In a blog post last summer we told you: “You heard it here first – the Supremes are going to put the kibosh on the WSLA.”
Yesterday, the Supremes did just that in deciding Kellogg Brown & Root Services, Inc. v. United States ex. rel. Carter.
The billion dollar issue in the KBR opinion was this: does the Wartime Suspension of Limitations Act (WSLA) apply only to criminal charges or also to civil claims (like claims under the False Claims Act)?
By way of background, private parties may file civil qui tam actions to enforce the False Claims Act (FCA), which prohibits making a false or fraudulent claim for payment or approval. A qui tam action must generally be brought within six years of a violation, but the WSLA suspends the running of any statute of limitations applicable to any “offense” involving fraud against the Federal Government whenever the United States is engaged in armed conflict.
The Supremes, in a unanimous opinion, only needed ten pages to tell us what you heard here first, that the WSLA only applies to criminal cases. In its analysis, the Supreme Court explained that commonly understood terms like “offense” in the WSLA only apply to criminal offenses and not civil claims. As further support, the Court looked to the legislative history of the WSLA and pointed out that a previous version of the WSLA included the phrase “now indictable under any existing statutes.” Even though this phrase was later stricken, the Supreme Court explained that the logical explanation of deleting this phrase was that Congress did so to change the WSLA from a retroactive measure designed to deal exclusively with past fraud into a permanent measure applicable to future fraud as well.
The Supreme Court decision matters because, had it gone the other way, the decision could have resulted in FCA claims having essentially no statute of limitations. This is especially true because, as of late, the United States is always engaged in some sort of armed conflict. The Supreme Court’s ruling is a huge win for the defense bar.
However, a portion of the KBR ruling was not helpful to the defense bar. The Supreme Court also considered a second issue that had not garnered as much attention: whether the FCA’s first-to-file bar keeps new claims out of court only while related claims are still alive or whether it may bar those claims in perpetuity? The FCA’s first-to-file bar precludes a second qui tam suit based on the facts underlying a “pending” action. The Supremes held that the first-to-file bar keeps new claims out of court onlywhile related claims are still alive, not in perpetuity. As support, the Court again looked to the ordinary meaning of words in the statute and it focused on the word “pending.” The Court explained that the term “pending” means “undecided” and “awaiting decision,” and that “we see no reason not to interpret the term ‘pending’ in the FCA in accordance with its ordinary meaning.”