INTRODUCTION

On May 26, 2015, in Kellogg Brown & Root Services, Inc. v. U.S. ex rel. Carter (KBR),1 the U.S. Supreme Court resolved two important issues for government contractors and other entities facing qui tam actions under the civil False Claims Act (FCA). First, the Court held that the Wartime Suspension of Limitations Act (WSLA) applies only to certain criminal cases, and therefore does not toll the FCA's statute of limitations. Second, the Court held that the FCA's first-to-file bar is triggered only when an earlier-filed case is actually "pending" before another court, such that the earlier-filed action loses its preclusive effect upon its dismissal.

The WSLA 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" during times of war.2 In KBR, the Supreme Court concluded that Congress intended the word "offense" to refer only to crimes, not violations of civil statutes like the FCA. As a result, the WSLA had no effect on the FCA's statute of limitations, under which an FCA action must generally be brought within six years of an FCA violation (or within three years of when the government should have known of a violation).3 This ruling is important to companies that may be subject to FCA suits, because it limits the ability of the government or a qui tam relator to bring stale civil claims on the theory that the statute of limitations was tolled by congressionally authorized military actions such as those in Iraq and Afghanistan.

The FCA's first-to-file rule provides that "[w]hen a person brings an action" under the FCA's qui tam provisions, "no person other than the Government may intervene or bring a related action based on the facts underlying the pending action."4 Thus, a later qui tam action will be barred by an earlier filed "pending" action that makes related allegations. In KBR, the Supreme Court interpreted the word "pending" essentially as "undecided," such that the dismissal of an earlier action means that it is no longer "pending." This ruling could leave companies subject to recurring qui tam cases after an earlier case raising similar allegations is dismissed.

ANALYSIS

On both issues, the Supreme Court's unanimous opinion by Justice Samuel Alito relied heavily on the presumptions that Congress used the terms "offense" and "pending" consistently with their plain dictionary meanings.5 However, although the Court also extensively analyzed the WSLA's statutory structure and history, it did not give similar attention to the FCA and its first-to-file provision as a whole.

The WSLA Holding

The Court concluded that the WSLA's "text, structure, and history" showed that it "applies only to criminal offenses."6 The earliest version of the WSLA was enacted in 1921 to address fraud against the government committed during World War I, by temporarily extending the statute of limitations for fraud "offenses" that were "now indictable" under federal law.7 In 1944, however, Congress deleted the "now indictable" language, so the WSLA would apply prospectively, to future wartime fraud offenses not yet committed.8

In KBR, the Court emphasized that "offense" is commonly understood as referring only to crimes, citing Black's Law Dictionary.9 The Court rejected as "most improbable" the argument that Congress broadened the WSLA's scope to include suspending civil limitations periods, when it deleted the "now indictable" language in 1944.10 The Court explained that "[f]undamental changes in the scope of a statute are not typically accomplished with so subtle a move.... If Congress had meant to make such a change, we would expect it to have used language that made this important modification clear to litigants and courts."11 The Court concluded that, regardless of any possible ambiguity in the term "offense," its prior decisions favored resolving that ambiguity "in favor of the narrower definition," limited to crimes.12