Six years from accrual. Three years from discovery. And never longer than ten years.
Despite the statutory language imposing time limits on the government’s pursuit of False Claims Act violations, courts continue to bend over backwards to give the government more time to assert them. The decision in United States ex rel. Sansbury v. LB&B Associates, Inc., No. 07-251 (D.D.C. July 16, 2014) [pdf] allowed the government a total of 14 years from the date of the first alleged false claim.
We hope that the Supreme Court will restore some sanity to the enforcement of the FCA limitations period in its decision in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, No. 12-1497. We discuss the issues in that case in an earlier post. But we still have to wait a while for that. Argument in the Carter case is scheduled for January 13, 2015.
[UPDATE: On May 26, 2015, the Supreme Court reversed the Fourth Circuit’s decision in Carter and held that the Wartime Suspension of Limitations Act is limited to criminal offenses. Kellogg Brown & Root Services, Inc. v. Carter, No 12-1497 (U.S. May 26, 2015) [pdf]. Our discussion of the Carter decision is available here.]
The FCA limitations and tolling framework
Sansbury is an unusual case that is based on the intricacies of the FCA’s limitations and relation-back provisions. Before getting into the facts of the case and the holding, here’s a breakdown of those provisions.
According to the text of the False Claims Act (31 U.S.C. § 3731(b)), the limitations period applicable to civil FCA actions is the later of: (1) 6 years after the date on which the violation is committed; or (2) 3 years after the date when the material facts giving rise to the cause of action are known or reasonably should have been known by the U.S. official responsible for acting on FCA violations (i.e. DOJ official), but in no event more than 10 years after the date on which the violation is committed.
But these may not be real deadlines. Even without the tolling that that may be available under the Wartime Suspension of Limitations Act, the government may get several additional years to make a decision on whether to intervene in a whistleblower’s qui tam suit. If the whistleblower’s original action is timely under § 3731(b), the government’s intervention complaint “relates back” to the date of the initial complaint. Even if the government takes three years to file its intervention complaint, it is deemed to have been filed on the date of the original suit. The relation back provision appears in 31 U.S.C. § 3731(c).
The facts in Sansbury
The decision in Sansbury shows how the relation back provision can give the government a 14-year limitations period. The case involved a qui tam action initiated by a former employee of LB&B Associates—Steven Sansbury—who claimed that LB&B fraudulently obtained its certification to participate in the SBA’s 8(a) program in 1994. Sansbury claimed that LB&B misrepresented that the company was owned and controlled by Lily Brandon (an Asian Pacific American), when in reality her husband actually controlled the company.
Sansbury first brought suit in the Maryland federal court in December 2004. The government reviewed Sansbury’s claims at that time and ultimately decided not to intervene in May 2006. Sansbury later filed another qui tam action in the D.C. federal court in February 2007. The government investigated again, and, four years later, decided to intervene. The government’s April 2011 intervention complaint asserted FCA violations going back to February 1997.
LB&B moved to dismiss the complaint as to all claims prior to February 1, 2001, based on the FCA’s six-year statute of limitations. LB&B argued that both Sansbury’s and the government’s claims before that date were time-barred.
The government argued that the claim was timely because the FCA allows qui tam relators to take advantage of the discovery rule in § 3731(b)(2). In the government’s view, the fact that the relator had knowledge of a violation does not foreclose the assertion that the FCA complaint is timely if it is filed within three years after the government learned the material facts. As long as Sansbury’s original February 2007 qui tam complaint was timely, the April 2011 intervention complaint must relate back to Sansbury’s complaint and be treated as if it were filed in February 2007. In the government’s view, allegations of False Claims Act violations going back to February 1997 were timely.
Government’s 14 year-old FCA claims were timely
The court acknowledged that the government “provided no support for its theory.” But it nevertheless accepted the government’s argument. An intervention complaint filed in April 2011 properly included “claims dating back to February 1, 1997.”
The court noted that there were some decisions allowing relators to take advantage of the 3-years-from-discovery rule in § 3731(b)(2). While they reflect a minority opinion, the court accepted their logic:
This view, while not a majority view, does offer some support for the Government’s theory—if the Relators here can take advantage 3731(b)(2), their initial complaint was filed within three years of the date when the Government first became aware of the claims. And if the Government’s complaint in intervention relates back to the date the Relators’ complaint was filed, then the Government’s claims can span as far back as February 1, 1997.
The court further reasoned that measuring the FCA’s limitations period “by the government’s knowledge, and never the relator’s, makes sense because it means that the government will be able to recover upon the maximum amount of claims within the overall ten year repose period.”
We’re hoping the Supreme Court will restore some sense to the issue next year.