High Court Should Reverse 4th Circ.’s Flawed FCA Ruling

The U.S. Supreme Court is currently deciding whether to review the Fourth Circuit's decision in United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013), holding that the Wartime Suspension of Limitations Act suspended the statute of limitations for civil False Claims Act cases.

In Carter, a former employee filed a whistleblower action under the qui tam provisions of the FCA, alleging that, in early 2005, the defendants submitted false claims to the United States military for water purification services provided during the Iraq War. The United States declined to intervene and the former employee has litigated the action on behalf of the government, as the qui tam provisions permit.

The district court dismissed these claims as barred by the FCA's six-year statute of limitations. The Fourth Circuit reversed. It held that the October 2002 Congressional authorization for the use of armed force in Iraq triggered the WSLA, and that the WSLA suspended the FCA's statute of limitations and will continue to do so until five years after the president or Congress declares a termination of hostilities. Id. at 179.

In addition to Carter, two district courts have held that the WSLA has suspended the FCA statute of limitations. See United States v. Wells Fargo Bank NA, Civ. No. 12-7527, 2013 U.S. Dist. LEXIS 136539 (S.D.N.Y. Sept. 24, 2013) (WSLA triggered by both the war in Afghanistan and the war in Iraq); United States v. BNP Paribas, 884 F. Supp. 2d 589 (S.D. Tex. 2012) (same).

The courts in Carter, Wells Fargo and BNP Paribas erred in ruling that the WSLA applies to noncriminal matters, such as claims asserted under the FCA. In Carter, the defendants have petitioned for a writ of certiorari, and on Oct. 7, 2013, the Supreme Court invited the solicitor general to share the views of the United States. The Solicitor General's Office has not yet responded.

Carter, Wells Fargo and BNP Paribas effectively eliminate the statute of limitations in FCA cases and put businesses in numerous industries, including health care, defense and financial services, at risk of having to defend stale claims seeking potentially ruinous damages under the False Claims Act.

Under these rulings, for an entity that has done business with the government or that has been a Medicare or Medicaid provider within the past 10 years, the statute of limitations has not yet begun to run for False Claims Act claims and will not begin to run for at least five years after...

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