• Court Holds Tolling Provisions of the Wartime Suspension of Limitations Act Applies to Actions filed under the False Claims Act
  • May 16, 2013
  • Law Firm: Berger Montague P.C. - Philadelphia Office
  • The Wartime Suspension of Limitations Act extends the time for filing False Claims Actions
    When an action is filed under the False Claims Act (FCA), 31  U.S.C. §3729 , it is not unusual for a court to consider such issues as whether the relator is the first to file or whether there has been prior public disclosure of the relator's allegations.  In a recent decision, U.S. ex rel. Carter v. Halliburton Co., et al., 710 F.3rd 171 (4th Cir. 2013) the Fourth Circuit Court of Appeals  focused on a more unusual issue, the application of the Wartime Suspension of Limitations Act (WSLA), 18 U.S.C. § 3287 to a false claims action.

    The whistleblower, Carter, claimed the defendants fraudulently billed the United States for services provided to military forces serving in Iraq by billing for work not performed and by submitting inflated time sheets.  His case has a complex procedural history.  His original complaint was filed in 2005 based on conduct occurring in that year.  The case in the Court of Appeals was based on a subsequent complaint filed in 2011 that had been dismissed by the district court as having been filed more than six years after the fraudulent conduct alleged and therefore  time barred by the statute of limitations in the FCA, 31 U.S.C. § 3731(b).  The Fourth Circuit applied the WSLA and reversed.

    The WSLA applies to False Claims Actions alleging civil offenses even without the participation of the United States

    The WSLA was first enacted in 1942 to lengthen the time to prosecute criminal fraud offenses against the United States during times of war "until three years after the termination of hostilities as proclaimed by the President or by a concurrent resolution of Congress."  18 U.S.C. § 3287 (2006).  In 2008, the WSLA was amended to, among other things, extend the time to bring an action "until 5 years after the termination of hostilities as proclaimed by a presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress."  18 U.S.C. § 3287.

    Although this case involved a direct contract with the military, that factor was not mentioned and appeared to have no impact on the decision probably because the WSLA is intended to apply to all fraud on the government during wartime.  The Fourth Circuit did interpret several different terms of the WSLA in rejecting the defendants' various arguments that the WSLA does not apply to false claims actions. The court first concluded that the United States was at war in Iraq during the relevant time period without a formal declaration of war , noting  further that neither Congress nor the President had acted to terminate the period of suspension during the time the allegedly fraudulent claims had been presented for payment, id at  179  .

    It then considered the text of the statute and the legislative history to determine that the "offense[s] involving fraud" to which the WSLA applies include civil claims, id at 180. It went on to conclude that the WSLA was applicable to relator-initiated cases where the United States is not a plaintiff nor an intervenor, id at  181. The court  found the  opinion in  United States ex rel Saunders v. North American Bus Industries, Inc., 546 F.3d 288 (4th Cir 2008) was inopposite. That case held that the provisions of 31 U.S.C. 3731(b) (2) did not toll the limitations period when the government is not a party to an FCA action.  As a result of these conclusions, the Carter court  held that the period of limitations had been suspended so that Carter's claim was timely filed.  In doing so, it rejected the position of a dissenting member of the panel who was concerned that application of the WSLA to FCA actions would allow extension of the statute of limitations indefinitely if the requisite action to suspend hostilities is not taken.

    Impact on other False Claim Actions

    At least one relator in a pending  non-intervened  false claim action alleging kickbacks  has urged a district court to apply the holding in Carter to toll the statute of limitations in his case, Emanuele v. Medicor Associates, Inc. ( 1:10-cv-00245 W.D. Pa. ).  It will be interesting to see if courts in other circuits follow the decision of the Fourth Circuit.