Last month, the U.S. Supreme Court extended the time in which a private party may bring a suit under the False Claims Act (FCA). The decision – United States ex rel. Hunt v. Cochise Consultancy – extended the statute of limitation to bring an FCA action up to 10 years from the date of the alleged violation.

 The FCA permits a private person to bring a civil action in the name of the federal government against “any person” who “knowingly presents … a false or fraudulent claim for payment” to the Government or to certain third parties acting on the Government’s behalf. See 31 U.S.C. §§ 3729(a), (b)(2). Two limitations periods apply to a civil action under the FCA: (1) An action must be brought within either 6 years after the statutory violation occurred or (2) 3 years after “the official of the United States charged with responsibility to act in the circumstances” knew or should have known the relevant facts, but not more than 10 years after the violation. See 31 U.S.C. § 3731(b)(2). The period providing the later date serves as the limitations period.

In this case, Hunt brought an FCA suit more than six years after the alleged misconduct. But the suit was filed within three years of when Hunt informed federal government of the alleged misconduct and within ten years of such misconduct. The defendant argued that the suit is time-barred (it was not filed within the above 6-year period) because the government declined to intervene and therefore the suit was untimely. The Supreme Court disagreed holding that the 10-year limitation applies no matter if the government intervenes or not.

The holding means that now private parties have up to 10 years to file an FCA action, during which time more evidence of potential misconduct could be collected. A potential loophole still exists. Arguably, a party bringing the action must notify the government of the alleged misconduct starting the statute of limitation clock. If the action is not brought within 6 years, the defendant might have a good defense that the action should be dismissed under the Statute of Limitations.