Wartime Suspension of Limitations Applied to Qui Tam FCA Action

The Court of Appeals for the Fourth Circuit reversed and remanded the dismissal of a qui tam False Claims Act action because the Wartime Suspension of Limitations Act (18 USC 3287) applies to FCA claims in which the government has opted not to intervene, and the first-to-file rule of 31 USC 3730(b)(5) does not stop a relator from filing once a prior related case is no longer pending. The relator alleged the contractors fraudulently billed the government for services provided to military forces in Iraq in violation of 31 USC 3729(a)(1) and (2). Granting the contractors’ motion to dismiss the claims as barred by the FCA’s six-year statute of limitations (31 USC 3731(b)(1)), the district court rejected the relator’s argument the WSLA tolled the claims ( 56 CCF ¶79,701). The district court ruled the WSLA does not apply to non-intervened qui tam cases.

Party Irrelevant

On appeal, the Fourth Circuit first determined the United States was “at war” for purposes of the WSLA beginning when Congress issued the Authorization for the Use of Military Force against Iraq on October 11, 2002, and when the claims at issue were presented for payment in 2005. The court then rejected the contractors’ argument the WSLA’s reference to “offense” limited its application to criminal offenses. Finally, the court addressed the district court’s conclusion the WSLA did not apply to actions where the government was not a party. The district court relied on a Fourth Circuit decision ( 52 CCF ¶79,023) holding a special statutory extension of the FCA’s statute of limitations (31 USC 3731(b)(2)) was available only to the government. However, the suspension of limitations in the WSLA depends on whether the country is at war, not who brings the case, and whether the suit was brought by the government or a relator was irrelevant.

Not Barred Forever

With regard to application of the first-to-file rule, the Fourth Circuit rejected the relator’s attempt to distinguish the action from two other pending FCA actions that also alleged the contractors systematically overbilled the government for hours worked by their employees. Even though the fraud occurred through different types of employees and in different divisions, the actions were based on the “same material elements of fraud.” However, the district court erred when it dismissed the relator’s complaint with prejudice on the ground it was forever barred by a pending action. Both of the original actions had been dismissed, and the first-to-file bar no longer precluded the relator from filing an action. The action was remanded to the district court to address whether the action should be dismissed on the alternative ground of the FCA’s public disclosure bar. ( U.S. ex rel. Carter v. Halliburton Co., et al., CA-4, 57 CCF ¶80,034)