Court Rules That Statute of Limitations for False Claims Act Cases Extended During Time of War

Posted on Health Care Law News by author

In an important development in False Claims Act jurisprudence, the Fourth Circuit Court of Appeals recently clarified that the normal six year statute of limitations applicable to False Claims Act cases can be tolled pursuant to the Wartime Suspension of Limitations Act (WSLA), 18 U.S.C. § 3287, which generally tolls the statute of limitations in federal fraud cases during times of war. More specifically, in United States ex rel. Benjamin Carter v. Halliburton et al., 2013 U.S. App. LEXIS 5309 (4th Cir. March 18, 2013), the Fourth Circuit Court of Appeals reversed a district court’s decision dismissing a False Claims Act case with prejudice, a decision that was driven in large part by the district court’s conclusion that the WSLA does not apply to False Claims Act cases pursued solely by qui tam relators (i.e., non-intervened cases). The district court further held that the Relator’s case, which was filed on June 2, 2011, and which was based on conduct that occurred from mid-January 2005 until April 2005: (1) had been filed beyond the FCA’s six year statute of limitations; (2) that although the Iraq war was in progress during the relevant time period, the WSLA did not toll the statute of limitations with respect to claims pursued only by a private relator; and (3) that the case would therefore be time-barred should it be re-filed.

The Fourth Circuit Court of Appeals reversed, finding that the WSLA does apply to non-intervened cases pursued by qui tam relators, and further that the WSLA tolls the applicable six year limitations period while the country is at war (which the country still is). The Fourth Circuit specifically found that the United States was “at war” in Iraq starting October 11, 2002, when Congress formally authorized the President to use military force. The appellate court also found that Iraq war had not been terminated by 2005 (the period when the claims at issue were presented for payment). Therefore, the Fourth Circuit held, the WSLA tolled the statute of limitations, and the Relator’s complaint was not time-barred. The case was then remanded to the district court.

The potential impact of this opinion should not be underestimated, as it could breathe new life into False Claims Act with perceived statute of limitations issues, and it could also significantly expand the universe of claims at issue in a given case. It is not yet clear whether this decision will be appealed to the U.S. Supreme Court.