Statute of Limitations for False Claims Act Cases
The False Claims Act (FCA) is an important tool for combating fraud against the government. Under the FCA, whistleblowers can file lawsuits on behalf of the government against companies or individuals that have defrauded the government. These whistleblower lawsuits are known as qui tam actions.
But whistleblowers can’t wait forever to file a False Claims Act lawsuit. There are limits on how long after a fraud occurs that a qui tam action can be filed. This time limit for filing the lawsuit is known as the “statute of limitations.” Understanding the statute of limitations is crucial for whistleblowers considering whether to file a qui tam case.
The False Claims Act’s Statute of Limitations
The False Claims Act has a default statute of limitations of 6 years. This means a qui tam lawsuit must be filed within 6 years of the date the alleged fraud took place. There are some exceptions that can extend or toll (pause) the statute of limitations, which will be discussed later.
The 6-year statute of limitations applies to civil FCA penalties and treble damages. However, there is no statute of limitations for the government to recover actual damages sustained because of the alleged fraud. So while the ability to receive civil penalties or treble damages could be barred by the statute of limitations, the government can still try to recover actual damages no matter how long ago the fraud occurred.
When the Statute of Limitations Clock Starts Ticking
An important question is when does the 6-year statute of limitations period start running? In an FCA qui tam case, the clock starts on the date the false claim or fraudulent statement was made to the government. This is known as the “accrual date.”
For example, if a healthcare company submitted a false bill to Medicare on March 15, 2015, the accrual date for statute of limitations purposes would be March 15, 2015. A qui tam lawsuit would need to be filed within 6 years of that date, by March 15, 2021, to be within the statute of limitations.
If there was an ongoing scheme with multiple false claims submitted over time, the accrual date may be the last false claim in the scheme. For example, if false claims were submitted from January 2018 through March 2020 as part of an ongoing scheme, the accrual date would be March 2020 when the last false claim was submitted. A qui tam case could potentially use that last claim as the accrual date for the 6-year statute of limitations.
Tolling the Statute of Limitations
There are circumstances where the statute of limitations in an FCA case can be “tolled” – meaning the clock pauses and does not count toward the 6-year limit. Three potential tolling situations are:
- Fraudulent Concealment – If the defendant actively concealed the fraud, the statute of limitations is tolled until the fraud is discovered or should have been discovered.
- Wartime Suspension – The statute of limitations is suspended for any period when the U.S. is at war or Congress has enacted a resolution authorizing military force.
- Government Knowledge – If the government already knew about the fraud before the FCA lawsuit was filed, the statute of limitations is tolled. The clock restarts on the day the qui tam complaint is filed.
Properly alleging fraudulent concealment, wartime suspension, or government knowledge in the qui tam complaint can potentially extend the statute of limitations beyond 6 years.
The Statute of Limitations for Retaliatory Discharge Claims
In addition to the qui tam case for fraud, whistleblowers can also bring retaliation claims if they experienced adverse actions for investigating or reporting the fraud. Retaliation claims under the False Claims Act have a shorter 3-year statute of limitations.
The clock starts ticking on the date the retaliation took place. For example, if a whistleblower was fired for investigating fraud on September 30, 2019, they would have until September 30, 2022 to file the retaliation claim under the FCA’s statute of limitations.
How Long Can the Government Investigate?
While qui tam cases themselves have a 6-year statute of limitations, the government has more time to investigate fraud and bring its own FCA lawsuit. The government has up to 10 years from the date of the false claim to begin an investigation and file a case based on the alleged fraud.
This means qui tam relators only have 6 years to file, but the government’s own direct FCA case can be filed up to 10 years from the false claim accrual date. So the government has more time to use the longer 10-year period to investigate even after a qui tam case is filed.
When Does the Statute of Limitations Run Out?
The statute of limitations poses a use-it-or-lose-it deadline for False Claims Act cases. If a qui tam lawsuit is not filed in time, the right to sue may be gone forever. Therefore, potential relators need to act quickly once fraud is discovered.
However, the FCA’s statute of limitations is not jurisdictional – meaning courts can’t simply dismiss a case filed after the statute of limitations ran. The time limit is an affirmative defense that must be raised by the defendant. If not raised, a late-filed qui tam case may still proceed.
But relators should not rely on defendants failing to raise the statute of limitations defense. To preserve FCA claims, qui tam lawsuits should be filed as soon as practicable and well within the 6-year limitations period.
When Does the Statute of Limitations Extend?
There are limited situations where the FCA statute of limitations can be extended beyond 6 years. Amendments to the False Claims Act in 2009 and 2010 included some extensions:
- If the defendant submitted a written report of the fraud to the government, the statute of limitations is extended to 10 years from that report date.
- For claims arising from wartime contracting with the military, the statute of limitations is extended to 10 years from the date of the fraudulent claim.
Absent these statutory extensions, tolling the statute of limitations by alleging fraudulent concealment, wartime suspension, or government knowledge are the main ways to extend the time to file an FCA qui tam case past the 6-year deadline.
Why Statutes of Limitations Exist
Statutes of limitations serve important purposes in the law. As time passes, evidence may be lost or destroyed, memories can fade, and witnesses can become unavailable. Statutes of limitations encourage prompt filing of legal claims so all parties can have a fair chance to prepare their case.
They also provide certainty and finality – defendants can only be sued for so long after an alleged wrong occurred. Businesses do not want the threat of litigation hanging over them indefinitely.
For False Claims Act cases, the 6-year statute of limitations balances giving whistleblowers a reasonable time to investigate fraud and file qui tam actions, while also limiting stale claims.
How to Determine If a Case Is Time-Barred
To evaluate whether a potential FCA qui tam case may be time-barred, here are some key questions:
- When did the alleged false claims occur? This is the accrual date that starts the statute of limitations clock.
- Have more than 6 years passed from the accrual date to today? If so, the case may be time-barred.
- Are there grounds to toll or extend the statute of limitations? Fraudulent concealment, wartime suspension, government knowledge, or a statutory extension may give more time to file.
- For retaliation claims, has it been more than 3 years since the adverse employment action?
Doing a thorough statute of limitations analysis upfront can help whistleblowers make informed decisions about whether sufficient time remains to pursue qui tam cases.
Strategies for Filing Before the Statute of Limitations
To ensure FCA claims are filed on time, relators and attorneys should:
- Act promptly as soon as fraud is suspected, and quickly gather evidence and information.
- Calculate statute of limitations deadlines based on claim accrual dates.
- File the qui tam complaint well before the deadline to allow leeway.
- Properly allege tolling or extensions if the statute of limitations is close.
- Continue investigating even after filing, since new evidence can be added by amending the complaint.
By being vigilant about statutes of limitations, whistleblowers can maximize their ability to file successful FCA cases within the time allowed.
Conclusion
The False Claims Act provides a valuable way for whistleblowers to hold fraudsters accountable. But FCA cases must be filed within 6 years of the false claims, or 3 years for retaliation. Carefully analyzing statutes of limitations and filing qui tam lawsuits as early as possible is key.
Some cases may warrant tolling or extending the statute of limitations beyond 6 years. But relators should not rely on this, and instead be proactive in investigating fraud quickly and bringing timely FCA qui tam actions while the courthouse doors remain open.
With proper diligence, whistleblowers can expose fraud against taxpayers and avoid having these important cases dismissed because they were filed too late.
References
False Claims Act Statute of Limitations Analysis
Tolling the FCA Statute of Limitations
False Claims Act Statute of Limitations