By: Lindsay Simmons
Bad news: On March 18th the United States Court of Appeals for the Fourth Circuit significantly broadened the scope of False Claims Act (FCA) liability for government contractors. United States ex rel. Carter v. Halliburton, No. 12-1011 (4th Cir. Mar. 18, 2013). How? By holding that the Wartime Suspension of Limitations Act (WSLA) delays the FCA’s six-year statute of limitations in qui tam cases while the country is at war – and for five years thereafter. As the dissent notes, “no case has ever held . . . that the WSLA applies to civil cases where the United States is not a plaintiff or intervenor in the qui tam action.”
The Carter case involved a government contractor engaged to build water purification systems in Iraq. The qui tam action alleged contractor billing improprieties. The relator’s complaint was filed after the six-year limitations period for filing such claims and the United States declined to intervene.
The district court dismissed the complaint as untimely. In overturning this dismissal the Fourth Circuit held that the WSLA applies (1) “to all offenses involving fraud against the United States;” and (2) to qui tam claims even when the government declines to intervene. The Court framed the goal of WSLA goal as “root[ing] out fraud against the United States during times of war.”
What does this mean? Government
contractors could face statutes of limitations that have been suspended for more
than 12 years – since 2001 – and that will not resume until after the
hostilities in Afghanistan and Iraq are over. And, while Carter involved false claims connected directly to the war effort, other contractors may be in harm’s way as well, as courts may hold the WSLA applicable to claims unrelated to war or conflict. In short, Carter could be used to suspend the limitations period for a wide range of FCA claims brought by relators or directly by the government into many areas of government contracting.
Lindsay Simmons is the attorney responsible for the content of this article.