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Last week, the Fourth Circuit issued a decision that exposes government contractors to False Claims Act lawsuits based on allegations which were previously considered untimely and which had already been the subject of prior qui tam action.  In U.S. ex rel. Carter v. Halliburton Co. (Mar. 18, 2013), the panel held that the Wartime Suspension of Limitations Act (WSLA), 18 U.S.C. § 3287, tolls the statute of limitations for civil and criminal fraud against the United States during war time, even without a formal declaration of war and regardless of whether the United States intervenes in the case.  The panel also held that dismissal of a qui tam plaintiff’s FCA complaint under the first-to-file bar (31 U.S.C. § 3730(b)(5)), should be without prejudice, thereby allowing a relator to re-file his complaint after the earlier filed action is no longer pending.

The Perpetual Plaintiff

Benjamin Carter worked for KBR as a reverse osmosis water purification operator at two military bases in Iraq from January 2005 through April 2005.  Carter brought a qui tam action against Halliburton Company and KBR, Inc., alleging that KBR billed the government for water purification services that were never completed and that water-purification employees were instructed to submit time sheets for twelve-hour days, regardless of actual hours worked.  Carter filed his original complaint under seal in 2006.  That case and two others filed by Carter were dismissed under the first-to-file rule which provides: "[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action."  31 U.S.C. § 3730(b)(5).  When Carter filed his fourth complaint in June 2011, two allegedly related FCA cases, both filed in 2007 by other relators, were pending in United States District Courts in Maryland and Texas.  Both cases, like Carter’s, alleged that KBR had a widespread practice of having employees submit time sheets for twelve-hour workdays without regard to actual hours worked.  The Maryland case was dismissed in October 2011 when the relator failed to serve the complaint, and the Texas case was voluntarily dismissed in March 2012 when the government declined to intervene.

Continue Reading Fourth Circuit Finds that Wartime Suspension of Limitations Act Tolls Statute of Limitations for Qui Tam Relators Even When the Government Does Not Intervene