Supreme Court Affirms Narrow Scope Of Wartime Suspension Of Limitations Act, Interprets False Claims Act 'First To File' Rule

In a unanimous decision issued on May 26, 2015, the United States Supreme Court closed the window that several lower courts had opened for bringing False Claims Act ("FCA") actions, finding that the Wartime Suspension Limitations Act ("WSLA"), 18 U.S.C. §3287, applies only to criminal offenses and not, as urged by the U.S. government (the "Government") and plaintiffs' bar, to civil FCA claims. But, the Court also held that the FCA's "first to file" rule keeps new claims out of court only while related, previously filed claims are still alive. The case is Kellogg Brown & Root Services, Inc. et al. v. United States ex rel. Carter, 575 US __ (May 26, 2015). Two components of the FCA were before the Court. The first, the FCA's statute of limitations, provides that a qui tam action must be brought within six years of a violation or within three years of the date by which the United States should have known about a violation. In no circumstances, however, may that suit be brought more than 10 years after the date of a violation. 41 U.S.C. §3731(b). This statute arguably intersects with the WSLA, which, during wartime, suspends "the running of any statute of limitations applicable to any offense ... involving fraud or attempted fraud against the United States or any agency thereof." 18 U.S.C. §3287 (emphasis added). The Court addressed whether "offense" includes civil claims.1 The second provision, the "first-to-file" bar, states that "[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." 31 U.S.C. §3730(b)(5) (emphasis added). The Court addressed whether "pending" includes cases that have concluded.

Background

In 2006, Benjamin Carter, a former Kellogg, Brown & Root Services, Inc. ("KBR") employee, brought a qui tam action ("Carter I") against KBR, claiming that KBR had fraudulently billed the Government for water purification services in Iraq. The Government declined to intervene in Carter's qui tam action. Carter's initial claim was followed by a complicated, "remarkable" sequence of dismissals and refilings of his complaint.2 A first district court decision denied Carter's claims, holding that the action was related to an action pending elsewhere, and thus barred by the FCA's first-to-file rule. Carter appealed that decision, and following a dismissal of the related action, Carter filed again ("Carter II"). The district...