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FMG Law Blog Line

Posts Tagged ‘FCA’

Circuits Now Split Three Ways Over False Claims Act Limitations Period

Posted on: April 26th, 2018

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 protected], Robyn Flegal at [email protected], or Ali Sabzevari at [email protected]

Leaked DOJ Memo Unearths New Strategy in Qui Tam Cases

Posted on: February 13th, 2018

By: Samantha L. Skolnick

On January 10, 2018, an internal Department of Justice memorandum (the “Granston Memo”) was leaked to the public, turning heads. The Granston Memo included an in-depth analysis of the DOJ’s position on evaluating dismissals pursuant to the False Claims Act (FCA). The Granston memo outlined the DOJ’s position on FCA claims brought by whistleblowers. Under the FCA, a whistleblower may bring what is known as a “qui tam” action on behalf of the government, which potentially allows said whistleblower to receive a share of any government recovery.  The Granston memo is particularly significant, as it provides those faced with claims of False Claims Act violations with insight into the DOJ’s stance on a range of factors for dismissing these qui tam actions.

Under the FCA, the Attorney General can dismiss a whistleblower’s qui tam action, so long as the whistleblower is given the opportunity to be heard. 31 U.S.C. § 3730(c)(2)(A). Despite this provision, the DOJ noted that this dismissal option has not been actively utilized by the DOJ.  The Granston Memo specifically addresses seven enumerated circumstances where the DOJ should be considering moving to dismiss these qui tam actions:

(1) curbing meritless qui tams;

(2) preventing parasitic or opportunistic qui tam actions;

(3) preventing interference with agency policies and programs;

(4) controlling litigation brought on behalf of the United States;

(5) safeguarding classified information and national security interests;

(6) preserving governmental resources; and

(7) addressing egregious procedural errors.

Of course, the factors above are not mutually exclusive or exhaustive. The DOJ could move to dismiss these actions for multiple or other reasons.

The Granston Memo also sheds light on the increased number of whistleblower filings per year, which appears to have triggered this concern by the DOJ of the underutilized dismissal provision of the FCA. Indeed, the Granston memo mentions the possible negative consequences of the Government’s failure to use the dismissal provision, including generating adverse decisions which affect the government’s ability to enforce the FCA.

Companies or persons facing FCA claims should be particularly aware of the Granston memo, and should argue to the DOJ and/or to the whistleblower themselves that any such claim is subject to dismissal based on the seven factors above. In some circumstances where the government has decided not to intervene, the whistleblower can obtain permission and voluntarily dismiss a qui tam action.

For more information, contact Samantha Skolnick at [email protected]