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Argument analysis: Sorting out a thorny statute-of-limitations question in False Claims Act case

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Argument analysis: Sorting out a thorny statute-of-limitations question in False Claims Act case

The Supreme Court engaged in a relatively lively debate today over a thorny issue of statutory interpreting under the False Claims Act: how two separate statute-of-limitations provisions apply to whistleblower, or “qui tam, ” actions when the federal government has not intervened in a suit brought by a private party, or relator.

“These the different types of actions are exceptional in many ways, ” Chief Justice John Roberts find about the qui tam suits brought under the 1863 statute that was meant to combat rampant fraud by contractors during the Civil War.

Theodore J. Boutrous Jr. for petitioners( Art Lien)

Cochise Consultancy Inc. v. United States, ex rel. Hunt stems from a more recent period of U.S. military history — the deployment of U.S. forces in Afghanistan and Iraq. Whistleblower Billy Joe Hunt alleges that Cochise Consultancy and another defense contractor defrauded the federal government in a contract to clean up munitions left behind by Iraqi forces.

The FCA helps the federal government recover some$ 3 billion in fraudulent contracting expenses annually, with the government taking the lead in about one-quarter to one-third of cases, while private relators initiate the rest( with the possibility of the government stepping in at any point ).

If the government intervenes in a civil action brought by a relator under the statute, the relator is generally entitled to between 15 percentage and 25 percent of any monetary recovery. If the government deteriorations to intervene and the relator successfully prosecutes specific actions, the relator receives between 25 percent and 30 percent of the recovery.

The case before special courts centers on the FCA’s two statute of limitations provisions.

As explained in David Engstrom’s preview, the law’s original statute of limitations, Section 3731( b )( 1 ), requires suits to be filed within six years of the alleged scam. In 1986, Congress added a second ordinance of limitations, Section 3731( b )( 2 ), which permits suits up to three years after “the official of the United States charged with responsibility to act in the circumstances” learns the “facts material to the right of action, ” but not more than 10 years after the alleged hoax. Both statutes of limitations apply to a “civil action under section 3730, ” and “whichever results last” controls the case.

Hunt’s FCA suit was filed in 2013, more than six years after the alleged scam, which occurred in 2006 and 2007. Hunt argues that his case qualifies for Segment 3731( b )( 2) ’s alternative ordinance of limitations because he filed suit less than three years after the relevant “official of the United States” learned of the alleged scam in 2010.

If the federal government had intervened in Hunt’s suit, the alternative ordinance of limitations plainly would have applied. But the government did not intervene. The district court rejected the suit as untimely, but the U.S. Court of Appeals for the 11 th Circuit reversed, taking a position different from conflicting views in several other circuits. As Engstrom’s preview explained, the 11 th Circuit held that relators can invoke Section 3731( b )( 2) in suits in which the United States is not a party and that Section 3731( b )( 2) ’s three-year limitations period does not start until the government learns of the alleged scam, regardless of when the relator discovers it.

Arguing on behalf of the contractors today, lawyer Theodore Boutrous said that under the 11 th Circuit’s approach, “a relator could disguise from the United States and could wait to sue for a decade and still take advantage of the relevant principles of equitable tolling.”

According to Boutros, that approach would be incompatible with Graham County Soil& Water Conservation District v. United States, ex rel. Wilson, in which the Supreme court held that the six-year ordinance of limitations did not apply to actions brought under an FCA provision that governs retaliation.

Graham “held that these provisions must be interpreted in context , not in isolation, ” Boutrous said.

Boutrous quickly ran into difficulty. Justice Neil Gorsuch said 😛 TAGEND

I simply put my cards on the table so you can play them as you wish. In Graham, we held that retaliation claims just simply aren’t covered by this provision at all, and they don’t qualify under that introductory speech for either purposes of[ Section 3731]( b )( 1) or( b )( 2 ). Here, you’re asking us to split the baby, as it were. And we normally don’t read the same speech to mean two different things. And I believe that’s a problem you face that we did not face in Graham.

Justice Sonia Sotomayor told Boutrous that the provisions appear to give relators a longer statute of limitations than the government, but it may be important to look at the broader purpose of the FCA, which is “is to ensure that when some fraud has resulted against the U.S ., that there is recovery for the United States.”

Boutrous observed that Hunt waited seven years to file his qui tam suit, “and one of the cases that creates the conflict that brings us here was eight or nine years. It is so contrary to the very essence of equitable tolling to allow someone to lie in the weeds and disguise from the United States.”

Roberts interrupted him be asserted that seems to be more of an “academic concern.”

The relators “know if they don’t move promptly, another relator might preempt them, ” the chief justice said. “They know that if they don’t move promptly, the government itself might find out before they have a chance to file, and that would preempt their action as well. The hypothesi of a relator just sort of, as you say, waiting in the weeds I think is not a realistic one.”

Boutrous repeated several times that statutes of limitations serve important purposes.

“Ten years in civil litigation, memories fade, people — witnesses die, ” Boutrous said. “They disappear. And so the difference between six years and 10 years is a very long time.”

Justice Samuel Alito seemed most sympathetic to the contractors’ side.

“This is an interesting case because it actually does create a statutory interpretation dilemma, ” Alito said. “This is a terribly-drafted ordinance. It may serve wonderful intents, but if I were to grade whoever drafted it–anyway, I’ll pass that.”

But “you have a real problem trying to fit this into the statutory text, ” he told Boutrous.

Two attorneys argued that relators can rely on the longer statute of limitations even when the government deteriorations to intervene in a case.

Earl Mayfield, representing Hunt, said “the absurdity here would be if the statute didn’t result in the United States obtaining more funds or if there was some anomalous result.”

Mayfield said that Congress has “built a statutory strategy that restricts the very harms” that petitioners raise.

“Virtually all relators bring their suits … as soon as they get a lawyer who is able to identify the cases of fraud and bringing it forward, because otherwise … they’ll lose everything, ” he said. “It would be like taking a lottery ticket and falling it in the toilet. No one does that. And at the end of the day, every time a relator acts , no matter when he does it, whether it be year one, year five, or year ten, it is the government that ultimately benefits.”

Matthew Guarnieri, an deputy to the U.S. solicitor general, also argued in support of Hunt’s position.

“The key thing to keep in mind” with respect to the policy outcome, Guarnieri said, “is that a relator allowed to sue to vindicate an interest of the United States. The United States is the injured party in all of these cases. The United States is a real party in interest regardless of whether or not it elects to intervene in the action, the majority of any recovery would go to the United States. And in that context, it made good sense that Congress chose to construct the tolling rule in( b )( 1) applicable based on the knowledge of the injured party; that is, the United States.”

Despite some persistent questioning from Alito, both Mayfield and Guarnieri apparently felt confident enough in their arguments to finish well before their time had expired.

***

Past case linked to in this post 😛 TAGEND

Graham Cty. Soil Water Con. v. U.S. ex Rel. Wilson, 545 U.S. 409( 2005)

[ Disclosure: Goldstein& Russell, P.C ., whose lawyers contribute to this blog in various capabilities, is among the counsel on an amicus brief in support of the respondent in this case. The author of this post, however, is not affiliated with the firm .]

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