Fourth Circuit Extends FCA Statute of Limitations in Wartime

Under the False Claims Act (FCA), whistleblowers must file their qui tam claims within six years of the alleged violation (or within 10 years if the case is filed within 3 years of the whistleblowers discovery of the fraud). But in a March 18, 2013 decision, the United States Court of Appeals for the Fourth Circuit applied provisions from the Wartime Suspension of Limitations Act (WSLA) that toll the FCA statute of limitations for fraud in wartime, holding that this claim was thus not time-barred.

In U.S. ex rel. Carter v. Halliburton Co., 2013 WL 1092732 (4th Cir. March 18, 2013) the relator brought a claim against Halliburton and other contractors for fraudulently billing the government during hostilities in Iraq. The defendants argued, among other things, that the six year statute of limitations prescribed by the FCA had elapsed, thus the claim was time-barred. The plaintiffs countered that the statute of limitations should be tolled because of the WSLA, which suspends statues of limitations in cases involving fraud against the government “[w]hen the United States is at war or Congress has enacted specific authorization for the use of the Armed Forces…” See 18 U.S.C. § 3287.

The defendants contended that hostilities had ceased in Iraq at the time of the alleged fraud, and so the WSLA should not apply. The defendants also argued that the WSLA should only apply to criminal fraud, not civil fraud. The Fourth Circuit disagreed with the defendants on both points. The court noted that the WSLA’s formal requirements for the termination of hostilities had not been met by either the President or the Congress at the time of the alleged fraud. The court also held that the WSLA applied to both criminal and civil fraud, and allowed the relator’s claim to survive the defendant’s motion to dismiss.

In times of war, the government is especially vulnerable to unscrupulous companies doing business in far off lands with limited oversight. The precedent set by the decision is timely, on the heels of a report issued by the Special Inspector General for Iraq Reconstruction detailing multiple instances of fraud during the Iraq war against $61,000,000,000 (yes, billion) of U.S. taxpayers’ money expended. To date, fraud recoveries are less than $2 billion (3%). This relatively small recovery means that hundreds of millions of dollars may still be recovered by wartime whistleblowers.

Amanda Narvaes

Amanda P. Narvaes, a Partner, joined Drew Cooper & Anding in 2011. Ms. Narvaes is a civil litigator in the areas of complex commercial litigation, lender liability, copyright litigation, and consumer protection. She graduated cum laude from Carleton College with a bachelor’s degree in history. She earned her law degree at WMU-Thomas M. Cooley Law School, graduating magna cum laude, and received Cooley’s Distinguished Student Award. Ms. Narvaes represents clients before Michigan trial courts across the state and in the Michigan Court of Appeals, and before the United States District Courts for the Western and Eastern District of Michigan. Ms. Narvaes has been a guest speaker in Ron Foster’s “Litigation for Paralegals” class. Ms. Narvaes discusses differences between Federal civil discovery rules and Michigan civil discovery rules.