Cochise Consultancy Inc. v. United States, ex rel. Hunt

DOES 31 U.S.C. § 3731(B)(2)’S EXTENSION OF THE STATUTE OF LIMITATIONS APPLY TO RELATORS IN FCA SUITS IN WHICH THE UNITED STATES IS NOT A PARTY?

Cochise Consultancy, Inc. and Parsons Corporation (“Cochise and Parsons”) contend that Section 3731(b)(2) may only be used to extend the statute of limitations when the United States is a party to the case. Cochise and Parsons assert that when Section 3731(b)(2) is read in light of its history, purpose, and statutory structure, it is clear that Congress did not intend for relators to benefit from Section 3731(b)(2) when the United States is not a party in an FCA case. Any other reading of Section 3731(b)(2), Cochise and Parsons argue, is a hyper-literal approach that goes against the Court’s contextual interpretation of Section 3731(b)(1) in Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson. Relying on historical context, Cochise and Parsons note that Congress copied Section 3731(b)(2)’s language from 28 U.S.C. § 2416(c), a provision that suspends the statute of limitations for claims filed by the United States. Additionally, they note that the primary purpose of the FCA’s 1986 amendments was to incentivize prompt reporting by relators, and a literal reading of Section 3731(b)(2) would have the opposite effect. Relying on the statutory structure of Section 3731, Cochise and Parsons further argue that the Court in Graham has already held that for the purposes of Section 3731(d), the phrase “any action brought under Section 3730” in fact refers only to actions in which the United States is a party. Thus, in Graham, Cochise and Parsons note that the Court prioritized a contextual interpretation of Section 3731(b)(1) over a literal interpretation in Graham to avoid a counterintuitive result. For example, Cochise and Parsons assert that the Graham court affirmed the statutory interpretation that most closely aligns with the default rule on statutes of limitations. Cochise and Parson argue that the same approach should be used to interpret Section 3731(b)(2). A literal interpretation here, Cochise and Parsons caution, would result in Section 3731(b)(2) enabling relators to delay filing suit for up to ten years, thereby incentivizing relators to wait longer to report fraud against the United States given that a relator’s monetary reward under the FCA increases with the severity of the fraud reported. Cochise and Parsons further claim that in light of United States v. Texas, if Congress intends a statute to depart from a common-law principle, the statute must be written so that it directly addresses this departure. Cochise and Parsons highlight the default rule that statutes of limitations begin with the plaintiff’s knowledge. Given this rule, Cochise and Parsons argue that Congress did not intend for relators to use Section 3731(b)(2) in non-intervened cases because the statute of limitations would then be tied to the knowledge of the Government, a non-party. Furthermore, Cochise and Parsons emphasize the absence of language clearly allowing relators to rely on Section 3731(b)(2) in non-intervened cases.

Hunt counters that Section 3731(b)(2) always applies to relators, regardless of whether the United States is a party. Hunt argues that because the statute’s language is plain, the Court does not need to resort to a contextual interpretation of Section 3731(b)(2), and instead the Court is obligated to enforce the statute according to its literal text. To support this argument, Hunt first notes that FCA suits are always considered civil actions, regardless of whether they are brought by the Government or by a relator. Hunt then provides that the two statutes of limitations for civil actions are presented in the alternative, and thus both statutes of limitations must be available to relators, even though relators are not explicitly named in Section 3731(b)(2). Hunt asserts that Cochise and Parson’s reliance on Graham is improper, because that case dealt with statutory ambiguity, and neither party has asserted that Section 3731(b)(2) is ambiguous. Hunt contends that his reading of Section 3731(b)(2) conforms with default statute of limitations principles because only a plain language reading of Section 3731(b)(2) promotes predictability, transparency, and certainty regarding when the relevant statute of limitations would be triggered in an FCA suit. Hunt further explains that the Court should look beyond a statute’s plain meaning only when such a result would (1) make the statute unconstitutional, (2) lead to an absurd result, or (3) conflict with congressional intent. Hunt argues that the first concern is not implicated in this case, and the latter two concerns have extremely high bars that this statute does not meet. Hunt contends that Cochise and Parsons’ “counterintuitive results” do not rise to the level of an “absurd result” given that the Court has routinely held that a statute’s clear language applies even where undesirable or burdensome outcomes result. Hunt asserts that a contextual interpretation of the statute in fact would cut against Cochise and Parsons. He supports this assertion by arguing that the FCA’s structure places a relator and the Government on the same level. Hunt contends that his interpretation of Section 3731(b)(2) aligns with the purpose of the 1986 FCA amendments, which were intended to strengthen a private actor’s ability to reveal fraud against the Government. Hunt contends that increasing a relator’s ability to bring an FCA claim strengthens the Government’s ability to detect complex fraud only disclosable by a relator. Hunt argues that, at its worst, the legislative history of Section 3731(b)(2) is inconclusive to determine congressional intent as to whether relators and the Government should be placed on the same level in FCA suits. Hunt contends, however, that a literal interpretation of Section 3731(b)(2) cannot be considered irreconcilable with congressional intent where the legislative history of the statute is inconclusive.

SHOULD THE RELATOR’S KNOWLEDGE OF THE FRAUDULENT ACT TRIGGER § 3731(B)(2)’S THREE-YEAR STATUTE OF LIMITATIONS?

Cochise and Parsons contend that, if the Court holds that Section 3731(b)(2) applies even when the United States is not a party, the relator’s knowledge of the fraudulent act against the Government should trigger Section 3731(b)(2)’s three-year statute of limitations. When the United States is not a party, Cochise and Parsons assert, a relator protects the interests of the United States by filing an FCA claim and thereby functions as a designated agent of the United States. Cochise and Parsons cite dictionary definitions to note that the term “government official” includes individuals who have been authorized or appointed to serve as a proxy for the Government by carrying out the Government’s interests. Given this understanding of “government official,” Cochise and Parsons contend that a relator pursuing an FCA claim in a non-intervened case is necessarily a proxy, and therefore an official of the United States. In furtherance of their argument, Cochise and Parsons note that a default statute of limitations is not triggered by a non-party and thus, if the United States is not a party, only a relator may trigger Section 3731(b)(2)’s three-year statute of limitations.

Hunt rejects Cochise and Parsons’ argument that the knowledge of a private relator should trigger Section 3731(b)(2)’s statute of limitations. In support of this contention, Hunt asserts that, where the United States is not a party, the FCA essentially divides one plaintiff into two separate actors—the relator and the Government—and only the Government should be considered a “real party in interest” because only the Government’s substantive rights are at stake in an FCA suit. In other words, Hunt argues that in an FCA suit, only the Government is a victim and a relator may only bring a suit on behalf of the Government. Due to this reasoning, Hunt purports, only the Government’s knowledge should be considered relevant for the purposes of triggering Section 3731(b)(2)’s statute of limitations. Moreover, simply declining to join an FCA suit, Hunt claims, should not be considered an affirmative appointment of a relator as a proxy for the United States. Applying a plain-language interpretation of Section 3731(b)(2), Hunt contends that a relator cannot be considered a United States official when the United States is not a party because the statute’s plain language does not say anything to this effect.