The federal False Claims Act (aka Qui Tam statute) provides a cause of action for an employee who is retaliated against for attempting to prevent its employer from making fraudulent claims for payment to the United States.  An open issue in the Fifth Circuit (the federal court of appeals covering appeals from Texas, Louisiana and Mississippi) was how quickly a plaintiff had to file a lawsuit for retaliation under the statute. In Riddle v. Dyncorp Inter. Inc., the Court clarified that the appropriate statute of limitations for an FCA retaliation claim in Texas is two years.  

In Riddle, the plaintiff alleged that he was a senior employment manager for Dyncorp until he was terminated.  Prior to his termination, Dyncorp, according to Riddle, contracted with the federal government to create a database but took no meaningful steps to fulfill the obligation.  He claims that when he protested the inaction, he was marginalized at work and eventually fired.  He filed his complaint against Dyncorp and three employees 178 days after his termination.  The company moved to dismiss the complaint alleging that a 90 day statute of limitations (borrowed from the Texas Whistleblower Act) applied to the claim and was untimely.  The trial court accepted this argument and dismissed the complaint.

On appeal, the Fifth Circuit Court of Appeals reversed the trial court and concluded that a two year statute of limitations applied to the claim.  When a federal cause of action fails to set a statute of limitations, the court is required to look at the most closely applicable state law claim and apply its statute of limitations.  Here, the court of appeals had to determine whether the 90 days statute of limitations from the Texas Whistleblower Act or the general two year statute of limitations applying to personal injury claims and is the default limitations period under Texas law applied.  Given that the Texas Whistleblower Act applies only to public employees and requires the exhaustion of any administrative appeals processes of the public employer, the Court found a sufficient number of differences between the FCA and TWA such that the 90 day limitations period was inapplicable.  Instead, the Court held that an FCA retaliation claim is more closely akin to a Sabine Pilot wrongful discharge claim (i.e., termination for refusal to perform an illegal act) because it is available to all employees (except those covered by contract or CBA) and has no administrative prerequisites that must be exhausted before bringing suit.  The Sabine Pilot claim has a two year statute of limitations.  Consequently, the Court concluded that the two year limitations period was appropriate, reversed the trial court’s dismissal, and remanded the case back to the trial court for further proceedings.

A full copy of the Court’s opinion is available here.

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