A "Mixed Bag" from SCOTUS - Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter

In a unanimous decision announced May 26, the U.S. Supreme Court, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 2015 BL 163948, U.S., No. 12-1497, 5/26/15, ruled that the Wartime Suspension of Limitations Act ("WSLA") applied only to criminal charges and not underlying civil claims in times of war. Thus, the WSLA – which suspends the statute of limitations when the offense is committed against the Government - cannot be used to extend the statute of limitations in cases such as those brought under the False Claims Act ("FCA"). This ruling reversed a decision of the Fourth Circuit which had previously held that WSLA applied to both criminal and civil claims.

In the same decision, the Court offered some clarity around the FCA's "First to File" bar. Under the statute, "[w]hen a person brings an action . . . 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) (emphasis added). Affirming the Fourth Circuit in interpreting the definition of the word "pending," the Court held that it's meaning was intended to be consistent with its general meaning – "remaining undecided" or "awaiting decision." Thus, once a decision is reached and the case is no longer active, it is no longer "pending" within the meaning of the statute and does not operate as a bar to a subsequent suit – although the Court noted that doctrines such as claim preclusion might be available in the defense of a later filed suit, depending on the circumstances of the case.

Holding that the WSLA does not extend the statute of limitations in FCA cases is good news. However, the first to file holding will provide an opportunity for relators to bring more troublesome cases after early filers' cases have been rejected by the government and abandoned by relators or dismissed by courts. In other words, the ruling will afford time that can allow "the cream to rise to the top." Thus, this decision allows for complex and sophisticated lawsuits that are not recognized at first blush but which can be brought at any time when there is nothing else relevant pending.