Jul 12014

Supreme Court Agrees To Hear Important Case Involving First to File and Statute of Limitations

Scott D. Stein
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On July 1, the Supreme Court granted the petition for a writ of certiorari in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, a case which will have significant implications for two key issues under the False Claims Act: statute of limitations and the first-to-file bar. The petition raises two questions. The first is “[w]hether the Wartime Suspension of Limitations Act – a criminal code provision that tolls the statute of limitations for “any offense” involving fraud against the government “[w]hen the United States is at war,” 18 U.S.C. § 3287, and which this Court has instructed must be “narrowly construed” in favor of repose – applies to claims of civil fraud brought by private relators, and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling.” As we have previously written, courts are divided on whether the Wartime Suspension of Limitations Act in effect permanently tolls the statute of limitations on civil FCA claims. Notably, the Supreme Court has agreed to address this question notwithstanding the fact that the Solicitor General opposed the request.

The second, equally important issue raised by the petition is “whether, contrary to the conclusion of numerous courts, the False Claims Act’s so-called “first-to-file” bar, 31 U.S.C. § 3730(b)(5) – which creates a race to the courthouse to reward relators who promptly disclose fraud against the government, while prohibiting repetitive, parasitic claims – functions as a “one case- at-a-time” rule allowing an infinite series of duplicative claims so long as no prior claim is pending at the time of filing.” As we have discussed in previous posts, there is a split among the circuits on this issue, which the Court has now apparently agreed to resolve – again, over the government’s objection.

The case will not be heard until the Court’s 2015 term (starting in October 2014), meaning a decision is unlikely before next year. We will be following the case closely and provide updates on key developments.

Scott D. Stein

Chicago

sstein@sidley.com

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