Although war can present “‘exceptional opportunities’ for fraud on the United States Government,” the statute of limitations for civil actions, including qui tam actions brought under the False Claims Act (31 USC §3729 et seq.), is not tolled by the Wartime Suspension of Limitations Act (WSLA) (18 U.S.C. §3287). On May 26, 2015, the Supreme Court issued its ruling in Kellogg Brown & Root Services, Inc. v. U.S. ex rel Carter, finding that when the United States is involved in an armed conflict, only criminal charges are suspended by the WSLA. The High Court also interpreted language in the False Claims Act regarding the first-to-file rule.
The Wartime Suspension of Limitations Act
Congress enacted the WSLA in 1942 in order to preserve the options of federal prosecutors to bring criminal charges against perpetrators of fraud against the federal government during wartime until three years after the war was over. Before a 2008 amendment, it provided that the running of any statute of limitations applicable to any offense involving fraud committed against the United States was suspended “while the United States is at war.” In 2008, Section 855 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (P.L. 110-417) amended the law to apply when Congress has enacted specific authorization for the use of military force, until there is either a presidential proclamation or concurrent resolution of congress declaring that hostilities have ended.
Application to qui tam actions
The case before the Supreme Court involves allegations of fraud by government contractors billing for their work in Iraq. The relator was an employee of one of the contractors; the United States declined to intervene. The contractors raised the statute of limitations as a defense, and the relator argued that the WSLA tolled the statute of limitations. The trial court dismissed the complaint, ruling that the WSLA applied only when the government was a party to the litigation. The Court of Appeals reversed, ruling that the WSLA applied to all matters involving alleged fraud against the United States government.
In addition, it held that the “first to file” rule did not bar the relator’s claims because the earlier lawsuits had been dismissed. Although 31 U.S.C. §3730(b)(5) provides that no party other than the government may sue under the False Claims Act when there already is another action pending on a related claim, the Fourth Circuit ruled that the provision no longer applies if the previous litigation has been dismissed.
The United States Supreme Court granted certiorari on July 1, 2014.
Health care amicus brief
The Pharmaceutical Research and Manufacturers Association (PhRMA), the American Hospital Association (AHA), and the American Medical Association (AMA) joined with the Chamber of Commerce of the United States of America and the Clearing House Association, an organization of banks, to file an amicus curiae brief. The brief raised concerns that business generally, and health care-related businesses in particular, would be unable to plan when the country is involved in military operations. It also contended that the Fourth Circuit’s interpretation of the first-to-file rule allows relators to dismiss and re-file, adding to the uncertainty that potential claims may never die (see Wartime extensions of limitations should not apply to qui tam cases: PhRMA, AHA, AMA, Health Law Daily, September 8, 2014).
The Supreme Court held that the WSLA applies only to criminal charges, and not to civil claims. Writing for a unanimous Court, Justice Alito noted that the WSLA should be construed narrowly, finding that “the WSLA does not suspend the applicable statute of limitations under either the 1948 or the 2008 version of the statute.” With regard to the first-to-file rule, the Court found no reason not to interpret the term “pending” in the FCA in accordance with its ordinary meaning and affirmed part of the Fourth Circuit’s opinion, holding that “a qui tam suit under the FCA ceases to be ‘pending’ once it is dismissed.” The Court remanded the case to the Fourth Circuit for further proceedings consistent with its opinion.