(United States ex rel. Carter v. Halliburton Co., No. 12-1011 (4th Cir. Mar. 18, 2013))

The United States Court of Appeals for the Fourth Circuit has held that an obscure World War II-era statute—the Wartime Suspension of Limitations Act (WSLA), 18 U.S.C. § 32871—tolls the False Claims Act’s (FCA) statute of limitations during times of war. A qui tam relator had filed a complaint on June 2, 2011, alleging that Halliburton Company and Kellogg, Brown & Root Services, Inc. (collectively, KBR) had fraudulently billed the U.S. Government for work at U.S. military bases in Iraq from January 2005 through April 2005. Because the complaint was filed after the FCA’s six-year statute of limitations expired, the trial court dismissed the suit. On appeal, however, the Fourth Circuit reversed. The Fourth Circuit found that the WSLA still applies to extend the time to pursue fraud actions during wartime to "5 years after the termination of hostilities." The Fourth Circuit held that start of hostilities in Iraq triggered the WSLA’s wartime provisions—notwithstanding the absence of a formal declaration of war—and that the WSLA will apply until a Presidential proclamation or Congressional resolution officially concludes the war. Further, the Fourth Circuit held that the WSLA tolls the statute of limitations even when the United States declines to intervene in a qui tam action—a curious result given that the WSLA’s purpose is to allow the Government to bring fraud actions that it lacked the time and resources to pursue while carrying out a war.

This watershed ruling could broadly undermine the FCA’s statute of limitations as a bar to untimely fraud allegations. For example, courts now might find that the WSLA tolls the statute of limitations for any fraud action against a federal contractor, even if the underlying contract is unrelated to the war effort. In fact, Carter already has been cited by a qui tam relator alleging false claims for unnecessary medical procedures unrelated to the Iraq war. See Emanuele v. Medicor Assocs. Inc., 10-cv-00245 (W.D. Pa.). Ultimately, although other courts may be hesitant to follow the Fourth Circuit, contractors are well-advised to monitor this trend, as they may find themselves facing decades-old claims of fraud.