What is the statute of limitations for qui tam actions brought against a contractor during a time of war? The answer to this question depends not only on whether the Wartime Suspension of Limitations Act applies to actions brought by an individual relator under the qui tam provisions of the False Claims Act, but also on when the United States is "at war." The Fourth Circuit Court of Appeals addressed both of these questions in U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013).
“At war” does not mean “declared war.”
The Wartime Suspension of Limtations Act was enacted in 1942. It suspends the applicable limitations period for any offense involving fraud against the United States when the country is “at war” or when Congress has enacted a specific authorization for the use of the Armed Forces. The suspension lasts for the duration of the war and until five years after hostilities end. 18 U.S.C. § 3287. Hostilities must be terminated “by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.”
The meaning of “at war” is not specifically outlined in the WSLA, but it is a focal point of the decision in Carter. The relator, a water purification operator at two U.S. military camps in Iraq, asserted that his employer charged the government for work that was not performed. Due to a number of procedural obstacles, the action was filed outside of the six-year limitations period that normally applies to FCA qui tam actions. As a result, the district court dismissed the action as untimely. The relator appealed, asserting that the WSLA tolled the limitations period because the hostilities in Iraq meant that the United States was “at war.” The Fourth Circuit agreed, reasoning that a “formalistic” definition of when the country was “at war” did not reflect the “realities of today.”
In the court’s view, the purpose of the WSLA suggests that a formal declaration of war is not necessary. If Congress wanted to require a “declared war,” it could easily have done so. Since it did not, the court reasoned that the country is “at war” within the meaning of the WSLA whenever it is involved in an armed conflict:
[W]e believe that requiring a declared war would be an unduly formalistic approach that ignores the realities of today, where the United States engages in massive military campaigns resulting in enormous expense and widespread bloodshed without declaring a formal war. In fact, the United States has not declared war since World War II. However, there have been extensive military engagements in Vietnam, Korea, Kosovo, Afghanistan, and twice in Iraq. . . . Surely these circumstances result in situations in which fraud can easily be perpetuated against the United States just as much as a formally declared war. The purpose of the WSLA—to combat fraud at times when the United States may not be able to act as quickly because it is engaged in “war”—would be thwarted were we to find that the United States must be involved in a declared war for the Act to apply.
Despite the court's refusal to require a declaration of war as a prerequisite to the application of the WSLA, the decision adopts a more formalistic approach with respect to determining when a "war" is over. Because neither the President nor Congress had formally declared that the Iraqi conflict was over when the alleged violations occurred, the court reasoned that the WSLA applied and that the limitations period was tolled.
The WSLA applies to qui tam actions?
Perhaps more important than its analysis of the "at war" requirement, Carter is significant because it applies the WSLA to qui tam actions initiated by relators.
Judge Steven Agee's dissenting opinion asserts that extending WSLA to qui tam actions is contrary to the purpose of the WSLA and creates perverse incentives for qui tam relators. In his view, the motivation behind the WSLA was Congress’s recognition that the “fog of war” increases the potential for fraud against the government while also decreasing the government’s ability to effectively police that fraud. The WSLA affords “law enforcement the ability to thoroughly investigate allegations of fraud without compromising the ability of the United States to fulfill its military mission.” Given the intent of the WSLA, a logical understanding of its application would be that the act only tolls the FCA limitations period when the government initiated the action. Holding otherwise would allow qui tam relators to sit on their hands to allow the damages (and the relators’ potential recovery) to increase.
But Judge Floyd's majority opinion rejects that argument, holding that “the suspension of limitations in the WSLA depends upon whether the country is at war and not who brings the case.” The court reasoned that its holding does not lead to absurd results because the WSLA tolls the limitations period for a specified period of time that is not endless (though it is plainly much longer than the typical six-year period for FCA qui tam actions).
Light at the end of the tunnel
Fortunately, there is some hope that wartime contractors will not always be faced with the significantly expanded FCA limitations period contemplated in Carter. The contractors in Carter are appealing the decision to the Supreme Court, which could reverse the Fourth Circuit’s ruling and limit the application of the WSLA to government-initiated actions only. Some jurisdictions have also expressly declined to follow Carter and have held that the WSLA does not apply to private FCA claims. See, e.g., U.S. ex rel. Emanuele v. Medicor Assoc., C.A. No. 10-245 Erie (W.D. Pa. Jul. 26, 2013).