Supreme Court Delivers Important Victory for Qui Tam Whistleblowers

On May 13, 2019, the Supreme Court of the United States, in a unanimous decision, delivered an important victory for qui tam whistleblowers.  United States ex rel. Hunt v. Cochise Consultancy, Inc., No. 18-315 (decided May 13, 2019) (referred to as “Hunt”). The decision, authored by Justice Clarence Thomas, held that private qui tam whistleblowers are entitled to the extended statute of limitations period in the federal False Claims Act (“FCA”) that many federal courts had previously reserved  only for FCA lawsuits filed by the government.  This decision is important because: (1) it affords whistleblowers the same amount of time as the government to file a claim against those who defraud taxpayer-funded programs; and (2) it resolves a split in the lower federal courts as to how to interpret the statute of limitations provisions in the FCA.

            The Supreme Court’s decision resolves the application of the FCA’s statute of limitations provisions, which provide:

“(b) 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.” 

31 U.S.C. §3731(b).

            While federal courts have unanimously applied the 6-year statute of limitations to qui tam lawsuits, there was a split between lower federal courts as to whether section 3731(b)(2)’s 3-year limitations period also applied to qui tam lawsuits.  In its decision, the Supreme Court unanimously held that it does.

            Justice Thomas, writing for the Court, held that “both Government-initiated suits under §3730(a) and relator initiated suits under §3730(b) are “civil action[s] under section 3730.  Thus, the plain text of the statute makes the two [statute of] limitations periods applicable to both types of cases.”  Hunt Opinion, p.5. 

            The Supreme Court also made clear that when applying the 3-year limitations period in section 3731(b)(2) the relator’s knowledge of the fraud does not start the clock on the statute of limitations because private relators are not “responsible official[s] of the United States charged with responsibility to act.”  Hunt Opinion, p.8-9.  This decision is important because whistleblowers, many of whom are employees working for the defendant, might gain knowledge of the fraud long before “the responsible government official.”  The Supreme Court’s decision makes clear that the statute of limitations clock under Section 3731(b)(2) of the FCA does not begin to run as a result of the private whistleblower’s knowledge of the fraud.

            This decision will ensure that whistleblowers who file FCA lawsuits across the United States have the full benefit of the extended statute of limitations period in Section 3731(b)(2).  This will allow all whistleblowers more time to file their lawsuits and will ultimately enhance the effectiveness of the FCA’s qui tam provisions in combatting fraud, waste, and abuse in government-funded programs, like healthcare and national defense.

            On a related note, the Supreme Court’s decision appeared to signal a resolution of another, unrelated challenge to the FCA’s qui tam whistleblower provisions.  In United States ex rel. Polukoff v. Intermountain Health Care, Inc., No 18-911, the defendant had filed a petition for certiorari to the Supreme Court arguing that the qui tam whistleblower provisions in the FCA were unconstitutional as they violated the “Appointments Clause” in Article II of the Constitution.  The “Appointments Clause” specifies the permissible means of appointing “Officers of the United States” to public offices “established by Law.” U.S. Const. Art. II, § 2, Cl. 2.  Intermountain argued in its petition that the FCA’s qui tam provisions improperly appointed private citizens as “Officials of the United States.”  While similar challenges had previously been rejected by numerous federal courts, this case caught the eye of many when the Supreme Court ordered the whistleblower and the United States to file a response to Intermountain’ s petition.  Many observers questioned whether the Supreme Court was signaling its interest in taking up this constitutional challenge to the FCA’s qui tam provisions. 

While the Supreme Court’s decision in Hunt does not specifically reject the arguments made by Intermountain, Justice Thomas clearly stated that “a private relator is not an ‘official of the United States’ in the ordinary sense of the phrase.  A relator is neither appointed as an officer of the United States [] nor employed by the United States.  Indeed, the provision that authorizes qui tam suits is entitled ‘Actions by Private Persons.”  Hunt Opinion, p.8-9.  This portion of the Hunt decision appears to flatly reject Intermountain’ s challenge that the qui tam provisions violates the Constitution’s “Appointments Clause.”  However, the Supreme Court may not get to rule directly on Intermountain’ s petition.  On April 29, 2019, Intermountain requested that the Supreme Court defer its petition because it has reached a settlement in principle of the underlying FCA lawsuit, and its petition may become moot.

Thus, the Supreme Court’s unanimous decision in Hunt delivers two important victories for qui tam whistleblowers under the federal False Claims Act.