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FCA and Statute of Limitations: A Puzzle for the Supreme Court
The False Claims Act (FCA), 31 U.S.C. §3729 et seq., which is more than 150 years old, was originally intended to protect the federal government from fraud perpetrated by war profiteers. Over the years, its scope has expanded to any recipient of federal dollars, especially health care companies. Since 1986, the federal government's recoveries have exceeded $59 billion in FCA settlements and judgments. DOJ, Fraud Statistics – Overview, at 1 (http://bit.ly/2GlIAvp). In 2018 alone, the total recovery was over $2.8 billion, most of which was health-care related. DOJ, Fraud Statistics – Overview, at 1, 3.
As the FCA's use increased over time, Congress strengthened and amended its provisions to add treble damages, increase the civil money penalties, and remove an intent requirement, thereby extending liability to subcontractors. See, Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (establishing the intent requirement that Congress later removed). The Supreme Court also broadened the FCA's scope, condoning "implied false certification," Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1995-96 (2016), as well as resurrecting the need for "materiality" of any fraud for a FCA claim to succeed. Id. at 2002-04.
As these changes and rulings suggest, the FCA is not a model of clarity. In a certiorari petition in United States ex rel. Hunt v. Cochise Consultancy, 887 F.3d 1081 (11th Cir. 2018), granted on Nov. 16, 2018, United States ex rel. Hunt v. Cochise Consultancy, 2018 U.S. LEXIS 6778, at 1 (Nov. 16, 2018), the Supreme Court will address an area of uncertainty that has led to a three-way circuit split regarding the FCA's statute of limitations. Depending on the outcome, FCA defendants could end up facing even more claims up to a decade old or, alternatively, have a new limitation on FCA actions upon which to rely.
The Conflict Over the Statute of Limitations
There are two types of FCA suits: 1) direct suits filed by the United States, 31 U.S.C. §3730(a), and 2) qui tam actions filed by private plaintiff relators. 31 U.S.C. §3730(b). In a qui tam action, the relator sues "in the name of the United States … 'pursu[ing] the government's claim against the defendant.'" Hunt, 887 F.3d at 1086 (quoting Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229, 1233 (11th Cir. 2008)). The recovery belongs to the federal government, but the government can allocate a certain percentage to a relator, 31 U.S.C. §3730(d)(1), (2), as an "incentive to encourage" discovery of fraud against the government. Hunt, 887 F.3d at 1087. These award provisions sometimes lead to relators bringing questionable cases in pursuit of a large settlement, as the DOJ has recognized in its recent memos about dismissal of qui tam actions. See, Dykema, The Tale of Two DOJ Memos and The False Claims Act, Feb. 2, 2018.
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