Cochise Consultancy v. U.S. ex rel. Hunt

Procedural Law
Court below: 11th Circuit

Court below: 11th Circuit

Whistleblower asks the Court to consider his claim timely

Billy Joe Hunt worked in Iraq for a government contractor. He learned of an alleged kickback scheme in which Cochise Consultancy paid bribes to get awarded a U.S. contract to clean up excess munitions left by enemy troops. Awarding Cochise the contract, he argues, ended up costing the U.S. government more money because another company was better equipped to perform the work.

Cochise v US ex rel Hunt

The False Claims Act

The federal False Claims Act exists to combat fraud on the public. Congress first passed the False Claims Act in 1863 at the height of the Civil War in an attempt to address the massive fraud occurring in the procurement of supplies and materiel for the Union. President Lincoln signed the legislation into law on March 2, 1863. It thus became known as the “Lincoln Law.”

Congress amended the Act in 1943 during the Second World War. Once again, the government attempted to combat war profiteers selling inferior products to the United States military. In 1986, at the height of the Defense Department build-up during the Reagan Administration, Congress again amended the Act to further combat procurement fraud and encourage the filing of cases. Congress recently amended the Act as part of the Fraud Enforcement and Recovery Act of 2009 and the Patient Protection and Affordable Care Act to further facilitate these goals.  

The “relator”

The statute contains a qui tam provision that allows an individual citizen or entity, referred to as a “relator,” to sue on behalf of the government. If successful, the relator receives a percentage of the recovery. Qui tam is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur which translates into "he who brings a case on behalf of our lord the King, as well as for himself.” The relator may also assert personal employment claims for wrongful termination for engaging in whistleblowing activities under of the Act.

Many legislators recognize the importance of financial incentives to promote fraud detection and prosecution. Indeed, it is believed that the qui tam model provides the greatest incentive for the whistleblower while exposing information that the government cannot detect on its own. These incentives may encourage individuals to report fraud, the occurrence of which law enforcement is unaware.

How the Act works

A party who presents fraudulent information to the U.S. government to get payment on a contract violates the False Claims Act. The relator, who learns of the fraud, may take action.

Relators must voluntarily disclose to the government the possible existence of a violation of the Act and evidence supporting those claims prior to filing a complaint. A “disclosure statement” details the allegations and evidence supporting the claim. After making the disclosures, cases are filed in court under seal. The case may then go forward if the government decides to intervene in the matter. If the government does not intervene, the relator may go forward on their own.

This case is about whether the relator filed the case on time.

The timing provision

The relevant section of the Act at issue here says a civil action may not be brought—

(1) more than 6 years after the date on which [the violation] is committed, or

(2) 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, whichever occurs last.

31 U.S.C. § 3731(b).

This case

Billy Joe Hunt, the relator in this case, filed a complaint in 2013 alleging fraud on the part of Cochise Consultancy during 2006 and 2007. The government declined to intervene in the case, and Hunt decided to go forward with it on his own. The Defendants filed a motion to dismiss the case, claiming the case was barred because it was brought too late under the Act.

Specifically, the Defendants argued that Hunt’s complaint was untimely because it was not filed within the six-year period as set forth in the Act. Hunt argued that it was filed in time because he did so less than three years after an “official of the United States” knew of the alleged fraud in 2010.   

The United States District Court, for the Northern District of Alabama agreed with the defendants and dismissed the case. In so doing, it stated that the Act did not apply because the complaint was time-barred as the government declined to intervene; or because the time period expired three years after Hunt discovered the fraud in 2006.

Hunt then appealed his case to the United States Court of Appeals for the Eleventh Circuit. The Appeals Court essentially agreed with Hunt and reinstated the case. In so ruling, the Eleventh Circuit took a unique position among other circuits. It held relators (like Hunt) can invoke the longer time period to bring in suits in which the United States itself is not a party. In addition, the three-year limitations period does not begin until the United States government learns of the alleged fraud, regardless of when the relator discovers it.

The defendants appealed this decision to the United States Supreme Court.

Applying the Act to Hunt’s case

In Hunt, the Court will resolve the issue of whether relators may avail themselves of the benefit of a longer time period to bring the case - essentially the same amount of time that the government is afforded under the Act. The Supreme Court agreed to hear the case, in part, to resolve a split that developed among the Circuits. The Fourth, Fifth and Tenth Circuits believe that relators are not the government and, as such, do not get the benefit of the longer time to file the case. The Third and Ninth Circuits believe that relators do get the benefit of a longer time to file. Most interestingly, the Eleventh Circuit takes yet another view and believes that a relator has a ten-year period in which to bring a case provided the case was filed within three years of a United States official obtaining knowledge of the material facts.

Should the Supreme Court decide that the longer time period applies to relators, it must also decide whose knowledge of the fraud starts the time period – the relator or the government’s. The defendants argue the time begins when the relator discovers the fraud. Hunt asserts that it begins to run when the government learns of the fraud.

The federal government’s view

The United States, through the Solicitor General's office, sided with Hunt.  It filed a “friend of the court” brief asserting that relators should have the benefit of the longer period with which to file an action, even where the government declines to intervene, in the interest of protecting the public fisc. The government also argues that the time period does not begin to run until the government learns of the fraud.

The Justices will hear arguments on March 19, 2019.


 
Cochise Consultancy v. U.S.

Contributor

William L. Hurlock, Esq. is the managing partner in the national law firm Mueller Law, LLC and works in the Montclair, New Jersey office. Bill practices primarily in the area of litigation focusing on False Claims Act, mass tort, product liability and commercial litigation.

 

Recent Reports: