28 June 2012

Are The Wars In Iraq and Afghanistan Tolling the Statute of Limitations for FCA Claims?

In a post titled “When is War Really Over,” the Wall Street Journal Law Blog reported on a recent Fifth Circuit decision interpreting the Wartime Suspension of Limitations Act, 18 USC 3287. That statute states in pertinent part that:

When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution, the running of any statute of limitations applicable to any offense

  1. involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not, or
  2. committed in connection with the acquisition, care, handling, custody, control or disposition of any real or personal property of the United States, or
  3. committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war or directly connected with or related to the authorized use of the Armed Forces, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.

The Fifth Circuit held that a formal declaration of the cessation of hostilities is required to end the tolling – something that the court held has not yet occurred with respect to the war in Iraq. The decision is troubling in light of another decision last year in which a federal district court suggested that civil False Claims Act cases – at least those in which the United States intervenes – may qualify as an “offense” under the Act.

This topic should be of interest to all FCA practitioners, as the Wartime Suspension act is not limited to any particular type of FCA claims. On its face it applies equally to FCA claims involving allegations of health care fraud or mortgage fraud as to claims involving fraud by military contractors. While the few district courts that have been asked to extend the applicability of the Wartime Suspension Act to the FCA have indicated some reluctance to do so, we can expect enterprising relators (and the United States) to press this argument in cases in which the statute of limitations is a significant issue.

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