Source: https://www.wilmerhale.com/insights/client-alerts/fourth-circuit-expands-fca-limitations-period
Timestamp: 2019-04-22 19:55:45+00:00

Document:
In United States ex rel. Carter v. Halliburton, a divided panel of the U.S. Court of Appeals for the Fourth Circuit expanded the scope of potential False Claims Act (FCA) liability for government contractors by holding that the Wartime Suspension of Limitations Act (WSLA) suspends the six-year statute of limitations in qui tam FCA cases even when the government has not intervened.1 The WSLA, located in the U.S. Criminal Code, suspends the limitations periods for fraud “offenses” against the United States while the country is engaged in a declared war or armed hostilities and for five years thereafter.2 Only one other modern court has held that the WSLA suspends the statute of limitations in civil FCA cases,3 and, as the Carter dissent notes, “no case has ever held (other than in dicta) that the WSLA applies to civil cases where the United States is not a plaintiff or intervenor in the qui tam action.”4 By suspending the express FCA limitations period in a potentially wide range of cases, the Carter decision reflects a substantial expansion of the applicability of the WSLA that appears inconsistent with the intent of Congress expressed in the FCA’s qui tam provisions.
In over fifty years, no court had applied the WSLA to toll the limitations period in civil FCA suits. In August 2012, however, in a case brought directly by the United States, a district court in Texas held that the WSLA applies to civil claims under the FCA, regardless of whether those claims arise from a contract related to the hostilities. See United States v. BNP Paribas SA, 884 F. Supp.2d 589 (S.D. Tex. 2012). Indeed, the claim related to the fraudulent procurement of USDA payment guarantees for exports of U.S. commodities—not to the wars in Iraq or Afghanistan.
The panel unanimously reversed the lower court’s holding that the FCA’s statutory first-to-file bar (which prevents the filing of qui tam suits based on the same facts as a “pending” action) barred Carter’s claims. The court reasoned that because the first-filed cases had been dismissed before Carter filed his complaint, they were no longer “pending” for purposes of the first-to-file bar.
Under the broadest reading of the majority’s opinion in Carter, potential FCA defendants could face what is, for all practical purposes, statutes of limitations that have been tolled since 2001 and will not begin to run until after the end of hostilities in Afghanistan and Iraq.15 While Carter’s facts were limited to alleged false claims squarely connected to the war effort, companies operating outside of the defense industry should take note as well—courts could follow BNP Paribas to hold the WSLA applicable to claims not arising out of a war or conflict, though no other court has so far taken such a broad view. Taken together and construed broadly, BNP Paribas and Carter could be invoked to suspend the limitations period for a wide range of FCA claims brought by relators or directly by the government involving healthcare, prescription drugs, finance and banking, and other areas of government contracting.
1United States ex rel. Carter v. Halliburton Co., No. 12-1011 (4th Cir. Mar. 18, 2013) (“Carter”). The decision is available here: http://www.ca4.uscourts.gov/Opinions/Published/121011.P.pdf.
2 18 U.S.C. § 3287.
3United States v. BNP Paribas SA, 884 F. Supp.2d 589 (S.D. Tex. 2012).
5Bridges v. United States, 346 U.S. 209, 217 (1953).
6 Pub. L. No. 110-329 (2008).
7 18 U.S.C. § 3287.
8United States ex rel. Carter v. Halliburton Co., 2011 WL 6178878 (E.D. Va. 2011).
10Id. at *14 (“whether the suit is brought by the United States or a relator is irrelevant to his case because the suspension of limitations in the WSLA depends upon whether the country is at war and not who brings the case”). The district court placed significant weight on the distinction between claims with government intervention and those without.
12United States ex rel. Carter v. Halliburton Co., 2011 WL 6178878 (E.D. Va. 2011).
13 Carter at 35-36 (Agee, J. dissenting).
14Id. at 39 (quoting United States ex rel. Sanders v. North American Bus. Industries, Inc., 546 F.3d 288, 295 (4th Cir. 2008). See also United States ex rel. Carter v. Halliburton Co., 2011 WL 6178878 at *12 (E.D. Va. 2011).
15 The WSLA’s tolling provisions apply only where the alleged fraud occurred during war or hostilities; the statute of limitations does not toll for offenses committed before hostilities began. Carter at *8 (citing United States v. Smith, 342 U.S. 225, 262 (1952)). Among its other holdings, Carter held that hostilities have not terminated in Iraq because the WSLA’s requirement of a “presidential proclamation, with notice to Congress” or a “concurrent resolution of Congress” have not been satisfied. Id. at *9.

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