In a long-anticipated decision–Cochise Consultancy Inc. v United States, ex rel. Hunt–the Supreme Court increased from 6 to 10 years the statute of limitations period for most whistleblowers bringing suit under the False Claims Act. The ruling greatly expands the potential exposure False Claims Act defendants face going forward.
But perhaps just as important, the decision provides a unanimous pronouncement by the Supreme Court that both intervened and non-intervened whistleblower cases are treated the same. This may prove useful for whistleblowers down the road in responding to the oft-made defense argument that non-intervened cases have less merit or should be viewed with skepticism.
The issue before the court was whether whistleblowers pursuing cases the government does not join are subject only to the traditional six-year limitations period, or whether they may also qualify for the expanded ten-year period to which the government has always been entitled (assuming it files within three years of learning of the violation). The Supreme Court stepped in to resolve a conflict among the Courts of Appeals which were all over the place on the question.
In a tightly worded opinion, relying largely on simple statutory construction, the court easily concluded the six and ten-year periods apply to both the government and whistleblowers. Any other reading, the court held, would undermine the plain text meaning of the statute. What this means for whistleblowers is significantly more time to bring a False Claims Act case and a much larger window of potential damages. Not a welcome result for the ever-increasing number of companies facing whistleblower actions where the government has chosen to sit on the sidelines.
But what may be an even more important outcome of the decision is the Supreme Court’s reaffirmation of the legitimacy and importance of non-intervened whistleblower cases. The right of whistleblowers to go at it alone, though firmly embedded in the qui tam provisions of the statute, is under constant barrage. Defendants routinely play mischief with non-intervention decisions, urging courts to read into them a lack of merit or materiality of the claims.
With this recent decision, the Supreme Court offers a direct rejoinder to this line of attack by refusing to treat intervened cases and non-intervened cases any differently under the False Claims Act. Indeed, the court flatly rejected any reading of the statute that in any way depends on the government’s intervention decision. As the court stressed, “[i]f the government intervenes, the civil action remains the same–it simply has one additional party.”
It is not surprising how the court came down here. The right to bring whistleblower actions in the name of the government is one of the hallmark provisions of the False Claims Act. It is a right Congress made clear it wanted whistleblowers to pursue, especially when the government decides to take a pass. That is why the statute provides for a significantly higher award to whistleblowers who proceed without government intervention (25-30% versus 15-25% of any government recovery).
What is surprising is that defendants continue to challenge this right or try to divine some kind of negative import when a whistleblower attempts to exercise it. Hopefully, this latest word by the high court powerfully reinforces not only the absolute right of the qui tam but the critical role Congress designed it to play as an essential part of the government’s fraud enforcement regime.
Gordon Schnell is a partner in the New York office of Constantine Cannon, specializing in the representation of whistleblowers.