Please note our NYC address has changed, see the new address in the header or on the contact page of our website.
425 Broadhollow Road
Suite 417
Melville, NY 11747

631.282.8985
Freiberger Haber LLP
420 Lexington Avenue
Suite 300
New York, NY 10170

212.209.1005

Information Learned From Government Agencies, If Reported To The Department Of Justice, May Suffice To Trigger The False Claims Act Statute Of Limitations

Print Article
  • Posted on: Oct 11 2016

Practitioners involved in qui tam litigation often encounter questions concerning when the statute of limitations begins to run. Under the False Claims Act (“FCA”), the government (or relator) must file a suit not “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.” 31 U.S.C. § 3731(b). The majority of the courts have held that “the official of the United States” means the U.S. Attorney General or his/her designees.  E.g., United States v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 593, 607 (S.D.N.Y. 2013).

Recently, a federal district court in Illinois had the opportunity to consider this issue.  Although the court adopted the majority interpretation concerning who within the government must have notice of an FCA claim, it allowed discovery into other governmental entities to determine whether the government was on notice of the alleged claims.  United States v. Kellogg Brown & Root Services, Inc., No. 4:12-cv-04110-SLD-JEH (C.D. Ill. Sept. 16, 2016).

Background:

On November 19, 2012, the government filed a lawsuit against Kellogg Brown & Root Services, Inc. (“KBR”), alleging violations of the FCA and breach of contract relating to logistical support provided by KBR to the United States Army during the Iraq war in 2004.  According to the government, KBR submitted bills from a subcontractor, First Kuwaiti Trading Company (“FKTC”), that it “knew or should have known” were “wildly inaccurate.…” Slip op. 1-2. These bills were submitted in 2004; the government, however, did not file its complaint until November 19, 2012.

KBR filed a motion to compel the government to respond to various discovery requests, including those relating to the running of the statute of limitations. KBR argued that the government’s suit was time-barred, because a government official may have had knowledge of the allegations prior to November 19, 2009.  In response, the government claimed that the action was not time-barred under the FCA’s tolling provision. See 31 U.S.C. § 3731(b)(2).

The Court’s Ruling:

The court framed the question to be resolved as “which government officials’ knowledge matters” in determining when the statute of limitations begins to run. Slip op. at 6. It began answering that question by noting that “[t]he text and structure of the False Claims Act, as well as the overwhelming weight of the case law that construes it, require a narrower reading of § 3731(b)(2) ….” Id. As such, “The official of the United States,” as used in the FCA, “means the Attorney General or her designees.” Id.

KBR argued that Section 3731(b) “should be construed as broadly as” the statute of limitations applicable to breach of contract actions. Slip op. at 7 (citing 28 U.S.C. § 2416(c)). Section 2416(c) provides that a suit is time barred after a certain period of knowledge “by an official of the United States charged with the responsibility to act in the circumstances.” (Emphasis added.) Courts have interpreted Section 2416(c) “to encompass government employees outside the Department of Justice.” Slip op. at n.11.  Looking at the two provisions, the court emphasized that they were different in text and meaning. Id. at 6-9. Noting the difference between “an official” and “the official,” the court found that the breach of contract statute of limitations applied to lawsuits filed by a broad range of government entities, while the FCA statute of limitations applied to lawsuits filed by the Attorney General or his/her designees. Id.

Having answered the question framed (i.e., “which government officials’ knowledge matters”), the court turned to when the statute of limitations is triggered, noting that the statute of limitations begins to run when “the government official charged with bringing the civil action discovers, or by reasonable diligence could have discovered, the basis of the lawsuit.” Slip op. at 7 (citing United States ex rel. Miller v. Bill Harbert Intern. Const., 505 F. Supp. 2d 1, 7 (D.D.C. 2007)). Thus, if the “relevant government official or officials knew or should have known of the basis of the FCA claims via reasonable diligence before November 19, 2009, then those claims are time-barred.” Id.

KBR sought broad discovery to show that, as noted, the statute of limitations was triggered before November 19, 2009.  KBR argued that many government agencies had investigated KBR for similar alleged misconduct. Thus, if any of those agencies “report[ed] facts that would put DOJ Civil on notice of a potential FCA claim,” it was entitled to learn of those reports. Slip op. at 12. The court agreed, holding that “KBR [was] entitled to discovery related to government communications to DOJ Civil that could tend to show DOJ Civil’s knowledge of facts that should have put it on notice of any FCA claims arising out of KBR’s alleged false claims.” Id. In so holding, the court rejected the government’s argument that only “publicly available government reports or memoranda are relevant to its knowledge” as being “unduly narrow.” Id. at 11.

A copy of the court’s opinion can be found here.

Takeaway:

The court’s decision is consistent with Rule 26(b) of the Federal Rules of Civil Procedure, which provides, in pertinent part, that the scope of discovery in a civil action encompasses “any nonprivileged matter that is relevant to any party’s claim or defense . . . .” Fed. R. Civ. P. 26(b). Whether the DOJ received information to put it on notice of the claims asserted against KBR sufficient to trigger the FCA’s statute of limitations cannot be determined in a vacuum. A court should be provided all information received by the DOJ material to the alleged claims in considering when the FCA statute of limitations was triggered. As the KBR court noted, it would be “unduly narrow” to limit the inquiry to only publicly-available information.

It remains to be seen whether other federal courts will adopt the holding and rationale of the KBR court. However, reason and fairness dictate that a defendant should be able to inquire whether the Attorney General and his/her designees received material information from other government agencies that would put it on notice of the claim being asserted.

Tagged with:

legal500
bnechmark
superlawyers
AVVO
Freiberger Haber LLP Footer Logo
Copyright ©2021 Freiberger Haber LLP | Disclaimer
Attorney advertisement | Prior results do not guarantee a similar outcome.
425 Broadhollow Road, Suite 417, Melville, NY 11747 | (631) 282-8985
420 Lexington Avenue, Suite 300, New York, NY 10017 | (212) 209-1005
Attorney Website by Zola Creative