Partner Zach Chaffee-McClure and Associate Ruth Anne French-Hodson have filed an amicus curiae brief in a False Claims Act (FCA) case the U.S. Supreme Court will consider in the 2018-2019 term, Cochise Consultancy Inc. v. United States, ex rel. Hunt. The case involves the proper accrual date for the statute of limitations when the United States does not intervene in a qui tam action brought under the FCA.
Hunt, a former employee of The Parsons Corporation, filed his FCA suit in 2013 alleging that Parsons and Cochise Consultancy, Inc., defrauded the United States in connection with work they performed as defense contractors in Iraq in 2006. Hunt allegedly observed fraud firsthand. But Hunt did not tell the government his story until 2010, when the FBI interviewed him about suspected kickbacks related to a munitions-clearing contract. Hunt then alleged that Cochise bribed an Army Corps of Engineers officer to order Parsons to rescind a security services contract it had offered to ArmorGroup and award it to Cochise. When Parsons employees refused, Hunt asserted, the officer forged a directive to rescind the contract. Hunt was later charged for his role in the kickback scheme and served ten months in prison. He filed the FCA suit after his release, and the government refused to intervene.The U.S. District Court for the Northern District of Alabama granted dismissal to Cochise and Parsons, agreeing that the action was barred by the FCA statute of limitations, 31 U.S.C. § 3731(b), which provides:
- A civil action under section 3730 may not be brought
- (1) more than 6 years after the date on which the violation of section 3729 is committed, or
- (2) more than 3 years after the date when facts material to the right of action 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 event more than 10 years after the date on which the violation is committed, whichever occurs last.
Cochise and Parsons argued Hunt's claim was barred by the six-year limitations period in Section 3731(b)(1). They contended Hunt could not rely on Section 3731(b)(2) because that provision does not apply to actions in which the United States had declined to intervene. Alternatively, they argued the limitations period in such cases can be triggered by the knowledge of the relator, making Hunt's claim untimely.
The Eleventh Circuit rejected those arguments and held that Hunt could rely on Section 3731(b)(2) and file suit within three years after the government learned of the claim, even though the government chose not to intervene and Hunt had known of the alleged fraud for more than seven years. This interpretation created a three-way circuit split.
Chaffee-McClure and French-Hodson argue the Eleventh Circuit's ruling provides an incentive for private plaintiffs to delay notifying the government of their claims. That runs contrary to a fundamental purpose of the FCA: “to combat fraud quickly and efficiently by encouraging relators to bring actions that the government cannot or will not—to stimulate actions by private parties should the prosecuting officers be tardy in bringing the suits."
In their brief, Chaffee-McClure and French-Hodson also consider the history of the FCA, its harsh penalties, and its susceptibility to what the Supreme Court has called “parasitic lawsuits." The practical consequences of the Eleventh Circuit's ruling, if not reversed, will be to revive stale claims, make adjudication of the statute of limitations at the motion-to-dismiss stage essentially impossible, and increase the amount of third-party discovery in FCA cases, they say. All of these developments increase the costs of litigation and the pressures to settle unmeritorious claims, which ultimately increases the cost of providing government services.
Chaffee-McClure and French-Hodson, who are both members of Shook's Appellate Practice Group, filed the amicus brief on behalf of DRI-The Voice of the Defense Bar and the Professional Services Council-The Voice of the Government Services-Industry.
Shook's Appellate Practice Group has briefed and argued cases before nearly every federal appellate court and numerous state appellate and supreme courts, as well as administrative agencies and military tribunals throughout the United States. Our appellate team has considerable experience in filing extraordinary writs and has played a key role in developing potential revisions to federal and state court rules and, in recent years, has filed amicus briefs on behalf of organizations involved in high-profile appeals that raise significant class action-related policy and public policy questions.
The case is Cochise Consultancy, Inc. and The Parsons Corp. v. United States ex rel. Hunt, No. 18-315.