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In the Light of Perpetual War

In the Light of Perpetual War

Yesterday, the U.S. Supreme Court unanimously decided an important case that was closely watched by lawyers who prosecute and defend whistleblower actions.

The background is the False Claims Act, which was passed in 1863 to fight rampant fraud in Civil War defense contracts. The FCA imposes liability on anyone who knowingly presents a false or fraudulent claim for payment to the government. See 31 U.S.C. § 3729. As we’ve covered here before, the Act empowers whistleblowers, or “relators,” to sue on the government’s behalf and, when successful, to share in a portion of the recovery. Id. § 3730.

Generally, under the FCA, a whistleblower lawsuit must be filed within six years of the alleged violation, or within three years of the date the government should’ve known about it, but in all events, no more than ten years after the violation. 31 U.S.C. § 3731(b).

Another law, however, suspends all statutes of limitations for fraud against the government whenever Congress has declared war or authorized the use of military force. 18 U.S.C. § 3287. It’s called the Wartime Suspension of Limitations Act. The law tolls the statute of limitations until five years after Congress or the President declares an end to hostilities.

There’s no question that this law applied to criminal cases; the question before the Court was whether it applied to civil cases, too.

The backstory was that, in 2005, the relator worked for a defense contractor in Iraq, and later, he filed a whistleblower lawsuit in Virginia alleging that his employer had fraudulently billed the government for services that weren’t performed properly or performed at all.

The government didn’t intervene, but shortly before trial, it alerted the parties to another, similar case in California that had been filed first.

This revelation, according to the Supreme Court’s opinion, “initiated a remarkable sequence of dismissals and filings.”

First, the district court dismissed the complaint under the “first-to-file” rule, which bars whistleblower lawsuits that rely on the same facts as an already-filed case. 31 U.S.C. § 3730(b)(5). The relator appealed that dismissal, and while his appeal was pending, the California case was dismissed for failure to prosecute. The relator then filed a new complaint, but he didn’t dismiss his appeal first, so the district court dismissed the new complaint under the first-to-file rule on the basis of his own, pending appeal. So the relator withdrew his appeal and filed a new case, but by then, others had already filed similar cases in Texas and Maryland, and besides, it was 2011, more than six years after the alleged fraud, so the court dismissed his case again—this time with prejudice.

Finally, the relator appealed the dismissal again and won, when the court of appeals held that he could refile his case for two reasons. First, the Wartime Suspension of Limitations Act applied to civil cases like his and thus tolled the statute of limitations. Second, the first-to-file rule didn’t apply once a related action was dismissed, and by then, both the Texas and Maryland cases had been dismissed.

The Supreme Court agreed on the second point but not the first. It held that the text, structure, and history of the WSLA demonstrated that it applied only to criminal cases, not civil cases, and it reversed the case on that basis. Were it otherwise, in fact, in today’s world, the WSLA could effectively eliminate the statute of limitations. Instead, the Court interpreted the law in favor of repose.

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