On May 26, 2015, the Supreme Court of the United States ruled unanimously in Kellogg Brown & Root v. United States ex rel. Carter, 575 U.S. ___ (2015) that the Wartime Suspension of Limitations Act (“WSLA”) does not suspend the statute of limitations for civil suits under the False Claims Act (“FCA”). The statute of limitations for a plaintiff to file a civil FCA lawsuit can be three or six years, but cannot exceed 10 years from the violative conduct. The decision also clarified the meaning of “pending” litigation under the first-to-file rule, holding that when a prior-filed qui tam suit is dismissed or withdrawn, there is no “pending” related litigation barring suit.

The case arose from the conflict in Iraq. An employee of a defense contractor, who was stationed in Iraq in 2005, alleged that his employer billed the United States for water purification services during the Iraqi War that were either performed improperly or not at all. The relator filed suit, but the District Court dismissed the case under the first-to-file rule because a similar qui tam lawsuit, which had been dismissed, was held to be “pending.” The Fourth Circuit reversed and ruled that: (1) the WLSA suspension of the statute of limitations applied to civil claims as well as criminal claims; and (2) the first-to-file rule does not apply once an earlier filed qui tam lawsuit is dismissed.

The Supreme Court ruling helped both the relator and the petitioner. First, it ruled that the “text, structure, and history” of the WLSA demonstrate that its tolling of the statute of limitations only applies to criminal cases. Second, the Court held that the first-to-file rule supported the plain meaning of a “pending” action. Thus, if another FCA action was not actually “pending,” the first-to-file rule did not apply.

In holding that the WLSA does not apply to civil claims, the Supreme Court traced the WLSA back to its adoption and amendments. The statute originally referred to “any offense against the laws of the United States,” and codified the WLSA under “Crimes and Criminal Procedure.” Although Congress amended the False Claims Act in 2008, it did not remove the reference to an “offense” and did not clarify that the suspension of the statute of limitations’ tolling would apply in civil matters as well as criminal matters. In its ruling, the Supreme Court sidestepped defining the term “war” within the statute. It deliberately did not answer whether the term applies to any military conflict, or whether the WLSA requires a formal, Congressional declaration of war to apply. 

The Court then addressed the first-to-file bar, which provides that “[w]hen a person brings an action… 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). The petitioner argued that a “pending action” could include cases which had been dismissed, therefore barring any subsequent action indefinitely. The Court reasoned that such an interpretation of “pending” departed from the plain language of the statute. The Court further noted that under such an interpretation, cases such as Marbury v. Madison and the trial of the Socrates would still be “pending.” The Court also recognized that adopting the petitioner’s interpretation could lead to inequitable results when, for example, suits dismissed on grounds having nothing to do with the merits of the case would be barred from refiling. The Supreme Court held that “a qui tam suit under the FCA ceases to be ‘pending’ once it is dismissed.” The Court acknowledged that while its holding was in harmony with the plain meaning of “pending” in the statute, its holding may act to discourage settlement of qui tam claims.

This decision serves as a double-edged sword for government contractors: they are protected from the uncertainty of False Claims Act liability extending beyond the limitations period. On the other hand, persons receiving federal funds are not protected from a second qui tam suit when the limitations period has not yet run and the first action is dismissed and no longer “pending.”