United States ex rel. Hunt v. Cochise Consultancy, Inc.

• Decision Date: 11 April 2018
• Docket Number: No. 16-12836,16-12836
• Citation: 887 F.3d 1081
• Parties: UNITED STATES of America, EX REL. Billy Joe HUNT, Plaintiff-Appellant, v. COCHISE CONSULTANCY, INC., doing business as Cochise Security, The Parsons Corporation, doing business as Parsons Infrastructure & Technology, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

887 F.3d 1081

UNITED STATES of America, EX REL. Billy Joe HUNT, Plaintiff-Appellant,

v.COCHISE CONSULTANCY, INC., doing business as Cochise Security, The Parsons Corporation, doing business as Parsons Infrastructure & Technology, Defendants-Appellees.

No. 16-12836

United States Court of Appeals, Eleventh Circuit.

April 11, 2018

Gary Vestal Conchin, Conchin Cloud & Cole, LLC, HUNTSVILLE, AL, Earl N. Mayfield, Christopher Day, JurisDay, PLLC, FAIRFAX, VA, for Plaintiff-Appellant.

Duane Allan Daiker, Robert R. Warchola, Jr., Shumaker Loop & Kendrick, LLP, TAMPA, FL, for Defendant-Appellee Cochise Consultancy, Inc., doing business as Cochise Security.

Aaron S. Dyer, James M. Carter, Michael Robert Rizzo, Pillsbury Winthrop Shaw Pittman, LLP, LOS ANGELES, CA, Jeffrey Paul Doss, Jackson Roger Sharman, III, Lightfoot Franklin & White, LLC, BIRMINGHAM, AL, Kevin M. Fong, Pillsbury Winthrop Shaw Pittman, LLP, SAN FRANCISCO, CA, for Defendant-Appellee The Parsons Corporation, doing business as Parsons Infrastructure & Technology.

Before WILSON and JILL PRYOR, Circuit Judges, and BARTLE,^* District Judge.

JILL PRYOR, Circuit Judge:

Relator Billy Joe Hunt filed a qui tam action alleging that his employer The Parsons Corporation and another entity, Cochise Consultancy, Inc., violated the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 - 33, by submitting to the United States false or fraudulent claims for payment. Hunt filed his action more than six years after the alleged fraud occurred but within three years of when he disclosed the fraud to the government. In this appeal, we are called upon to decide whether Hunt’s FCA claim is time barred. To answer this question, we must construe the FCA’s statutory provision that requires a civil action alleging an FCA violation to be brought within the later of:

• "6 years after the date on which the violation ... is committed," 31 U.S.C. § 3731(b)(1), or

• "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," id. § 3731(b)(2).

The question we answer today, which is one of first impression, is whether § 3731(b)(2) ’s three year limitations period applies to a relator’s FCA claim when the United States declines to intervene in the qui tam action.

The district court concluded that the limitations period in § 3731(b)(2) is inapplicable in such cases and thus Hunt’s claim is time barred. After careful consideration of the statutory scheme, we hold that § 3731(b)(2) ’s three year limitations period applies to an FCA claim brought by a relator even when the United States declines to intervene. Further, because the FCA provides that this period begins to run when the relevant federal government official learns of the facts giving rise to the claim, when the relator learned of the fraud is immaterial for statute of limitations purposes. Here, it is not apparent from the face of Hunt’s complaint that his claim is untimely because his allegations show that he filed suit within three years of the date when he disclosed facts material to the right of action to United States officials and within ten years of when the fraud occurred. The district court therefore erred in dismissing his complaint. We reverse and remand to the district court for further proceedings.

I. FACTUAL BACKGROUND

A. The Fraudulent Scheme

Hunt alleges that Parsons and Cochise (the "contractors") defrauded the United States Department of Defense for work they performed as defense contractors in Iraq.¹ The Department of Defense awarded Parsons a $60 million contract to clean up excess munitions in Iraq left behind by retreating or defeated enemy forces. Hunt worked for Parsons in Iraq on the munitions clearing contract, managing the project’s day-to-day operations. One facet of the contract required Parsons to provide adequate security to its employees, its subcontractors, and others who were working on the munitions clearing project. Parsons relied on a subcontractor to provide the security services.

After seeking bids for the security subcontract, a Parsons committee awarded it to ArmorGroup. But an Army Corps of Engineers contracting officer in Iraq whom Cochise had bribed with trips and gifts, Wayne Shaw, was determined to override this decision and have the subcontract awarded to Cochise. Shaw directed Hunt to have Hoyt Runnels, another Parsons employee who served on the committee that selected ArmorGroup, issue a directive awarding Cochise the subcontract. When Hunt did so, Runnels refused to issue the directive, explaining that such a directive had to come from the Corps.

Shaw then created a forged directive rescinding the award to ArmorGroup and awarding the subcontract to Cochise. The directive had to be signed by Steven Hamilton, another Corps contracting officer. Hamilton, who was legally blind, relied on Shaw to describe the document he was signing. Shaw did not disclose that the directive rescinded the award to ArmorGroup so that the subcontract could be awarded to Cochise.

After Hamilton signed the directive, Shaw directed Runnels to execute it. Runnels again refused because he believed the award to Cochise had been made in violation of government regulations. Shaw threated to have Runnels fired. Two days later, Hamilton learned that the directive Shaw had him sign rescinded the award to ArmorGroup and awarded Cochise the subcontract. Hamilton immediately rescinded his directive awarding the subcontract to Cochise.

After Runnels refused to follow Shaw’s directive to award the subcontract to Cochise, another Parsons employee, Dwight Hill, replaced Runnels and was given responsibility for awarding the security subcontract. Rather than give the subcontract to ArmorGroup, Hill awarded it to Cochise through a no-bid process. Hill justified using a no-bid process by claiming there was an urgent and immediate need for convoy services and then defended the choice of Cochise to fill this immediate need by asserting that Cochise had experience that other security providers lacked. But Hunt alleges that Hill selected Cochise because he was its partner in the fraudulent scheme.

From February through September 2006, Cochise provided security services under the subcontract. Each month the United States government paid Cochise at least $1 million more than it would have paid ArmorGroup had ArmorGroup been awarded the subcontract. The government incurred other additional expenses as well. For example, armored vehicles were needed to provide the security services, and because Cochise had no such vehicles, the government paid more than $2.9 million to secure the vehicles. In contrast, ArmorGroup would have supplied its own armored vehicles, saving the government millions of dollars. In September 2006, when Shaw rotated out of Iraq, Parsons immediately reopened the subcontract for bidding and awarded it to ArmorGroup.

Several years later, Hunt reported the fraud to the United States government. On November 30, 2010, FBI agents interviewed Hunt about his role in a separate kickback scheme. During the interview, Hunt told the agents about the contractors’ fraudulent scheme involving the subcontract for security services. For his role in the separate kickback scheme, Hunt was charged with federal crimes, pled guilty, and served ten months in federal prison.

B. Procedural History

After his release from prison, on November 27, 2013, Hunt filed under seal in federal district court an FCA complaint against the contractors. Hunt set forth two theories why the claims the contractors submitted for payment qualified as false claims under the FCA. First, he alleged that Cochise fraudulently induced the government to enter into the subcontract to purchase Cochise’s services by providing illegal gifts to Shaw and his team. He alleged that Parsons, through Hill, conspired with Cochise and Shaw to rig the bidding process for the subcontract. Second, Hunt alleged that the contractors had a legal obligation to disclose credible evidence of improper conflicts of interest and payment of illegal gratuities to the United States but failed to do so.

After the United States declined to intervene, Hunt’s complaint was unsealed. The contractors moved to dismiss, arguing that the claim was time barred under the six year limitations period in 31 U.S.C. § 3731(b)(1), and Hunt had waited more than seven years after the fraud occurred to file suit. Hunt responded that his claim was timely under the limitations period in § 3731(b)(2) because he had filed suit within three years of when the government learned of the fraud at his FBI interview and ten years of when the fraud occurred. The district court disagreed, concluding that § 3731(b)(2) ’s limitations period was either (1) unavailable to Hunt because the United States had declined to intervene or (2) expired because it began to run when Hunt learned of the fraud. The district court then granted the motions to dismiss, finding Hunt’s claim untimely under § 3731(b)(1) ’s limitation period because it was apparent from the face of Hunt’s complaint that he failed to file suit within six years of when the fraud occurred. This is Hunt’s appeal.

II. STANDARD OF REVIEW

We review de novo a district court’s dismissal of a complaint for failure to state a claim upon which relief can be granted. Am. Dental Ass’n v. Cigna Corp. , 605 F.3d 1283, 1288 (11th Cir. 2010). A dismissal for failure to state a claim on statute of limitations grounds is appropriate "only if it is apparent from the face of the complaint that the claim is time-barred." La Grasta v. First Union Sec., Inc. , 358 F.3d 840, 845 (11th Cir. 2004) (internal quotation marks omitted). "We review the district court’s interpretation and application of statutes of limitations de novo ." Ctr. for Biological Diversity v. Hamilton , 453 F.3d 1331, 1334...