Supreme Court Rules on WSLA, FCA’s First-to-File Rule

The Supreme Court reversed the Court of Appeals for the Fourth Circuit’s holding a qui tam False Claims Act action was timely, because the Wartime Suspension of Limitations Act applies only to criminal offenses, not to civil claims. The Court also ruled the FCA’s first-to-file rule did not warrant dismissal of one timely claim, because prior related FCA actions cease to be “pending” once they are dismissed. The relator alleged the contractors fraudulently billed the government for water purification services provided to military forces in Iraq. In reversing a district court’s holding all but one of the claims were untimely, the Fourth Circuit concluded the WSLA applied to civil claims based on fraud committed during the conflict in Iraq.

“Offense”

The unanimous opinion by Justice Alito considered the WSLA’s text, structure, and history. The WSLA suspends “the running of any statute of limitations applicable to any offense … involving fraud or attempted fraud against the [government]” (18 USC 3287). The dictionary meaning of “offense” most commonly refers to crimes. Although “offense” is sometimes used more broadly, none of the hundreds of instances where the word appears in Title 18, Crimes and Criminal Procedure, denotes a civil violation, and Congress could have used clearer and more specific language if it wanted to toll the statutes of limitations for civil suits as well as crimes. The WSLA’s retention of the term “offense” from its enactment in 1921 suggested no fundamental alteration in the original meaning, which indisputably referred only to crimes. The government and relator argued the 1944 removal of the phrase “now indictable under any statute” expanded the WSLA’s reach to civil claims. However, “[f]undamental changes in the scope of a statute are not typically accomplished with so subtle a move,” and the amendment was necessary to change the WSLA from a retroactive measure designed to deal exclusively with past fraud into a measure that also applied to future fraud. Finally, the Court’s cases required resolution of any ambiguity in favor of the narrower definition. Therefore, because the case involved civil claims, the WSLA did not suspend the FCA’s statute of limitations.

“Pending”

The Court then considered the contractors’ argument the FCA’s first-to-file rule forever barred any subsequent related action, even if the earlier actions had been dismissed. The FCA provides that “[w]hen a person brings an action … no person other than the [g]overnment may intervene or bring a related action based on the facts underlying the pending action” (31 USC 3730(b)(5)). The contractors contended “pending” was “short-hand for the first filed action.” The Court responded that Marbury v. Madison and the trial of Socrates would be still pending under this interpretation, which did not comport with any known usage of the term. As for verbal economy, Congress could have accomplished the same result “in other equally economical ways—for example, by replacing ‘pending,’ with ‘earlier’ or ‘prior.’” Moreover, the contractors’ interpretation could lead to strange results, such as barring a potentially successful suit that could result in a large recovery for the government even though an earlier suit was dismissed for a reason unrelated to the merits, such as failure to prosecute. (Kellogg Brown & Root Services, Inc., et al. v. U.S. ex rel. Carter)

About Marilynn Helt

Marilynn Helt is a Senior Writer/Analyst in the Government Contracts group at Wolters Kluwer Law and Business. Marilynn analyses new developments affecting government contracting and supports the group’s legal research tools, with a focus on revising and updating explanations of contracting topics. With over 20 years’ experience providing authoritative content for legal professionals, Marilynn has written articles and edited and helped launch outside-authored treatises, books, and journals. Marilynn has prior law firm experience in international tax and estate planning. She received a BA in humanities and German from Valparaiso University, an MA in German literature from Washington University in St. Louis, and a JD magna cum laude from the University of Illinois College of Law.
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