Recent Decision In Lance Armstrong False Claims Act Case Raises New Timelines Arguments

For several years now, litigants have wrestled with three questions: (i) does the Wartime Suspension of Limitations Act ("WLSA") apply to civil False Claims Act ("FCA") actions, (ii) do the 2009 Fraud Enforcement and Recovery Act ("FERA") amendments to the FCA apply to FCA "claims" pending as of the effective date of the FERA or to FCA actions pending as of that date, and (iii) to what extent and under what circumstances can third parties be held liable under the FCA for claims asserted by others? The U.S. District Court for the District of Columbia recently issued a significant decision addressing these questions in the context of resolving a motion to dismiss in a whistleblower suit brought against Lance Armstrong.

The FCA action was brought by Armstrong's former teammate Floyd Landis, and the government later intervened. The complaints allege that Armstrong and his cycling team defrauded the government of $42 million in sponsorship monies by engaging in doping that was prohibited by the United States Postal Service ("USPS") sponsorship agreements of Armstrong's team. Armstrong and his co-defendants moved to dismiss the complaint on the basis that they involved events beyond the FCA's general six-year statute of limitations.

The decision first addressed whether the WSLA tolled the FCA's statute of limitations. The WSLA amended Title 18 of the US Code to provide that when Congress has authorized the use of military force, "any statute of limitations applicable to any offense involving fraud or attempted fraud against the United States or any agency thereof ..." is suspended until five years after the termination of hostilities. The relator argued that the WSLA tolled the statute of limitations for conduct occurring more than six years before the FCA complaint was filed.

In a departure from many recent rulings in other cases broadly interpreting the scope of the WSLA, the court held that because the WSLA's tolling provision applies only to "fraud" cases, it is not applicable to a suit under the FCA. The court relied heavily on the United States Supreme Court's decision in United States v. Grainger, 346 U.S. 235, 242 (1953), in concluding that this provision of the WSLA cannot toll the statute of limitations for FCA cases.1 Grainger held that a WSLA provision suspending statutes of limitations for offenses involving fraud applied only to claims in which fraud is an "essential ingredient." Because the 1986 amendments to the FCA provide that a...