Supreme Court Resolves WLSA, First to File Bar in KBR Decision

The Supreme Court handed down its decision in KBR v. US ex rel. Carter this morning. In a unanimous 13 page opinion written by Justice Alito, the Court said that (1) the Wartime Suspension of Limitations Act does not extend the statute of limitations for the civil False Claims Act; and (2) a subsequent lawsuit under the False Claims Act can proceed if the earlier lawsuit has been dismissed.

We have previously discussed the rather unique procedural history of the case that caused these two questions to arise, so we won’t recap it again here. If you need the background, visit this post.

The Fourth Circuit had held that all but one of the relator’s claims of fraud were beyond the six year statute of limitations in the False Claims. They were saved, according to the Fourth Circuit, by the WSLA, which extended the amount of time that the relator had to file. The Supreme Court disagreed and reversed this aspect of the lower court decision. The Supreme Court limited the WSLA, which extends the statute of limitations during times of war, to criminal offenses only.

The Supreme Court also held that a qui tam suit under the False Claims Act ceases to be pending once it is dismissed. This interpreted the first to file bar in the law.

The first to file bar in the False Claims Act prevents relators from proceeding with an action based on facts underlying a pending action. KBR had argued that pending was short-hand for the first filed action and thus any subsequent related action should be dismissed after its filing, even if the first action was dismissed without prejudice. The Supreme Court adopted the ordinary meaning of pending, so that a second suit would not be barred by a previously dismissed, but related, lawsuit.

The Supreme Court did leave one open question on the first to file bar. It explicitly recognized a potential issue with the functioning of its decision in the case of a lawsuit settlement and left itself room to later determine the complete scope of the first to file bar under the FCA if the earlier lawsuit is not dismissed without prejudice.

The full opinion can be found here: http://www.supremecourt.gov/opinions/14pdf/12-1497_2d8f.pdf

Photo Credit: dbking