Amicus Curiae Brief — Cochise Consultancy, Inc., et al., Petitioners v. United States, ex rel. Billy Joe Hunt

No. 18-315

IN THE SUPREME COURT OF THE UNITED STATES

_______________

COCHISE CONSULTANCY, INC. AND

THE PARSONS CORPORATION

Petitioners,

v.

UNITED STATES OF AMERICA EX. REL. BILLY JOE HUNT,

_______________

Respondent.

On Writ of Certiorari

to the United States Court of Appeals

for the Eleventh Circuit

_______________

BRIEF OF DRI-THE VOICE OF THE DEFENSE

BAR AND THE PROFESSIONAL SERVICES

COUNCIL–THE VOICE OF THE GOVERNMENT

SERVICES INDUSTRY AS AMICI CURIAE IN

SUPPORT OF PETITIONERS AND REVERSAL

__________________

TOYJA E. KELLEY,

PRESIDENT

DRI-THE VOICE OF THE

DEFENSE BAR

55 West Monroe St.

Chicago, IL 60603

(312) 795-1101

toyja.kelley@saul.com

ZACH CHAFFEE-MCCLURE

Counsel of Record

RUTH ANNE FRENCH-HODSON

SHOOK, HARDY & BACON LLP

2555 Grand Blvd.

Kansas City, MO 64108

(816) 474-6550

zmcclure@shb.com

Counsel for Amici Curiae

TABLE OF CONTENTS

TABLE OF AUTHORITIES ........................................ ii

INTEREST OF AMICI CURIAE ................................ 1

SUMMARY OF ARGUMENT ..................................... 2

ARGUMENT ................................................................ 5

I.

The FCA’s Breadth and Harsh Penalties

Make It Subject to Private Litigation Abuse ... 5

A.

History of the FCA ................................. 6

B.

Qui Tam Lawsuits Are on the Rise ....... 8

II.

Allowing Relators to Take Advantage of

Subsection 3731(b)(2) Is Contrary to the

Purpose of the Qui Tam Provisions of the

FCA. .................................................................. 9

III.

A 10-year Statute of Limitation Will Increase

Litigation Costs to the Government and

Businesses. ...................................................... 10

IV.

Increased Litigation Costs and Punitive

Liability Will Force More Unwarranted

Settlements. .................................................... 14

V.

Implications for the Government ................... 16

CONCLUSION .......................................................... 18

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Allison Engine Co. v. United States ex

rel. Sanders,

553 U.S. 662 (2008) ................................................ 3

Arthur Andersen LLP v. United States,

544 U.S. 696 (2005) .............................................. 12

Artis v. D.C.,

138 S. Ct. 594 (2018) ............................................ 11

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) .............................................. 14

Carpenter v. United States,

138 S. Ct. 2206 (2018) .......................................... 12

Fisher v. Univ. of Tex.,

136 S. Ct. 2198 (2016) .......................................... 12

Gabelli v. SEC,

568 U.S. 442 (2013) ........................................ 10, 11

Glus v. Brooklyn E. Dist. Terminal,

359 U.S. 231 (1959) .............................................. 14

Graham County Soil and Water

Conservation Dist. v. United States

ex rel. Wilson,

545 U.S. 409 (2010) ................................................ 2

iii

Hughes Aircraft Co. v. United States ex

rel. Schumer,

520 U.S. 939 (1997) ................................................ 8

Jones v. Bock,

549 U.S. 199 (2007) .............................................. 14

Jones v. Rogers Mem’l Hosp.,

442 F.2d 773 (D.C. Cir. 1971) .............................. 15

Richards v. Mileski,

662 F.2d 65 (D.C. Cir. 1981) ................................ 15

Schindler Elevator Corp. v. United

States ex rel. Kirk,

563 U.S. 401 (2011) ............................................ 3, 6

Searcy v. Philips Elecs. N. Am. Corp.,

117 F.3d 154 (5th Cir. 1997) ................................ 16

United States ex rel. Baker v. Cmty.

Health Sys.,

No. 05-279, 2012 U.S. Dist. LEXIS

146865 (D.N.M. Aug. 31, 2012) ........................... 13

United States ex rel. Findley v. FPCBoron Employees’ Club,

105 F.3d 675 (D.C. Cir. 1997) ............................ 6, 7

United States ex rel. Hunt v. Cochise

Consultancy, Inc.,

887 F.3d 1081 (11th Cir. 2018) .............................. 3

United States ex rel. Jamison v.

McKesson Corp.,

649 F.3d 322 (5th Cir. 2011) .................................. 9

iv

United States ex rel. Karvelas v.

Melrose-Wakefield Hosp.,

360 F.3d 220 (1st Cir. 2004) .................................. 9

United States ex rel. Maldonado v. Ball

Homes, LLC,

No. CV 5: 17-379-DCR, 2018 WL

3213614 (E.D. Ky. June 29, 2018) ....................... 16

United States ex rel. Marcus v. Hess,

317 U.S. 537 (1943) ................................................ 6

United States ex rel. Presser v. Acacia

Mental Health Clinic, LLC,

836 F.3d 770 (7th Cir. 2016) ................................ 15

United States ex rel. Ridenour v. KaiserHill Co.,

397 F.3d 925 (10th Cir. 2005) .............................. 17

United States ex rel. Sanders v. N. Am.

Bus. Indus.,

546 F.3d 288 (4th Cir. 2008) ...................... 9, 11, 12

United States ex rel. Sikkenga v.

Regence Bluecross Blueshield,

472 F.3d 702 (10th Cir. 2006) .............................. 10

United States ex rel. Steury v. Cardinal

Health, Inc.,

625 F.3d 262 (5th Cir. 2010) ................................ 17

United States v. Kubrick,

444 U.S. 111 (1979) .............................................. 15

v

United States v. Taber Extrusions L.P.,

No. 4:00CV00255, 2001 U.S. Dist.

LEXIS 24600 (E.D. Ark. Dec. 27,

2001) ..................................................................... 13

Vermont Agency of Natural Resources v.

United States ex rel. Stevens,

529 U.S. 765 (2000) ................................................ 5

Zubulake v. UBS Warburg LLC,

220 F.R.D. 212 (S.D.N.Y. 2003) ........................... 11

Statutes

31 U.S.C. § 3729(a) .................................................. 5, 7

31 U.S.C. § 3730(d) .................................................. 5, 7

31 U.S.C. § 3730(e) ...................................................... 8

31 U.S.C. § 3730(e)(4)(B) ............................................. 7

31 U.S.C. § 3730(h) ...................................................... 8

31 U.S.C. § 3731(b)(2)........ 2, 3, 4, 9, 11, 13, 15, 16, 18

Act of March 2, 1863, 12 Stat. 696-98......................... 6

Dodd-Frank Wall Street Reform and

Consumer Protection Act of 2010,

Pub. L. 111-203, § 1079A, 124 Stat.

1376 ........................................................................ 8

False Claims Act of 1943, Pub. L. 78213, 57 Stat. 608..................................................... 7

vi

False Claims Amendments Act of 1986,

Pub. L. No. 99-562, 100 Stat. 3153 ........................ 7

Fraud Enforcement and Recovery Act of

2009, Pub. L. 111–21, 123 Stat. 1617 .................... 8

Patient Protection and Affordable Care

Act, Pub. L. No. 111-148, tit. X, §

10104(j)(2), 124 Stat. 119 (2010) ........................... 8

Rules

Fed. R. Civ. P. 8(c) ..................................................... 14

Fed. R. Civ. P. 12(b)(6) .............................................. 14

Other Authorities

Br. for the United States as amicus

curiae in Gilead Sciences Inc. v. U.S.

ex rel Campie, 2018, No. 17-936 .......................... 17

David Freeman Engstrom, Public

Regulation of Private Enforcement:

Empirical Analysis of DOJ Oversight

of Qui Tam Litigation Under the

False Claims Act, 107 NW. U. L. REV.

1689 (2013) ............................................................. 9

David S. Torborg, The Dark Side of the

Boom: The Peculiar Dilemma of

Government Spoliation in Modern

False Claims Act Litigation, 26 J.

LAW & HEALTH 181 (2013) ................................... 13

John T. Boese, Civil False Claims and

Qui Tam Actions (4th ed. 2011) ......................... 5, 6

vii

Larry D. Lahman, Bad Mules: A Primer

on the Federal False Claims Act, 76

Okla. B.J. 901 (2005).............................................. 6

Memo, U.S. Dep’t of Justice, Factors for

Evaluating Dismissal Pursuant to 31

U.S.C. 3730(c)(2)(A) (Jan. 10, 2018) ................ 9, 16

Michael Rich, Prosecutorial Indiscretion:

Encouraging the Department of

Justice to Rein in Out-of-Control Qui

Tam Litigation under the Civil False

Claims Act, 76 U. CINN. L. REV. 1233

(2008) .................................................................... 17

S. Rep. No. 99-345 (1986) ...................................... 7, 10

U.S. Dep’t of Justice, Civil Division,

Fraud Statistics—Overview (Dec. 19,

2017) ................................................................... 5, 8

United Press Int’l, Navy Paid $900 for

Plane Ashtray, Sun Sentinel, May

30, 1985 .................................................................. 7

Victor E. Schwartz & Phil Goldberg,

Carrots and Sticks: Placing Rewards

as Well as Punishment in Regulatory

and Tort Law, 51 Harv. J. on Leg.

315 (2014) ............................................................... 6

INTEREST OF AMICI CURIAE 1

DRI – The Voice of the Defense Bar (www.dri.org)

is an international organization composed of more

than 22,000 attorneys who defend the interests of

industries, businesses, and individuals in civil

litigation. DRI’s mission includes enhancing the skills,

effectiveness, and professionalism of the civil defense

bar; promoting appreciation of the role of defense

lawyers in the civil justice system; anticipating and

addressing substantive and procedural issues

germane to defense lawyers and fairness in the civil

justice system; and preserving the civil jury. To help

foster these objectives, DRI participates as amicus

curiae in carefully selected cases in which this Court

is presented with questions that are exceptionally

important to civil defense attorneys, their clients, and

the conduct of civil litigation.

The Professional Services Council–The Voice of the

Government Services Industry (“PSC”) is the national

trade association for the government professional and

technology services industry. Many of PSC’s more

than 400 small, medium, and large member

companies directly support the U.S. government

through contracts with the Department of Defense

and other national security and humanitarian-related

federal departments and agencies, both domestically

and abroad. Collectively, the association’s members

1 Pursuant to Rule 37.6,

amici certify that no counsel for any

party authored this brief in whole or in part and that no person

or entity other than amici themselves provided any monetary

contribution intended to fund the preparation or submission of

this brief. All parties have consented to the filing of this amicus

brief.

2

employ hundreds of thousands of Americans in all 50

States and abroad.

Amici and their members represent those in the

healthcare, defense, education, and governmentservices industries that are frequent targets of False

Claims Act suits. The limitations issue presented by

this case has the potential to increase litigation costs

and uncertainty for amici’s members, particularly in

connection with stale claims. Amici are concerned

that these additional burdens and the increased

difficulty in disposing of non-meritorious claims

through motion practice will increase pressures to

settle unmeritorious claims and, ultimately, increase

the cost of providing government services.

This Court should not adopt the Eleventh Circuit’s

decision because it would give new life to stale claims

that would otherwise have been time-barred under the

six-year statute of limitation in Section 3731(b)(1).

Such a rule would also impose significant practical

obstacles for defendants and the U.S. government

raising a limitations defense in relator-initiated cases,

because its application depends on the knowledge of a

United States official even in a non-intervened case,

thus making a ruling on the limitations issue

practically impossible until after protracted discovery.

SUMMARY OF ARGUMENT

This Court has diplomatically observed that the

False Claims Act (“FCA”) statute of limitation “could

have [been] drafted [] with more precision,” cautioning

against simplistic readings that fail to account for the

“[s]tatutory language” providing “context” to the

meaning of this provision. Graham County Soil and

Water Conservation Dist. v. United States ex rel.

3

Wilson, 545 U.S. 409, 415, 422 (2010). More generally,

this Court has recognized that expansive readings of

the FCA can create “almost boundless” liability.

Allison Engine Co. v. United States ex rel. Sanders,

553 U.S. 662, 672 (2008). Given the FCA’s potential

for abuse, this Court has instructed courts to “strike a

balance between encouraging private persons to root

out fraud and stifling parasitic lawsuits.” Schindler

Elevator Corp. v. United States ex rel. Kirk, 563 U.S.

401, 413 (2011) (quoting Graham County Soil & Water

Conservation Dist. v. United States ex rel. Wilson, 559

U.S. 280, 295 (2010)). One important constraint on

the FCA’s potential for abuse is its statute of

limitation. The Eleventh Circuit failed to strike the

correct balance when it ruled that the knowledge of a

United States agent could extend the limitations

period for an FCA action pursuant to Section

3731(b)(2) even if the United States does not intervene

in the case.

The Eleventh Circuit misapplied the FCA statute

of limitation. United States ex rel. Hunt v. Cochise

Consultancy, Inc., 887 F.3d 1081, 1083 (11th Cir.

2018). Under that court’s approach, a private relator,

normally subject to a six-year statute of limitation,

could extend the limitations period to ten years simply

by waiting to tell the government of its claim. Such an

interpretation is not only counter to the limitations

provision, it undermines the policy goals of the FCA

and imposes considerable costs on government

contractors and the U.S. government itself.

One of the primary purposes of the qui tam

provisions in the FCA is to incentivize private

individuals to promptly inform the government of

potential fraud. The Eleventh Circuit creates a

4

countervailing incentive to hide claims from the

government and so extend the limitations period.

Allowing the limitations period of Section

3731(b)(2) to govern a non-intervened suit also would

create significant practical obstacles for defendants

raising the limitations defense, and so increase the

cost of defending against non-meritorious actions.

Because the success of the defense would necessarily

turn on the knowledge of a United States official—

notwithstanding that the United States has declined

to intervene in the suit and is not a party—limitations

questions will require extensive third-party discovery

from the government and be essentially impossible to

resolve through early dispositive motions.

The

practical demands of intensive discovery and

evidence-dependent motion practice will necessarily

force government contractors to settle more nonmeritorious claims, which ultimately increases the

cost of providing government services. It will also

impact the daily operations of government agencies

and hamper those agencies’ main missions—fulfilling

statutory and administrative requirements—in favor

of expending time and resources on stale cases,

including precisely those cases the government

considered insufficiently meritorious in which to

intervene.

Amici respectfully urge the Court to restore the

balance between encouraging fraud reporting and

discouraging parasitic filings by holding that Section

3731(b)(2) does not control non-intervened suits. The

Court should reverse the decision below to give effect

to one of the FCA’s constraints against “almost

boundless” liability—its limitations period—and to

ensure federal contractors and agencies alike are not

5

burdened by the uncertainty and costs associated with

stale suits.

ARGUMENT

I. The FCA’s Breadth and Harsh Penalties

Make It Subject to Private Litigation Abuse

The FCA encourages private citizens to sue

companies defrauding the federal government,

rewarding citizens handsomely if their lawsuits

generate settlements or awards. The FCA provides for

large mandatory fines, including an automatic

trebling of the amount in dispute, plus high perincident fines and attorney fees, to punish those who

commit fraud against the government and to deter

others from such conduct. 31 U.S.C. § 3729(a). These

penalties make liability “essentially punitive in

nature.” Vermont Agency of Natural Resources v.

United States ex rel. Stevens, 529 U.S. 765, 784 (2000).

The private relator who brings the action keeps up to

30% of the award. See 31 U.S.C. § 3730(d). Because

the fines are calculated on a per-violation basis and

damages are trebled, the awards for a relator increase

with the length of time the violation occurs.

These incentives have led to important recoveries

for the government and payouts to inside

whistleblowers who uncovered actual and significant

fraud. See generally John T. Boese, Civil False Claims

and Qui Tam Actions (4th ed. 2011); U.S. Dep’t of

Justice, Press Release, Justice Dep’t Recovers Over

$2.8 Billion from False Claims Act Cases in Fiscal

Year 2018 (Dec. 21, 2018) (“2018 FCA Press Release”),

https://tinyurl.com/ycrvbfv2.

However,

the

opportunity for individuals to invoke the threat of

FCA’s harsh penalties to generate tremendous

6

payouts has led to a long history of litigation abuse.

See id. As this Court has observed, the FCA’s strong

penalties are not appropriate in many situations. See,

e.g,. Schindler Elevator Corp., 563 U.S. at 413.

A. History of the FCA

Congress enacted the FCA, originally called “The

Informer’s Act,” in 1863 to prevent unscrupulous

contractors from fraudulently selling provisions to the

Union Army during the Civil War. See Boese, supra,

at 1-6; Larry D. Lahman, Bad Mules: A Primer on the

Federal False Claims Act, 76 Okla. B.J. 901, 901

(2005) (providing examples of decrepit mules, faulty

rifles, and rancid rations). Often, war profiteers acted

with impunity because the scale and complexity of war

made prosecuting frauds too onerous. The 1863 Act

included several features of the modern FCA: it

applied to any fraud against the government, imposed

penalties for each false claim, and authorized damages

as a multiple of the government’s loss. See Act of

March 2, 1863, 12 Stat. 696-98.

Broad judicial interpretation of the FCA, however,

has created openings for litigation abuse. See Victor

E. Schwartz & Phil Goldberg, Carrots and Sticks:

Placing Rewards as Well as Punishment in Regulatory

and Tort Law, 51 Harv. J. on Leg. 315, 337-35 (2014).

When government involvement in the economy

expanded through the New Deal and pre-World War

II military buildup, this Court lowered the bar for the

information needed for bringing a qui tam action. See

United States ex rel. Marcus v. Hess, 317 U.S. 537

(1943). The result was a dramatic increase in

“parasitic” qui tam suits, as people found ways to

game the system. See United States ex rel. Findley v.

FPC-Boron Employees’ Club, 105 F.3d 675, 679-80

7

(D.C. Cir. 1997) (recounting FCA’s history). Some

relators filed suits based on copying criminal

indictments they played no role in helping to bring.

See id. In 1943, Congress responded by requiring

relators to base claims on information the government

did not possess. See False Claims Act of 1943, Pub. L.

78-213, 57 Stat. 608, 608-09.

Over the past 30 years, Congress has amended the

FCA to address reports that fraud was pervasive in

government contracts. The concept of unscrupulous

government contracting was popularized again in the

1980s, when contractors allegedly overcharged the

military as much as $435 for a hammer, $640 for a

toilet seat, and $7,600 for a coffee maker. See United

Press Int’l, Navy Paid $900 for Plane Ashtray, Sun

Sentinel, May 30, 1985. Similar reports led the

Departments of Defense and Health and Human

Services to triple their investigations into fraudulent

claims. S. Rep. No. 99-345, p. 2 (1986). Congress

responded by enacting the False Claims Amendments

Act of 1986, Pub. L. No. 99-562, 100 Stat. 3153.

Through these amendments, Congress broadened

the availability of FCA claims to more potential

relators and increased the incentives. See 31 U.S.C. §

3730(e)(4)(B) (no longer requiring relators to be

“insiders” with new information or first-hand

knowledge of the alleged violation); 31 U.S.C.

§ 3729(a) (increasing per incident fines to their

current level of $5,500 to $11,000 for each violation);

31 U.S.C. § 3730(d) (allowing the relator to keep up to

15% to 25% of the recovery when the government

intervenes and up to 30% when the government

declines to intervene).

8

Congress again updated the FCA to address new

types of fraud after the financial crisis in 2009 and

2010. See Fraud Enforcement and Recovery Act of

2009, Pub. L. 111–21, 123 Stat. 1617; Dodd-Frank

Wall Street Reform and Consumer Protection Act of

2010, Pub. L. 111-203, § 1079A, 124 Stat. 1376, 2079

(amending 31 U.S.C. § 3730(h)); Patient Protection

and Affordable Care Act, Pub. L. No. 111-148, tit. X, §

10104(j)(2), 124 Stat. 119, 901-02 (2010) (amending 31

U.S.C. § 3730(e)).

B. Qui Tam Lawsuits Are on the Rise

The FCA amendments have resulted in a growing

qui tam bar and a record rise in qui tam lawsuits. In

the mid-1980s, relators filed only a few dozen qui tam

actions per year. See U.S. Dep’t of Justice, Civil

Division, Fraud Statistics—Overview (Dec. 19, 2017),

https://tinyurl.com/ybfoto57 (“2017 Fraud Statistics”)

(reporting 30 qui tam actions in 1987). From the mid1990s through 2009, an average of 300 to 400 qui tam

suits were filed each year, with the DOJ initiating only

about 150 claims each year. See id. Since 2009-2010,

government filings have remained constant, but the

number of qui tam filings has nearly doubled, with 706

filings in 2016, 674 in 2017, and 645 in 2018. See id.;

2018 FCA Press Release. Whereas the government

will not intervene in every case, relators have no duty

to exercise fair judgment—even a marginal FCA claim

has potential value to them. See Hughes Aircraft Co.

v. United States ex rel. Schumer, 520 U.S. 939, 949

(1997) (“relators are . . . less likely than is the

Government to forgo an action arguably based on a

mere technical noncompliance with reporting

requirements that involved no harm to the public

fisc.”). The government declines to participate in

9

about 75% of relator-initiated claims, 2 often a sign

that a given case lacks merit. See, e.g., United States

ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 331

(5th Cir. 2011) (stating that the non-intervened claims

“presumably lacked merit”); United States ex rel.

Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220,

242 n.31 (1st Cir. 2004) (“[T]he government’s decision

not to intervene in the action also suggested that

[relator’s] pleadings of fraud were inadequate.”).

These claims are nevertheless expensive and

burdensome to defend, often producing settlements

irrespective of the merits.

II. Allowing Relators to Take Advantage of

Subsection 3731(b)(2) Is Contrary to the

Purpose of the Qui Tam Provisions of the

FCA.

Reading 31 U.S.C. § 3731(b)(2) to apply to nonintervened suits is inconsistent with the very purpose

of the FCA’s qui tam provisions. The FCA authorizes

qui tam actions “to combat fraud quickly and

efficiently by encouraging relators to bring actions

that the government cannot or will not—to stimulate

actions by private parties should the prosecuting

officers be tardy in bringing the suits.’” United States

ex rel. Sanders v. N. Am. Bus. Indus., 546 F.3d 288,

295 (4th Cir. 2008) (quoting Hess, 317 U.S. at 547);

See David Freeman Engstrom, Public Regulation of Private

Enforcement: Empirical Analysis of DOJ Oversight of Qui Tam

Litigation Under the False Claims Act, 107 NW. U. L. REV. 1689,

1719 (2013); Memo, U.S. Dep’t of Justice, Factors for Evaluating

Dismissal Pursuant to 31 U.S.C. 3730(c)(2)(A) (Jan. 10, 2018)

(“2018 Dismissal Memo”) (noting that while the number of qui

tam filings have “increased substantially,” “the rate of

intervention has remained relatively static”).

2

10

United States ex rel. Sikkenga v. Regence Bluecross

Blueshield, 472 F.3d 702, 725 (10th Cir. 2006)

(“Congress viewed qui tam prosecutions as providing

a means to achieve rapid exposure of fraud against the

public fisc, unencumbered by the lack of resources or

the bureaucracy inherent in enforcement by public

authorities.”). In reviewing the history of the qui tam

provision, the Senate noted that “one of the least

expensive and most effective means of preventing

frauds on the Treasury is to make the perpetrators of

them liable to actions by private persons acting, if you

please, under the strong stimulus of personal ill will

or the hope of gain” because such enforcement relies

on “the enterprising privateer” rather than “the slowgoing public vessel.” S. Rep. No. 99-345, p. 11 (quoting

United States v. Griswold, 24 F. 361, 366 (D. Or.

1885)).

But without an effective time bar, relators will

have significant incentive to delay bringing their

claims: the potential for larger damages and penalties

and thus larger financial rewards for the relators.

Sophisticated qui tam relators and their advocates

would capitalize on these incentives to delay filing

suit, to the detriment of the FCA’s goal of promoting

the efficient termination of fraud against the

government.

The FCA’s statute of limitation

complements and promotes the FCA’s objectives by

encouraging private individuals to report purported

fraud to the government expeditiously.

III. A 10-year Statute of Limitation

Increase

Litigation

Costs

to

Government and Businesses.

Will

the

Statutes of limitation provide vital “security and

stability to human affairs.” Gabelli v. SEC, 568 U.S.

11

442, 448-49 (2013) (quoting Wood v. Carpenter, 101

U.S. 135, 139 (1879)); accord Artis v. D.C., 138 S. Ct.

594, 607-08 (2018) (concluding that statutes of

limitation that are “‘fundamental to a well-ordered

judicial system’”) (quoting Board of Regents of

University of State of New York v. Tomanio, 446 U.S.

478, 487 (1980)). They “promote justice by preventing

surprises through the revival of claims that have been

allowed to slumber until evidence has been lost,

memories have faded, and witnesses have

disappeared.” Gabelli, 568 U.S. at 448 (quoting Order

of Railroad Telegraphers v. Railway Express Agency,

Inc., 321 U.S. 342, 348-349 (1944)).

The Eleventh Circuit’s interpretation of Section

3731(b) forces businesses to choose between defending

stale FCA claims with less evidence—due to the

normal processes of fading memories and document

loss—or incurring the costs of retaining institutional

knowledge and documents related to every

government contract for the entire limitation period.

Because the Eleventh Circuit rule focuses on what the

government knew and when, the “innumerable

[discovery] headaches” necessitated by applying

subsection 3731(b)(2) to non-intervened suits would

fall on the government as well. Sanders, 546 F.3d at

295.

“‘Documents create a paper reality we call proof.’

The absence of such documentary proof may stymie

the search for the truth.” Zubulake v. UBS Warburg

LLC, 220 F.R.D. 212, 214 (S.D.N.Y. 2003). Extending

subsection 3731(b)(2) to non-intervened suits would

only increase the evidentiary demands on both FCA

defendants and government agencies. As the Fourth

Circuit concluded, such an interpretation would force

12

defendants “to seek out and litigate the identity and

knowledge of a government official not a party to the

action. And government agencies would be subjected

to disruption and expense in responding to discovery

requests in actions in which the government

affirmatively chose to avoid those concerns by

declining to intervene.” Sanders, 546 F.3d at 295. In

short, the Eleventh Circuit’s statutory interpretation

would increase discovery burdens by focusing the

limitations inquiry on a third-party’s knowledge over

a period up to ten years.

Through normal processes, access to documentary

proof will wane, impeding the ability of parties and

courts to reach just results. Given the vast number of

electronic records now created on a daily basis, most if

not all large organizations delete records or transfer

them to less accessible storage over time, often

automatically according to regular document

retention and destruction policies. Destruction of

business records in compliance with valid document

retention policies is “common in business” and

perfectly legal under normal circumstances. Arthur

Andersen LLP v. United States, 544 U.S. 696, 704

(2005). This Court has recognized how normal

document retention policies impact the availability of

documentary evidence. See, e.g., Carpenter v. United

States, 138 S. Ct. 2206, 2218 (2018) (noting that the

“Government can now travel back in time to retrace a

person’s

whereabouts,

subject

only

to

the retention polices of the wireless carriers, which

currently maintain records for up to five years”);

Fisher v. Univ. of Tex., 136 S. Ct. 2198, 2241 n.19

(2016) (Thomas, J. dissenting) (acknowledging the

University of Texas’s current 5-year records retention

policy for student records in assessing what fact-

13

finding could be done to compare categories of

applicants). If a relator waits to bring suit for up to a

decade under the Eleventh Circuit’s rationale, it is

more likely that relevant documents no longer will be

available.

Despite all efforts of contractors to maintain

records, government retention policies will affect the

availability of agency records that could be vital to

demonstrate government knowledge (and the related

commencement of the limitations period) or liability.

Normal governmental retention policies have resulted

in the destruction of discoverable information in FCA

suits. See, e.g., United States v. Taber Extrusions L.P.,

No. 4:00CV00255, 2001 U.S. Dist. LEXIS 24600, at *89 (E.D. Ark. Dec. 27, 2001); United States ex rel. Baker

v. Cmty. Health Sys., No. 05-279 WJ/ACT, 2012 U.S.

Dist. LEXIS 146865 (D.N.M. Aug. 31, 2012). Such

evidentiary issues will only be exacerbated if the

subsection 3731(b)(2) ten-year repose period is

extended to non-intervened suits brought by private

relators.

Even without added burdens, the fact-intensive

nature of FCA claims ordinarily requires extensive

discovery from the relevant agencies. See David S.

Torborg, The Dark Side of the Boom: The Peculiar

Dilemma of Government Spoliation in Modern False

Claims Act Litigation, 26 J. LAW & HEALTH 181, 184,

187-90 (2013). Extending the limitations period to

capture otherwise barred claims only increases that

burden on the government.

And the Eleventh

Circuit’s approach injects into private cases yet

another fact particularly within the records or

knowledge of the government agency: when the

14

agency knew or reasonably should have known facts

material to the right of action.

IV.Increased Litigation Costs and Punitive

Liability Will Force More Unwarranted

Settlements.

Many targets of FCA lawsuits engage in low-dollar,

high-volume transactions in government-supported

programs or with the government itself. Courts must

be able to weed out groundless claims at the motionto-dismiss stage. Otherwise, targets of qui tam suits

likely will settle even meritless claims, as many do not

have the resources to risk going to trial. See AT&T

Mobility LLC v. Concepcion, 563 U.S. 333, 350 (2011)

(appreciating that with “even a small chance of a

devastating loss, defendants will be pressured into

settling questionable claims”). A loss, even if remote

on the merits, could financially ruin a defendant and

impose the high reputational cost of being labeled a

fraudster.

Proving the date of the government’s knowledge

will be next to impossible at the motion-to-dismiss

stage. A plaintiff need only plead that the alleged

violation occurred within the last ten years. A

defendant, on the other hand, may establish a

limitations defense at the motion-to-dismiss stage

only if the availability of the defense is plain and

definitive from the face of the complaint. Jones v.

Bock, 549 U.S. 199, 215 (2007) (noting that “[i]f the

allegations . . . show that relief is barred by the

applicable statute of limitations, the complaint is

subject to dismissal for failure to state a claim”); Glus

v. Brooklyn E. Dist. Terminal, 359 U.S. 231, 235

(1959); Fed. R. Civ. P. 8(c) & 12(b)(6). Even with

relevant allegations in the complaint, the U.S. Court

15

of Appeals for the District of Columbia Circuit has

recognized that there is “an inherent problem” in

raising a statute of limitation defense at the motionto-dismiss stage. Richards v. Mileski, 662 F.2d 65, 73

(D.C. Cir. 1981). Unless the applicability of the

statute of limitation is definitive “beyond doubt” on

the face of the complaint, Jones v. Rogers Mem’l Hosp.,

442 F.2d 773, 775 (D.C. Cir. 1971), federal courts lean

to allowing “both parties to make a record adequate to

measure the applicability of such a defense, to the

benefit of both the trial court and any reviewing

tribunal.” Richards, 662 F.2d at 73.

Assuming an FCA plaintiff pleads an alleged date

the government became aware of the purported

violation, the plaintiff will not plead a date that is fatal

to the claim. Only after discovery can the defendant

develop evidence to demonstrate the claim’s

untimeliness. And even at the summary judgment

stage it may be difficult to succeed, given the potential

for faded memories, destroyed documents, and the

death, disappearance, or unavailability of witnesses.

See United States v. Kubrick, 444 U.S. 111, 117 (1979).

Accordingly, the expansion of subsection 3731(b)(2)

to non-intervened suits puts higher pressure on

defendants to settle, given the threat of extensive and

time-consuming discovery, the risk of higher penalties

due to longer periods of purported violations, and the

difficulty of proving a limitations defense that focuses

on the government’s knowledge.

The longer a

defendant must wait to “lift the cloud on its

reputation” from fraud accusations, the greater is the

“undue pressure . . . to settle the case.” United States

ex rel. Presser v. Acacia Mental Health Clinic, LLC,

836 F.3d 770, 776 (7th Cir. 2016) (quoting Fidelity

16

National Title Insurance Co. of New York v.

Intercounty Nat'l Title Ins. Co., 412 F.3d 745, 749 (7th

Cir. 2005)).

V. Implications for the Government

As set out above, an expansive reading of Section

3731(b) will burden the government even when it

declines to intervene. See 2018 Dismissal Memo

(noting that “[e]ven in non-intervened cases, the

government expends significant resources in

monitoring these cases and sometimes must produce

discovery or otherwise participate”).

Applying

subsection 3731(b)(2) in non-intervened cases, in

particular, injects into the litigation specific questions

concerning the government’s knowledge that may

have no relation to any issue other than the

limitations period. The added costs will come at the

expense of the agencies’ missions. Discovery requests

require agencies to commit time and resources to

reviewing and objecting to requests, retrieving and

collecting documents, reviewing documents for

relevance and for privilege, producing documents, and

preparing agency witnesses for depositions and trial.

United States ex rel. Maldonado v. Ball Homes, LLC,

No. CV 5: 17-379-DCR, 2018 WL 3213614, at *3 (E.D.

Ky. June 29, 2018); see also Searcy v. Philips Elecs. N.

Am. Corp., 117 F.3d 154, 159 (5th Cir. 1997) (noting

that the FCA is designed to “encourag[e] the

government to monitor relators’ actions and step in

when a relator is not acting in the best interest of the

public” even when the government has decided not to

intervene). Often agencies must also monitor filings

to ensure there is no inadvertent disclosure of

classified documents, file statements of interest,

17

participate in mediation or settlement negotiations,

and participate as amicus on appeal. See id.

Interfering with agency management of its own

contractors also compromises its ability to pursue the

best results for the public. See United States ex rel.

Steury v. Cardinal Health, Inc., 625 F.3d 262, 270 (5th

Cir. 2010). This problem is not merely theoretical. In

one example, the government presented credible

evidence that the qui tam litigation—even without

intervention—would delay the clean-up and closure of

a CERCLA Superfund site “by diverting the focus of

security planners and management from the clean-up

effort, by requiring the reassignment of personnel

from the project to a review of classified documents for

declassification or redaction in aid of litigation, and by

placing an added financial burden on the project

through a requirement to shift funds from clean-up to

litigation.” United States ex rel. Ridenour v. KaiserHill Co., 397 F.3d 925, 937 (10th Cir. 2005). More

recently, the government expressed concern about the

burdensome discovery requests that likely would be

issued to the Food and Drug Administration to

determine “exactly what the government knew and

when”—leading the U.S. to take the unusual action of

informing the Court it would seek dismissal of the

relator’s claim if the case were revived and remanded.

See Br. for the United States as amicus curiae in

Gilead Sciences Inc. v. U.S. ex rel Campie, 2018, No.

17-936, p. 15-16.

As one scholar has noted, “most non-intervened

suits exact a net cost on the public.” Michael Rich,

Prosecutorial

Indiscretion:

Encouraging

the

Department of Justice to Rein in Out-of-Control Qui

Tam Litigation under the Civil False Claims Act, 76

18

U. CINN. L. REV. 1233, 1264-65 (2008). A holding that

subsection 3731(b)(2) does not apply in non-intervened

cases will allow for earlier adjudication of limitations

questions, reduce the discovery burden on government

agencies, and diminish the distraction to federal

agencies created by the increasing number of private

FCA actions.

CONCLUSION

This Court should reverse the judgment of the

court of appeals.

Respectfully submitted,

TOYJA E. KELLEY,

PRESIDENT

DRI-THE VOICE OF

THE DEFENSE BAR

55 West Monroe St.

Chicago, IL 60603

(312) 795-1101

toyja.kelley@saul.com

ZACH CHAFFEE-MCCLURE

Counsel of Record

RUTH ANNE FRENCH-HODSON

SHOOK, HARDY & BACON LLP

2555 Grand Blvd.

Kansas City, MO 64108

(816) 474-6550

zmcclure@shb.com

Counsel for Amici Curiae

January 2019