The False Claims Act: Who Is The Responsible Government Official?

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This teleforum will discuss the Supreme Court argument in United States ex rel. Hunt v. Cochise Consultancy, Inc., a case about the False Claims Act statute of limitations. In this case, the Court is examining whether a relator can rely on the tolling provision of the statute of limitations, which allows a claim to be filed up to three years after the responsible government official learns of facts material to action, even if the government never intervenes. While the case presents two narrow issues—how long can a relator wait to file suit and who is the “responsible government official” whose knowledge of the facts can trigger the limitations period—the Court’s resolution of the case could touch on several hot-button issues and create ripples that materially change FCA jurisprudence. 


Mark B. Sweet, Partner, Wiley Rein LLP

Brandon J. Moss, Associate, Wiley Rein LLP


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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Criminal Law & Procedure Practice Group, was recorded on Thursday, March 14, 2019, during a live teleforum conference call held exclusively for Federalist Society members.          


Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon's subject is "The False Claims Act: Who Is the Responsible Government Official?" My name is Wesley Hodges, and I am the Associate Director of Practice Groups at The Federalist Society.


As always, please note that all expressions of opinion are those of the experts on today's call.


Today we are very fortunate to have with us Mr. Mark B. Sweet, who is a Partner at Wiley Rein, as well as Ms. Brandon J. Moss, who is an Associate at Wiley Rein. Both are members of their White Collar practice and handle many FCA cases. After our speakers give their remarks today, we will move to an audience Q&A, so please keep in mind what questions you have for this subject, for any of the cases that they discuss, or for one or both of our speakers as well. Thank you very much for sharing with us today. Mark, I believe the floor is yours to begin.


Mark Sweet:  Thanks, Wes, and thanks for everybody for joining in. We're going to talk today about a case that is pending before the Supreme Court involving the False Claims Act. The case is scheduled for oral argument next week, so we thought this week would be a good opportunity to discuss it. It involves a few parties. On one side is a government prime contractor and subcontractor. The prime contractor is Parsons Corporation, and the subcontractor was the Cochise Consultancy. And on the other side, of course, is the United States government and a relator, a qui tam relator named Billy Joe Hunt. So we're going to talk through how the case came about, what it implicates, both the narrow questions and some of the broader implications that could be triggered by the way the Court rules.


So I'm going to start of by giving you guys a little bit of background about the False Claims Act and some of the statutory provisions there at issue, and then Brandon's going to give a little bit of background on how the facts of the case unfolded and how we got to where we are. And then we'll talk about how the Court might rule and what that might implicate, both specifically in the questions presented to it and where it could go beyond that. I think Brandon and I both are really interested in this case, not just for the issues that have been presented to the Court, but, really, where else it could go because as we've seen in some of the past False Claims Act litigation, once you present things to the Supreme Court, you never know what they're going to rule on and where they might take it. So a lot of interesting things could come out of this, and a lot of issues that we deal with every day could be affected.


So with that intro, I'll get started. So the False Claims Act, as many of you know, is the government's primary tool for fighting fraud against the government. It imposes civil liability for a variety of fraudulent acts, including knowingly submitting false claims for payment to the government, knowingly making false statements or using false documents that are material to false claims, or knowingly concealing or improperly avoiding or reducing an obligation to pay money to the government. And what makes the statute unique is that a whistleblower, or a qui tam relator as it's called, can file a suit on behalf of the government.


And the way this works is the relator would file a complaint in federal court under seal, which means it would not be known to the defendant. The complaint and any supporting materials would then be sent to the Department of Justice, either to the main Justice or a U.S. Attorney's Office. The government would then have an opportunity to investigate the allegations made in the complaint. Usually, they do this by issuing a civil investigative demand or a subpoena for documents. They can take testimony, it can do interviews, all the normal ways that they would conduct an investigation. So the defendant in that case might have awareness that these issues are under investigation, but they would not have awareness that the complaint has been filed, and they would not have an opportunity to do discovery of their own.


At the end of that investigative process -- sometimes that can take a year, two years. It can take quite a long time. It's really up to the government and however long the court gives them on extensions of time to conduct their investigation. But however long they need, they usually get. And at the end of that process, the government chooses whether they want to intervene and take over the case or not. And if they choose not to intervene, then the qui tam relator can pursue the case in the name of the government. This means that the relator can litigate the case just like any private party would litigate a case, and any money that the relator recovers at the end goes to the government with a percentage of that going to the relator personally and the relator's attorneys getting attorney's fees. In these cases, a relator can get up to 30 percent of the total recovery, so it's quite a substantial amount and quite a good incentive for a relator to bring allegations. If the government intervenes, that's capped at 25 percent. If the government does not intervene, you can get up to the full 30 percent.


Now, any False Claims Act case is subject to a statute of limitations provision under 31 U.S.C. § 3731. And the way the statute is written is a little bit confusing. It's not the clearest wording, and that's probably why we're here today talking about this and why this case is before the Supreme Court. So there are two provisions in the statute of limitations for False Claims Act. The first one says a civil action under this statute may not be brought more than six years after the date on which the violation of the statute is committed. That's pretty straightforward. It's straight six years from the date of the violation. The second provision, which is the part that's at issue specifically in this case, says a civil action under the statute may not be brought more than three years after the date when facts material to the right of the 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 ten years after the date on which the violation is committed.


So breaking that down a minute, what that really means is -- and this is what they typically call the tolling provision of the False Claims Act. But what it means is if the government doesn't find out about the case immediately, you can have up to three years, whether there's government or possibly the realtor, up to three years from the date when the responsible government official knew or should have known of the material facts. So the reason this is often an issue, as with all fraud, there's a concern that the government may not find out about it for quite some time. It may be concealed, it may just not come to their attention, and so the statute builds in some time for them to learn of the issues, investigate, and decide whether the government wants to take action.


Usually, the latter provision's pretty easy to satisfy. The government finds out, typically, in most of these cases when the relator brings the matter to its attention, and usually that happens in the form of the sealed filing, the lawsuit. So if the lawsuit's been filed and that's the first the government finds out about it, then the statute's satisfied within three years that the complaint has been initiated. And this really works in the government's favor because you can then have up to ten years under that provision of payments that you could potentially recover under the False Claims Act. So your damages, in this case, the False Claims Act gives you three times the damages suffered by the government. The damages under False Claims Act can be really high as a result.


And the problem that tends to arise, and I think the backdrop to all these cases, that these cases tend to move very slowly. And Brandon's going to talk about this Hunt case in particular and why it's moved so slowly. But in all False Claims Act cases, there's just no rush on the government to move. If the first they find out about it is when the relator files their complaint, then statute of limitations often isn't a consideration that they've got to worry about. And the courts usually don't put that much pressure on them to make a decision whether to intervene or not, so there's not much rush on the investigation. It takes time, of course, for subpoenas to be issued, and for documents to be produced, and witnesses to testify, so all this can take a few years. And by the time the witnesses testify, it's often five, eight, ten years after the alleged fraud occurred. So of course, memories start to fade, and evidence starts to disappear. And that's really what I think could be at risk here in the Hunt case.


So Brandon, why don't you tell us a little bit about what happened in the Hunt case? It's a wild case. I will say when I read it, it involves, as she's going to tell you, bribery, kickbacks, forgery. I think a blind guy even got tricked into signing a document he didn't know what he was signing. And after all of that, someone even went to jail. And yet, only lawyers could turn it into a case about the statute of limitations, so that's where we are.


Brandon Moss:  This is definitely one of the more compelling set of facts you'll ever hear, and it does make for good bedtime reading. And it's not surprising that the Court would want to take something like this. I could easily see it ending up in a lawbook one day just because kids are going to want to read it. But in any event, as it's a statute of limitations case, the best way to start describing it is by timeline. And this one takes us back to 2006. Back then, Parsons, one of the two defendants, was a government contractor who performed numerous contracts for the United States in Iraq and Afghanistan. The particular contract here was a munitions clearing contract known as the CMC contract. Basically, when the enemy would retreat or when they defeated enemies in Iraq and Afghanistan, this is the company they hired to go make sure there weren't any things left of the battlefield; bombs, IEDs, all those things, make sure it's fine.


The relator here, Billy Joe Hunt, worked for Parsons on the CMC contract. Parsons was awarded the possibility of doing a subcontract for the contract because they needed security for when they were clearing the munitions. So they bid out a subcontract, and they gave it to a company called ArmorGroup. Well, it turns out that as Hunt alleges, the other defendant in this case, knows as Cochise, was bribing an Army Corps of Engineering officer named Wayne Shaw, and directed Parsons employees, including himself, to basically give the contract to Cochise instead. Well, Parsons didn't do that. They gave the contract to the person they wanted to, at which point Wayne allegedly fraudulently drafted a rescission of that contract and then gave it to the person he wanted to give it to anyway. So eventually, Cochise did succeed in getting the contract and provided Parsons with security services from February 2006 to September 2006. For what it's worth, Hunt alleges that Parsons immediately rebid the contract when Shaw left Iraq and gave it back to the ArmorGroup.


Now, let's fast forward the story to November 30, 2010. This is a little more than four years after the fraud concluded, if you assume the end of the fraud was the end of the subcontract. That's the day when FBI agents knocked on good old relator Hunt's door to ask him about his role in another kickback scheme. And as part of that interview, Hunt told the agents about the scheme involving Parsons and Cochise, and described it as a bid-rigging scheme and bribery scheme that resulted in the government being charged for security services at a grossly inflated rate that were not performed, and that the government was charged more than a million dollars a month in additional charges, plus other fees for products that they didn't need to buy. Hunt was eventually charged for his role in the kickback scheme, which instigated the FBI knock and talk, and he spent ten months in prison.


Let's fast forward again. Now, we're at November 27, 2013. This is seven years after the alleged fraud concluded, and two years and 362 days after Hunt told the FBI about the alleged fraud.


Mark Sweet:  So you're outside the normal statute of limitations, six-year statute of limitations. And the only thing that's available at right is the longer tolling provision.


Brandon Moss:  Yep, you're still inside ten years. The only thing that can keep you alive here is the idea that the three years hasn't run yet based on telling the government. Hunt had just gotten out from prison, and he decides to file his qui tam complaint in the Northern District of Alabama. Eventually, after researching the case, investigating, the U.S. government decides to decline, and Hunt moved forward alone. The Northern District of Alabama threw out the case on statute of limitations issues. Hunt then appealed.


Now, note that the case would have been barred in circuits that have weighed in on applicability of subsection (b)(2) to date. For example, the Fourth, Tenth, and Fifth hold that a relator can't take advantage of (b)(2), so the statute of limitations would have run in September of 2012. On the other hand, the Third and the Ninth, which do allow a relator to take advantage of (b)(2), would also have barred it because they say that the three year is triggered by the relator's knowledge of the key facts because they're the ones standing in the shoes of the United States.


But here, on appeal, the Eleventh Circuit decided to do something totally different. The Eleventh Circuit concluded that the relator could take advantage of (b)(2), just like the Third and the Ninth, but that the realtor was not the official for purposes of triggering (b)(2). They reasoned that 3731(b)'s use of the phrase "civil action" under 3730 includes all types of FCA cases, government initiated, relator initiated in which the government joined, or relator initiated in which the government declined. They said that nothing in 3731(b)(2) says that the limitations period is unavailable.


That makes sense from a statutory basis, but on appeal, the defendants looked at a Supreme Court decision called Graham County Soil and Water Conservation District v. United States ex rel. Wilson. There, the Court said that the six-year statute of limitations in Section (b)(1) didn't apply on a retaliation claim under the False Claims Act, even though (b)(1) applies to, quote, unquote, "a civil action" under 3730, and the retaliation claims are authorized by 3730(h). They said that the statutory language has meaning only in context, and that context suggested that a civil action under 3730 was ambiguous rather than clear. They interpreted it to not include retaliation claims based on the statutory context in the interpretive canons. They said that statutes should be interpreted to avoid counterintuitive results.


Congress legislates against the standard rule that the limitations period commences when the plaintiff has a complete and present cause of action. In other words, Congress has to go out of its way to change the status quo. The key to that decision, of course, was the absurdity doctrine for the defendant. The ambiguous statute should be interpreted to prevent ambiguous results. In this case, it wouldn't make sense to interpret (b)(2) as allowing the springing right of action where, in theory, it's dead for a long time, but as soon as you tell the government, it springs back to life. The relator countered the argument, saying that there's plain meaning. Absurdity doctrine can't be invoked merely because the statute creates bad outcomes for a party. That's kind of the state of play right now.


Mark Sweet:  Yeah, so those cases are interesting. The relators like to assert in these cases that they are one and the same with the government, and I think this Graham County case is a good example of situations where the Court has read into the statute some daylight between the relator and the government. In other words, although the relator's bringing the case in the name of the government, they are not exactly the same. And so that's kind of what's at issue here. There's this now three-way split, which I guess is the appellate lawyer's dream. But the three-way split -- you've got circuits going in three different directions on how to interpret this second provision in the False Claims Act statute of limitations. So there's sort of three ways the appellate courts have already come out on this that the Supreme Court could follow along with.


First, it could go with the circuits that have said that longer limitations periods available to a relator-based complaint, but only when the government intervenes. The logic here would be that there's no need for a tolling provision based on the government's awareness when the relator has first-hand knowledge of the fraud. We don't need the relator sitting on a case kind of like Hunt did, going to jail, and then coming out and thinking, "You know what, maybe I should file a complaint about that."


Brandon Moss:  He's really making good use of that jail law library.


Mark Sweet:  [Laughter] Right. Six years after the fact, or seven years after the fact, when he's known about it since day one. That's bad for policy. He's just sitting there letting the damages rack up while no one's aware of what's going on. The problem with that idea is that the statute of limitations provision in the False Claims Act doesn't really distinguish between government actions or realtor actions. It just says a civil action under the statute, and that includes either one, and that includes situations where a relator starts a case and the government investigates and decides not to intervene. So I think this idea has some logic, but it's got some problems, especially if you're just reading the text of the statute.


The second way the Supreme Court could go, which is how some of the other circuits have gone, is to say that the longer limitations period is available in all suits, regardless of whether the government intervenes. Again, the logic here is the flip of what I just discussed. Statute doesn't distinguish between cases where the government intervenes or doesn't intervene. And to counter these policy concerns about the relator's sitting on their rights and waiting to file, people have correctly noted that the statute has plenty of other provisions in it to protect against that. There's what's known as a first-to-file bar. That prevents a relator for waiting too long because if another qui tam relator files the same suit first, then the second to file is out of luck and can't proceed. There are also provisions that suggest you can't be a parasitic qui tam relator. In other words, if the allegations are publicly available, then you can't file a lawsuit based on what's publicly available. So that's another risk that any relator takes when they wait to file that the information could become public, and if they wait too long, then they're not really bringing anything interesting or notable to the government's attention.


The problem, though, with this interpretation is it doesn't really make sense to trigger the statute of limitations based on someone else's knowledge. So if the relator is the one proceeding, why should it matter when the government becomes aware of the facts material to the right of action? Shouldn't the relator's knowledge be the one that triggers the statute of limitations if the relator is the only one proceeding? And I think that makes some sense, too.


Brandon Moss:  Especially given the amount of time the government sometimes takes to investigate it after the case is brought in the first place.


Mark Sweet:  That's right. That's right. And if the government has said that they're not really interested in a case, oftentimes they don't want to have to be the subject of a lot of discovery. And if the whole case is going to turn on, "Well, what was in the mind of a government official?", that could be really burdensome and painful for the government to go through when they didn't really even want to be in the case in the first place. So it puts the government in an awkward position. It puts the parties in the awkward position of having them take discovery of a third party or -- you can debate whether they're a third party or a real party in interest, but someone who's not actively participating in the litigation. So that creates problems.


So then you get to the third possible way to interpret this, which is that the longer limitations period is available in all suits, but the relator could be the, quote, "responsible government official" whose knowledge of the facts material to the suit would trigger the limitations period. In other words, the relator would have either six years to bring the suit or three years from the point the relator becomes aware of the action to bring the suit if the government doesn't intervene. This has some logic, too. The relator stands in the shoes of the government. He is suing, or she is suing, in the name of the government. And there are a lot of provisions that suggest that the two are one and the same. They're all on the same team. They recover together. So if the relator is filling that capacity as the government official in that respect charged with the responsibility to act in the circumstances, then in that case, he's filling that role, and he is then subject to the same limitations.


The problem is the language of the statute uses this unique wording that it's when the official of the United States charged with responsibility to act in the circumstances becomes aware, and that's not language that appears anywhere else. So there are other provisions that tie the relator to the government and say they're working together, but none of them uses language calling that an official of the United States. So the weakness with this interpretation is really that this is the only time the statute specifically refers to an official of the United States. So to say that that's the relator, I think, is a bit of a stretch, just from looking at the language.


And then, additionally --


Brandon Moss:  Sorry. Really quickly, not to interrupt, but what are your thoughts on the fact that if you do identify the relator as the official of the United States, are you still going to need Touhy subpoenas when you go after the government itself for things?


Mark Sweet:  Yeah, there's all kinds of practical problems.


Brandon Moss:  Because if you're equating them, then discovery's going to get really simple for the defendant all of a sudden.


Mark Sweet:  And you could -- this case is about what happens if the government does intervene, but if the Supreme Court were to say, "Yes, the relator is the official charged with the responsibility to act," does that mean any time the relator knows about something that that starts the clock on everybody, on the government, too? Because you can imagine a situation where the relator becomes aware of it but doesn't tell anyone for four years, and suddenly that provision that the government's banked on for so many years is no longer available at all, depending on how they rule.


So I think there's a lot of practical implications and problems, really, with deciding it this way. That's why I think it's unlikely that, of all these options, that the Court would go in that direction, but the district court did in this situation. They ruled that as an alternative basis for dismissing the case, so it's possible. It's out there, and certainly, the defendants would like it. It would help shorten the time period for statutes of limitations. It would simplify this in a lot of respects. When did the relator know, and how do you get from six years from the statute, from the violation occurring? So it would simplify things quite a bit.


So the Supreme Court could really go in all of these directions. Any of these would have a direct impact on how long is available. The narrow question -- how long is available to bring a suit if the government chooses not to intervene? But really, the language they use could affect how long is available for both the government or the relator to bring a case.


And then there are some other directions they could go. One of the things we learned from the Escobar case is that just because you present a narrow issue to the Court doesn't meant that they necessarily are going to stick to that narrow issue. In the Escobar case, it was about whether -- the question presented was whether there was a cognizable theory of liability for implied certifications. In other words, if your invoice to the government contains nothing in it that's false, but you're sort of impliably certifying compliance with all the terms of the contract, or all the regulations governing the program, is that a basis for saying that it was a false claim?


And the Court ruled on that issue, but then they went further and said, "Well, all of this is cabined by materiality." And they just started introducing this whole new element, really, to False Claims Act cases about is the false statement material? That was something that really had not been vetted, briefed, argued much, but that was something the Court came in and decided on its own. And that has spawned a ton of new litigation. So with that happening, we can really see the Court going in a lot of directions here. And I think that's where Brandon and I are most interested because this could affect a lot of different cases, even beyond the sort of narrow situation where the relator brings a case and the government doesn't intervene.


Brandon Moss:  Yeah. For example, one of the things I think that they might be able to address, either advertently or inadvertently, is the constant question practitioners in this area have as to who is the responsible official of the United States who needs to have knowledge to start triggering it?  Is it DOJ? Is it just the Attorney General and his designees? Or could it be a broader subset? Could it be a contracting officer or potentially the Inspector General? Anyway, there's been a great debate over this point in jurisprudence, and every defendant wants to say that the government knew about the fraud early on. And it kind of goes hand in hand recently with the government knowledge type materiality arguments, as Mark just referenced under Escobar.


Of course, the chances are that the Supreme Court will stay on the narrow track and just determine whether the official of the United States can or cannot be the relator. There's always a chance they could resolve once and for all exactly who at the United States needs to know. How could this happen? Well, one of the arguments is that the relator can use (b)(2), and if they can use it, it would increase discovery costs for the defendant who have to use Touhy requests to suss out when the relevant U.S. official actually became aware of the key facts. Basically, they're arguing that if it's based on when the government knows, then who is in the government who knows, it's going to cost more to do it, etc., etc.


Of course, counterargument in the briefing is that it's not a problem because the scope of discovery would be limited to the Attorney General and his delegates, the fraud section attorneys, the assistant U.S. attorneys, etc., etc.; attorneys who basically have the authority to address FCA allegations and who open files when they know of such allegations, so that would be the sharp cutoff point.


Mark Sweet:  That's certainly what the government would prefer. They've advocated both in this brief that they filed in this case as well as every other case that they have out there that the responsible government official is the Department of Justice, and they're the ones charged under the statutes with bringing a False Claims Act cast. They're the ones in the government who can bring a False Claims Act case, and so they should be the only responsible government official. Nobody else in the government has that kind of authority.


Brandon Moss:  And if the Supreme Court agrees, there's a chance they might include language indicating that in their decision, which would answer the question. Or if they disagree, they could try to shoot down the thought by saying that there are many others who could have the relevant knowledge. In this case in particular, given that it's the FBI here who's alleged to have the knowledge, it's unclear if it would be assumed that it would be relayed to the AUSA. I'm not quite sure what's going on, but it seems like something they might need to discuss.


Mark Sweet:  Yeah, and if you look at the contracting officer's responsibilities under the FAR, it's very broad and includes broad language like safeguarding the interests of the United States. Obviously, IGs are charged with rooting out fraud, waste, and abuse, so they are an official of the United States charged with responsibility to act under the circumstances if they become aware of fraud.


Brandon Moss:  And this is a big deal, especially for government contractors who, when they discover fraud, they have a duty to make a disclosure to their contracting officer and also to the Inspector General. If they can say those things automatically start the statute of limitations, they're going to be in a better spot.


Mark Sweet:  Yeah. And what about a Suspension and Debarment official? They have an obligation or duty to take action when they become aware of fraud. What about agency counsel, or even just the program chiefs that -- the people who run the program. They obviously have their own obligations to take action when they need to. Some of the offices of general counsel have got mission statements online that you can see, and a lot of them are broadly worded. They talk about their role in rooting out fraud, waste, and abuse, and protecting the interests of the United States. I mean, you could make the case that all of these people have that kind of responsibility.


And it doesn't necessarily have to be the Attorney General because -- and the other thing is, the statute says the official charged with responsibility to act under the circumstances. It doesn't say the Attorney General, even though it does say that in other parts of the statute. So Congress could have used that language again if they wanted to. They didn't here. I think this could, depending on what the Court says -- and they're going to have to say something about who that responsible official is. They may be very precise in what they say, but they may not. They may be broader in just talking about it, and it could end up harming the government and helping defendants quite a bit if they have some broad language as to who is the responsible government official.


Brandon Moss:  I will say this before moving it over to you to talk about other broader implications. I think it would be very ironic if the Supreme Court were to come back and say basically anyone with responsibility acting in a contracting official, etc., could be the person, when Shaw, this bad apple, is the one who instigated the whole thing. He, arguably, has responsibility to act if he saw a fraud or abuse. So it would be very odd for them to come to that conclusion under this particular set of facts, but I wouldn't put it past people.


Mark Sweet:  I do feel a little bad for Shaw. This is a motion to --


Brandon Moss:  Alleged, alleged.


Mark Sweet:  Yes. So he is dragged through the mud, absolutely. And I'm sure when the case got dismissed, he was like, "Thank goodness. I can now say it was all a bunch of baloney," and got dismissed immediately by the court, and there was nothing to it. But now this has gone all the way up to the Supreme Court, and so his name will forever live in the annals of law as the guy who did all these terrible misdeeds. And this case may never get a chance to even see a courtroom.


Brandon Moss:  Poor guy. Well, maybe poor. I don't know. Maybe he is a bad apple.


Mark Sweet:  One of the things that -- I don't think Brandon touched on this. One of the things that came up in the case was that he apparently tricked another government official who was blind into signing a document that would have rescinded the contract and allowed the other contractor to take over. So, I mean, if the guy did it, that's pretty terrible. But the facts here could not be any more sensational.


Anyway, another broad question that could be implicated here is what violation triggers the running of the statute of limitations? So if the Court is looking for ways to curtail these cases and to -- it's concerned about the due process implications of having these extremely long statute of limitations periods. And in this case, you're talking about -- this is a good example. This fraud allegedly occurred in 2006. It's now 2019, and we're still at a motion to dismiss phase. We haven't even gotten to discovery. By the time we start issuing document requests and having witnesses testify, it's going to be 13, 14, 15 years after the fact that people are supposed to remember exactly what happened. That's going to be hard to do. And I think as a defendant, you've got a real due process argument that this is unfair.


Brandon Moss:  I agree. In fact, at least in this case, you have the actions leading to the fraud and the submissions pursuant to the fraud in the same period, more or less. I could easily see a situation in which there's fraud in inducement of a contract. That's a 10-year contract. You have a 10-year statute of limitations on top of that for the payments pursuant to the contract. You file ten years later. You go through all the rigamarole with productions and investigations, and you're not looking at trial until 25 or so years later.


Mark Sweet:  I mean, it's wild, but it's actually possible. I agree. Now, so if the Court wanted to get into that and they were concerned about it, another thing they could do is to say, "Well, the violation," -- and just to remind you guys, the way the statute is written is you could bring the action up to six years after the date on which the violation occurs, or up to ten years after the date on which the violation occurs, depending on which provision you're using. But the Court could say, "Well, what is the violation?" Is it, like in this case, is it the fraud in inducement, the fraud that leads to award of the contract? Like here, it was bid rigging, and bribes, and other gifts and gratuities that led to this improper award. Other cases, it's just plain false statements that are made in a proposal. But is the violation what induced the award, or as the courts typically do, say each violation occurs every time the government receives a new claim under that contract that was improperly awarded? And that, of course, stretches out the time period that's relevant longer, and longer, and longer. Every time you're submitting new claims for payment, you're stringing out the limitations period.


So the Court could look at the word violation and say that this provision has to be curtailed at some point, and in this case, the violation occurred before the award, and so if you measure from the date of the violation, it's been more than six years, and it's been more than three years since someone became aware of that. It's been now more than ten years by the time someone files it. I don't know if that's going to save them here, but it's possible that the Court could go down that road of figuring out what is the violation.


The Court could also start thinking about what are facts material to the claim. This longer provision is based on when facts material to the right of action are known or reasonably should have been known by the government, or by the official of the United States, as it's written. What exactly constitutes facts material? Did the FBI have facts material? Did the contracting officer have facts material? So you could get into an explanation of what that is. And it may not be that they intend to rule on that basis, but just describing it, just expanding upon that could have a significant impact on statute of limitations cases in the future.


Brandon Moss:  One thing that we haven't touched on yet which I thought was interesting -- you always see these opposing briefs, and they have a lot in common. But both parties did agree on one thing here, and that's the Supreme Court had to take up this mantle to quash a practice called forum shopping. In this unique situation, this case would have dismissed in any other circuit that has taken up this question, except for I guess now the Eleventh Circuit. If this case were to have held the way it is with the three different splits, because of the broad venue provision of the False Claims Act, relators can almost bring cases anywhere. You better believe that there will be a lot of relators headed down to Florida, Alabama, etc., to file their cases, which, in some cases, there's just no nexus between the defendant and that area which can cause enormous expense, but just the concept under the rule of law that would have been something that would have been dead in any other case springing to life based on a legal construct, not the facts of the case, is just something that needs to be resolved.


Mark Sweet:  Yeah. So I think there's a lot of procedural issues here, there's some substantive implications, and it's no surprise that although on its face, I think it sounds like a narrow issue that the Supreme Court would want to take it up. And I think we'll all be really interested to see how narrowly they tailor the opinion, whether they get into some of these broader issues, and what impact this has on other cases that may not necessarily fit this fact pattern but are heavily litigated between defendants and the government, or defendants and a relator.


Brandon Moss:  Yep, agreed.


Mark Sweet:  Yeah. So with that, we'll open it up for questions if there are any.


Wesley Hodges:  Before we get to an audience question, Mark and Brandon, are there any other subjects that you'd like to dive into or cover in more detail?


Mark Sweet:  No, I don't think so. If you've got any questions, we're happy to answer them. If not, we look forward to seeing the outcome and, hopefully, we can do this again after the Supreme Court rules.


Wesley Hodges:  Absolutely. This has been one of the most thorough discussions we've had on a teleforum prior to questions, so I would imagine, just like the audience, we're very grateful for the detail you went into and for going through the subject with us. Seeing no immediate questions from the audience, we're very grateful that you all joined us for this call. Mark and Brandon, any final thoughts for us?


Brandon Moss:  No, but thank you so much for joining us. This is an important case. It'll be fascinating to see what happens.


Wesley Hodges:  Absolutely. Well, on behalf of The Federalist Society, I'd like to thank you both for the benefit of your very valuable time and expertise. We welcome all listener feedback by email at [email protected]. Thank you all for joining. This call is now adjourned.


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