Fourth Circuit Applies The Wartime Suspension Of Limitations Act To The Civil False Claims Act

The False Claims Act's ("FCA") six-year statute of limitations took a body blow on March 18, 2013 when a split panel of the Fourth Circuit Court of Appeals ruled that the Wartime Suspension of Limitations Act, 18 U.S.C. § 3287 ("WSLA") applies to certain FCA claims. With its opinion in United States ex rel. Carter v. Halliburton Co., No. 12-1011, 2013 WL 1092732 (4th Cir. Mar. 18, 2013), the Fourth Circuit is the first appellate court in more than fifty years to apply the WSLA to civil FCA causes of action and the first appellate court ever to apply it since the FCA's 1986 amendments. In our view, the Halliburton decision rests on a flawed interpretation of the WSLA text and its legislative history, and it also fails to address numerous other arguments demonstrating that Congress never intended the WSLA to extend to civil FCA actions.

We advanced similar views in response to the 2012 district court decision in United States v. BNP Paribas SA, 884 F. Supp. 2d 589 (S.D. Tex. 2012), which, at that time, was the first district court ruling in more than fifty years applying the WSLA to a civil FCA action in order to resurrect otherwise time-barred claims. See FraudMail Alert No. 12-08-16. The Fourth Circuit's ruling in Halliburton further diminishes the viability of a statute of limitations defense in certain types of FCA cases, even those brought by qui tam relators.

Of course, pending any reversal on rehearing, the Halliburton decision applies only in the Fourth Circuit and, in any event, leaves open a number of questions concerning the application of the WSLA to civil FCA claims. Because the action was remanded to the district court for further proceedings, the decision is unlikely to reach the Supreme Court anytime soon. In the meantime, the result (right or wrong) will present significant challenges to defendants seeking to avoid having to defend against stale FCA allegations.

Halliburton Case Background

Halliburton is a qui tam action under the FCA. The Justice Department declined to intervene and, as far as the docket reflects, the Justice Department did not file any brief with the Fourth Circuit expressing its view on the WSLA issue.

The relator in Halliburton alleged that the government contractor defendant violated the FCA by falsely billing the United States under a Defense Department contract to provide logistical services to U.S. military forces in Iraq. The specific FCA violations allegedly occurred in 2005. Judge Cacheris of the...