DOJ Backs Long FCA Filing Limit At Supreme Court

 In False Claims Act, Government Fraud, Recent News

The U.S. Department of Justice is endorsing a relatively long time limit for whistleblowers to launch False Claims Act suits, telling the U.S. Supreme Court that FCA cases not joined by the government don’t need to start sooner.

In an amicus brief on Friday, the DOJ sided with a defense industry whistleblower in a dispute over the FCA’s statute of limitations that the Supreme Court has agreed to resolve. According to the amicus brief, there’s no clear sign that the statute of limitations is shorter for whistleblowers, unlike other FCA provisions that obviously treat whistleblowers differently.

“Where the [FCA] subjects [whistleblower] suits to requirements or limitations that do not apply to government actions, it does so expressly,” Friday’s brief said, adding that the disputed FCA section “does not distinguish between [whistleblowers] and the government.”

The case filed by a whistleblower manager named Billy Joe Hunt accuses Parsons Corp. and Cochise Consultancy Inc. of defrauding the U.S. Department of Defense in connection with a munitions cleanup contract. Hunt filed suit in late 2013 alleging fraud that ceased in early 2007, placing him outside the FCA’s usual six-year limitations window.

But the FCA contains an exception for when the government didn’t learn of fraud until later, allowing suits to be filed as much as 10 years after wrongdoing occurred. At issue is whether that exception applies to suits in which the DOJ declined to intervene, as happened in Hunt’s case.

In Friday’s brief, the DOJ said there’s no reason to think that the intent of the exception — punishing fraud that’s hard to detect — shouldn’t apply to cases that whistleblowers handle without government help.

“Nothing in the legislative record suggests that Congress intended to shield wrongdoers from the [exception] when the United States relies on a [whistleblower] to prosecute an action,” the DOJ wrote.

The Eleventh Circuit sided with Hunt — who went to prison for unrelated fraud — but there’s a recognized circuit split on the issue.

Parsons and Cochise have warned that recognizing the exception would encourage whistleblowers to hold off on informing the government so that more fraud occurs and damages increase, potentially resulting in a heftier whistleblower reward. But the DOJ on Friday called that concern “unfounded.”

According to the DOJ, whistleblowers would still have “substantial incentives to report fraud to the government and to file suit expeditiously.” As one example, it noted that whistleblowers are typically blocked from pursuing FCA cases if someone else beats them to the courthouse with the same allegations.

The case also involves the fact that the FCA exception is triggered when wrongdoing comes to the attention of an “official of the United States.” As part of their argument, Parsons and Cochise say that a whistleblower should be treated as such an “official,” which would make the clock start running sooner.

But the DOJ on Friday rejected that interpretation, telling the Supreme Court that a private whistleblower “is not an ‘official of the United States’ in any sense of that term.”

Earl N. Mayfield III of Juris Day PLLC, counsel for Hunt, told Law360 on Monday that he is “very pleased” that the DOJ is “interpreting the False Claims Act’s statute of limitations exactly how Congress wrote it.”

Attorneys for Parsons and Cochise could not immediately be reached for comment on Monday.

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