The Supreme Court unanimously held Tuesday that the Wartime Suspension of Limitations Act applies to criminal offenses, not the civil one cited in a case against KBR Services, setting back a whistleblower claim brought by a former contract employee for the firm in Iraq.
But the high court also rebuffed the company’s argument that the claim should be barred in perpetuity because of the existence of a related claim and remanded it to a lower court for further review.
From January to April 2005, during the armed conflict in Iraq, Benjamin Carter worked there for KBR as a water purification operator. He filed a qui tam complaint against them, alleging they had fraudulently billed the government for services that were not performed or not performed properly.
The False Claims Act was adopted in 1863 and signed into law by President Abraham Lincoln in order to combat rampant fraud in Civil War defense contracts. The FCA may be enforced not just through litigation brought by the government, but also through civil qui tam actions that are filed by private parties.
In 2010, shortly before trial, the US informed the parties about an earlier lawsuit that arguably contained similar claims.
“This initiated a remarkable sequence of dismissals and filings,” the court wrote in its opinion.
A lower court held that Carter’s suit was related to the earlier one and dismissed it without prejudice under a “first-to-file” bar. Carter appealed, and while his appeal was pending, the earlier case was dismissed for failure to prosecute. Carter quickly filed a new complaint, but the court dismissed this complaint under the first-to-file rule because respondent’s own earlier case was still pending on appeal.
Carter then voluntarily dismissed this appeal, and in June 2011, more than six years after the alleged fraud, he filed yet another complaint, and it is this complaint that was at issue.
The FCA imposes two restrictions on qui tam suits related to the case. One, the first-to-file bar, precludes a qui tam suit “based on the facts underlying [a] pending action,” the court said. The other, the FCA’s statute of limitations provision, states that a qui tam action must be brought within six years of a violation or within three years of the date by which the US should have known about a violation. In no circumstances may a suit be brought more than 10 years after the date of a violation.
