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SCOTUS Unanimously Extends Statute of Limitations for Relators to File FCA Lawsuits

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SCOTUS Unanimously Extends Statute of Limitations for Relators to File FCA Lawsuits

In a 9-0 decision authored by Justice Clarence Thomas, the US Supreme Court held that nonintervention is irrelevant to whether the “government knowledge” statute of limitations applies in a False Claims Act qui tam suit. In the underlying lawsuit, a relator sued Parsons Corp. and subcontractor Cochise Consultancy, Inc. alleging that they defrauded the government on a military contract with the US Department of Defense. The relator filed suit seven years after the alleged fraud, but within three years of alerting FBI agents.

The case was initially dismissed as time-barred. The FCA requires cases to be filed within either six years of the alleged misconduct or three years after the relevant material facts are known or should have been known to the government, whichever is later. The statute also provides for a 10-year, overall limitations period. On appeal, the Eleventh Circuit broke from other circuits and held that the three-year government knowledge statute of limitations applies even where the government declines to intervene in a case. The Supreme Court affirmed the Eleventh Circuit, rejecting the defendant/appellants’ argument that the government knowledge statute of limitations applies only when the government is a party to the case, and focusing instead on the plain meaning of the provision.

Randy Brater of Arent Fox LLP commented on the significance of the decision to Law360:

“As expected, the Supreme Court focused on the plain meaning of the text of Section 3731 of the False Claims Act, affirmed the decision of the Eleventh Circuit, and harmonized the statute of limitations periods for both the government and relators. The Court also found that the three year limitations period in 3731(b) applied to knowledge of the Government and not the relator. The decision sets up a dynamic in future, non-intervened cases, where the relator and the defendants will litigate the actual or constructive knowledge of the government to determine if the statute of limitations bars the suit. As a result of Cochise, the government should have a preservation obligation, and discovery with the government about its knowledge of the underlying facts of the alleged fraud should be permissible. This holding creates yet another incentive for regulated entities to carefully consider self-disclosure to the government of actions that potentially may run afoul of the False Claims Act.”

See Randy’s commentary here.

The case is Cochise Consultancy Inc. et al. v. U.S. ex rel. Hunt, case number 18-315, in the Supreme Court of the United States.

DOJ News

Software Development Company Pays $21.57 Million to Resolve FCA Allegations

DOJ announced that Informatica LLC f/k/a Informatica Corporation will pay $21.57 million to resolve claims that it provided misleading information about its commercial sales practices that were then used in contract negotiations with the General Services Administration (GSA).  The qui tam lawsuit alleges that Informatica, which sells tools for establishing and maintaining data warehouses, knowingly provided false information about its commercial discounting practices to resellers.  The resellers in turn used the allegedly false information to negotiate contracts setting maximum prices that a vendor can charge government agencies.  As a result, according to the allegations, GSA agreed to less favorable pricing, causing government purchasers to be overcharged.  In the announcement, Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division stated, “Companies that negotiate contracts with the government must make complete and accurate disclosures . . . We will continue to hold accountable those who harm taxpayers by withholding critical information from contracting agencies.”

The DOJ press release is here.

UK Retailer to Pay $600k to Settle FCA Allegations Relating to Avoidance of Customs Duties

The U.S. Attorney’s Office for the District of Maine and the U.S. Customs and Border Protection announced a False Claims Act settlement with Selective Marketplace Ltd., an English clothing retailer.  Selective will pay a total of $610,000 to resolve FCA allegations that it improperly avoided U.S. customs duties on merchandise shipped from the U.K. to U.S. customers, including customers in Maine.  U.S. customers generally are not required to pay customs duties on shipments of merchandise worth less than $200.  The qui tam complaint alleges that Selective split up single orders worth more than $200 into multiple shipments containing merchandise under $200 in order to avoid duties.

The USAO press release is here.

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