False Claims Act Statute of Limitations Upheld

A hospital system’s corporate integrity agreement (CIA) officer and in-house counsel successfully argued that the statute of limitations barred a False Claims Act (FCA) complaint against her, according a ruling filed by U.S. District Court for the Southern District of Florida (Court), dated April 16, 2010.

The CIA officer was charged with FCA violations long after the government filed related FCA charges against the hospital system for which she worked. Although the CIA officer’s involvement was a cornerstone of the government’s initial case, the government had formed a belief that she had knowingly made false certifications of compliance with the CIA despite her knowledge of Stark Act violations.The government alleged that the CIA officer violated the False Claims Act when she submitted sworn declarations that her employer (at that time, Tenet Healthcare Corporation) was in material compliance with applicable federal program requirements. Such declarations were alleged to be false for failing to disclose that Tenet was in violation of the Stark Statute by billing Medicare for referrals from twelve physiciains who practiced at a Tenet facility in Ft. Lauderdale, North Ridge Medical Center, and by allowing those violations to continue.

Because the statutory six-year statute of limitations period from the date of the CIA officer’s last alleged FCA violation had expired, the government relied upon the alternative statutory tolling period of three years from the date when it knew or should have known material facts about the violation (31 U.S.C. §3731(b)(1) and (2)). The government contended that it lacked essential evidence of the CIA officer’s false statements until it reviewed an outside counsel’s report on Stark Act violations, and that the delivery of that report should start the statute of limitations clock.

The government, however, had made multiple statements to the same court during the previous suit against the hospital system, well before it received the outside counsel report, that the CIA officer was personally involved in the illegal conduct.

The Court decided that the government could not, on the one hand, attempt to impute the CIA officer’s intentional fraudulent conduct to the hospital system to hold the hospital system liable and, on the other hand, claim that it was unaware of the CIA officer’s fraudulent intent. The government knew of ample evidence years before it received the outside counsel’s report.

According to the Court, "the statute of limitations clock does not re-start every time a plaintiff learns of a new fact or of better evidence to support its claim."

Find the complete document filed by Court in our Documents Section: U.S. v. Sulzbach, S.D. Fla., April 16, 2010