereas the relator s role is that of a partial assignee of the government. In this unique context, the court held it was not absurd to apply a limitations period triggered by government knowledge. The Eleventh Circuit also considered whether a relator constitutes an official of the United States whose knowledge triggers the statute of limitations in 3731(b)(2). The court held that the language of the provision was plain and that the limitations period begins to run only when the government knew or reasonably should have known of the material facts concerning the fraud. The court stated that there was nothing in the statute to support the legal fiction that because a qui tam relator sues on behalf of the government, it becomes a government agent and the government official charged with responsibility to act. THE CIRCUIT SPLIT In granting the Cochise Consultancy defendants petition for certiorari, the Supreme Court implicitly recognized that the answer to the question of whether an FCA suit has been filed before the expiration of the statute of limitations now depends on the jurisdiction in which the case is filed. In the U.S. Courts of Appeals for the Fourth, Fifth, and Tenth Circuits, a relator must bring suit within six years of the alleged violation pursuant to 3731(b)(1), and may not rely on 3731(b)(2) in cases in which the government has not intervened. The U.S. Courts of Appeals for the Third, Ninth, and Eleventh Circuits permit a relator to rely on the limitations period in 3731(b)(2) in nonintervened cases. Unlike the Eleventh Circuit, the Third and Ninth Circuits consider a relator an official of the United States, whose knowledge of material facts triggers the running of the limitations period. THE PETITION FOR CERTIORARI The Cochise Consultancy defendants petition for certiorari provides the Supreme Court with a cogent preview of the arguments in favor of adhering to the Fourth, Fifth, and Tenth Circuit decisions. Among the most compelling are that: 39
GOVERNMENT CONTRACTING LAW REPORT (1) The text of 3731(b)(2) refers only to the United States and not to relators, indicating that Congress intended for it to apply only in cases in which the government has intervened; (2) The Supreme Court previously ruled in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 5 that the phrase a civil action brought under 31 U.S.C. 3730 did not include FCA retaliation claims, and therefore, the phrase did not in fact cover all civil actions under the Act; (3) The statute of limitations in a non-intervened action would depend upon determining the knowledge of a nonparty to the action, an absurd result; and (4) If 3731(b)(2) applied in non-intervened actions, it is not clear when the six-year limitations period would apply, rendering it insignificant, if not superfluous. CONCLUSION Regardless of the outcome, the Supreme Court s review has practical implications for the 75 percent of FCA cases in which the government declines to intervene. It should provide a conclusive answer to whether a relator can rely on 3731(b)(2), and, if so, whether the cause of action accrues based on the relator s or the government s knowledge. The Supreme Court s decision will provide uniformity in the Circuits, reduce forum shopping, and give defendants a greater degree of predictability about whether FCA cases brought against them are timely. 5 545 U.S. 409 (2005). 40