26 May 2015

Law in Plain English: Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogKellogg Brown & Root Services, Inc. v. United States ex rel. Carter

Argument: TBD (Aud.)

Background: In 2011 (after several previous attempts and amendments), former employee Benjamin Carter filed a qui tam (whistleblower) action under the False Claims Act (FCA), alleging that KBR falsely billed the United States for services performed in Iraq in 2005. The district court ruled that the complaint was filed outside of the FCA's six year statute of limitations. The court also found that another substantially similar complaint had been filed before Carter's, and was therefore the court did not have jurisdiction to hear the case pursuant to the FCA's first-to-file bar (a provision to prevent parasitic lawsuits based upon previously disclosed fraud). The Fourth Circuit reversed, finding that the Wartime Suspension of Limitations Act tolled the statute of limitations while the United States was engaged in combat in Iraq even if war was not formally declared. Additionally, the panel found that, while Carter's claim was properly denied by the district court pursuant to the first-to-file bar, dismissing the claim with prejudice was erroneous because Carter could re-file his claim later if the other complaint was dismissed (as it later was).

Issue: The questions before the Court are (1) whether the Wartime Suspension of Limitations Act – a criminal code provision that tolls the statute of limitations for “any offense” involving fraud against the government “[w]hen the United States is at war,” 18 U.S.C. § 3287, and which this Court has instructed must be “narrowly construed” in favor of repose – applies to claims of civil fraud brought by private relators, and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling; and (2) whether, contrary to the conclusion of numerous courts, the False Claims Act’s so-called “first-to-file” bar, 31 U.S.C. § 3730(b)(5) – which creates a race to the courthouse to reward relators who promptly disclose fraud against the government, while prohibiting repetitive, parasitic claims – functions as a “one case- at-a-time” rule allowing an infinite series of duplicative claims so long as no prior claim is pending at the time of filing.

Holding: In a unanimous decision, the Supreme Court ruled that As shown by the WSLA’s text, structure, and history, the Act applies only to criminal offenses, not to civil claims like those in this case. The FCA’s first-to-file bar keeps new claims out of court only while related claims are still alive, not in perpetuity. Thus, dismissal with prejudice was not called for in this case.
Post a Comment