Supreme Court ruling gives whistleblowers more time to file legal action under False Claims Act

(Editor's note: The original article was updated to include comments from attorney William Mitchelson.)

A ruling Monday by the U.S. Supreme Court means that whistleblowers will have more time to file legal action under the False Claims Act.

The unanimous ruling by the court justices gives whistleblowers up to four years of additional time to bring False Claims Act cases in healthcare and other industries. The ruling applies in so-called qui tam suits in which the federal government has declined to intervene, and whistleblowers choose to file their own private lawsuit.

In Conchise Consultancy v. U.S., ex rel. Hunt, the justices said a time limit provision of the False Claims Act applies to private parties in cases in which the government has not intervened.

The limitations period provides that a False Claims Act action must be brought within three 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. There was confusion over whether the limitations period applied in those cases where the Department of Justice declined to intervene and take legal action, but where a whistleblower chose to pursue legal action on their own.

RELATED: The Trump administration is cracking down on healthcare fraud. Here’s how to protect your practice

The ruling specifies that the statute of limitations applies in False Claims Act cases regardless of whether the government takes on a case.

However, in practicality, there is only a small group of cases where whistleblowers choose to pursue legal action on their own if the federal government decides not to bring charges, Derek Adams, a partner at Washington, D.C.-based law firm Feldesman Tucker Leifer Fidell LLP, told FierceHealthcare.

RELATED: Uncertainty surrounds healthcare fraud enforcement. Here are some trends to watch in 2019

Adams said he doesn’t think the ruling will lead to an increase in the number of qui tam cases. “It’s not a game-changer,” said Adams, who previously served as a trial attorney with the U.S. Department of Justice’s Civil Fraud Section.

The ruling does make it clear that the FCA statute of limitations applies nationwide, as previously different circuit courts interpreted the timeline for filing actions differently in cases where the federal government did not intervene.

Attorney William Mitchelson, litigation partner at Alston & Bird, said that the Supreme Court's decision could have an impact. It will result in the preservation or revival of some claims that were previously considered to be time-barred whistleblower cases in which the government declined to intervene, Mitchelson said in an email to Fierce Healthcare.

"This may increase defendants’ financial exposure. But the practical impact of the decision may be limited, because whistleblowers are still incentivized to promptly file claims or face possible dismissal under the FCA’s public disclosure and first-to-file bars. The challenge is that organizations may now have to defend more cases arising from circumstances that are up to 10 years old," said Mitchelson, who defends companies and individuals in False Claims Act cases.

“It’s a pretty nuanced ruling,” said Adams. And while he does not think the ruling will have a great impact, it remains important for healthcare organizations to try to avoid whistleblowers from going to the federal government with complaints alleging fraud and other wrongdoing, he said.

Whistleblowers often take their complaints outside an organization when they think their concerns have not been taken seriously, he said. Organizations should have hotlines in place so that employees can voice a complaint. And when an organization receives a complaint, they should thoroughly investigate and try to address those concerns, he said.

If the federal government receives a whistleblower complaint and investigates an organization, it helps if the organization can show it did a thorough investigation and found no wrongdoing took place, he said.

Mitchelson agreed organizations should focus on compliance to stay out of trouble. "Government contractors and healthcare providers can mitigate the impact of potential FCA claims being filed up to 10 years after submission of the relevant requests for payment by implementing effective compliance programs," he said.

Such programs should be robust and adequately funded to identify areas of risk and actively monitor them, he said. An effective program will capably investigate reports of non-compliant behavior and carefully document the program’s education and other compliance activities.

"In areas where provisions of law, regulation or contract are vague or potentially in conflict—particularly those related to payment or performance—companies should consider seeking advice from legal counsel before taking a position that has an impact on requests for payment," he advised. Companies should also consider with legal counsel’s advice whether the company should discuss issues of legal or contract vagueness proactively with the relevant contracting officer or government agency, he said.