The US Supreme Court issued its decision on May 13 in Cochise Consultancy v. United States ex rel Hunt, unanimously holding that the three-year tolling provision in 31 U.S.C. 3731 (b)(2) applies in favor of relators in declined FCA cases. This decision resolves a three-way split in the circuits on whether relators may have up to 10 years to pursue allegations in declined whistleblower cases.
At the oral argument held March 19, spirited questions from the justices gave a good heads up that the Supreme Court did not want to recognize different limitation periods for FCA actions, notwithstanding some strong judicial decisions in different circuits that have done so in recognition that the tolling provision on its face appeared to be for the benefit of the government only
The Court had no trouble concluding, however, that the three-year tolling provision applies to intervened and non-intervened actions based on the fact that the statute simply does not make a distinction for civil actions filed by the government or the relator under Section 3730 of the statute that authorizes the US Attorney General to bring a civil action in 3730(a) and authorizes private relators to bring a civil action in 3730(b). The Court also declined the invitation to label relators as responsible government officials to conform to the language of three-year tolling provision as that would open another muddle for the statute – a strategic argument advanced by Cochise for which there is clear negative precedent as Justice Thomas recognized in the opinion.
Big picture, the decision expands the exposure period to the 10-year statutory endpoint in intervened and declined qui tam cases. This increases the exposure period in declined cases. More significantly, a longer limitations period may further exacerbate real world inequities related to excessive seal durations and partial interventions, both practices not intended by the statute. It may artificially up the settlement leverage in some declined cases, which are often declined after years of costly investigative effort by the government. This odd result then may be a good reason for Congress to fully examine the credible issue of “procedural inequity” in the modern FCA statute that contributes to its gross inefficiencies and excessive costs in processing these cases. Since the 1986 amendments, government declinations related to whistleblower filings have remained steady in the 75-80% range. The tiny subset of cases successfully pursued after declinations do not justify the procedural inequities of longer limitations, longer seals periods, or partial intervention decisions that allow piecemeal pursuits of declined allegations.
Check out our recent LawFlash on the decision and our earlier LawFlash that discusses the Supreme Court’s review.