Just when you thought you
were in the clear and the U.S. Attorney was out of time to bring a false claims
action against you, the Supreme Court of the United States may issue a decision
that will keep you up at night.
On July 1, 2014, in Kellogg Brown & Root Services, Inc., et al.
v. United States ex. rel. Carter, the Supreme Court decided that it will
look at the applicability of the Wartime
Suspension of Limitations Act (WSLA) to the statute of limitations applicable
to False Claims Act (FCA) litigation.
By way of background, an
action was brought against Kellogg Brown & Root Services, Inc., alleging
that the company had fraudulently billed the United States for services
provided to the U.S. military in Iraq in 2005. The court initially dismissed
the complaint as being beyond the FCA’s statute of limitations. That decision
was reversed on appeal. The Circuit Court found that the WSLA tolls the statute
of limitations for “any offense” involving fraud against the federal government
“[w]hen the United States is at war.” 18 U.S.C. § 3287. The court also held
that the Act “does not require a formal declaration of war,” reasoning that
such a requirement “would be an unduly formalistic approach that ignores the
realities of today[.]” The United States had not formally declared war since
World War II. Given the current military conflicts like Afghanistan and Iraq,
as well as past military operations such as Operation Desert Shield in 1990 and
Desert Storm in 1991, this decision effectively repeals the statute of
limitations for civil fraud claims and authorizes an indefinite tolling of FCA
claims pursuant to the WSLA. I wait with trepidation to see how the Supreme
Court will handle this issue.
If you ever find yourself
facing a false claim action or are unsure of your legal footing, feel free
to contact Connell Foley’s New York Construction Law Group
for guidance on this or any other construction-related issue.
