On May 26, 2015, the United States Supreme Court issued its much-anticipated decision in the long-running saga of Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 2015 WL 2456621 (2015) ("KBR"). In so doing, the Court resolved a split between the Circuit Courts of Appeal regarding the applicability of the Wartime Suspension of Limitations Act ("WSLA") to the FCA.

The WSLA, first enacted in response to contractor malfeasance during World War I, tolls the statute of limitations for any "offense" involving fraud against the United States or that is otherwise connected to acquisition or procurement, for as long as the United States is at war. In 2008, Congress amended the Act to include instances of congressionally authorized uses of force, such as the Authorization for the Use of Military Force authorizing American operations in Afghanistan. In recent years, a number of courts, including the United States Court of Appeals for the Fourth Circuit, have relied on the WSLA to permit qui tam relators to file FCA suits after the otherwiseapplicable statute of limitations had expired. If uniformly applied, the WSLA would expose contractors to significant risk of liability for controversies that arose many years after contract closeout.

In a unanimous decision, the Court rejected a broad application of the WSLA to any and all actions. Instead, the Court relied on the plain text and statutory history in concluding that the law only tolls the statute of limitations for criminal offenses; the statute does not toll actions for civil or administrative claims. The implication of the KBR decision is substantial, especially as it relates to qui tam actions filed long after the original statute of limitations expired (stale claims). For civil and administrative claims arising out of contract performance in support of operations in Iraq and Afghanistan, claims against those contractors must be timely filed within the statutory limitations period – relators will not have the latitude to file stale claims.

In its decision, the Court also addressed the "first to file" bar under the FCA, adopting the government's position in concluding that there is no support in the text of the FCA to interpret "pending" to include cases that have been dismissed. Instead, the Court held that the "first to file" bar only prevents a relator from filing suit while another suit arising from the same conduct is pending; once a suit is resolved, another relator is free to file his or her own suit.

The upshot of the Court's "first to file" construction is that although contractors may not be subject to two concurrent FCA claims arising out of the same alleged conduct, they may nonetheless be subject to multiple qui tam cases if filed sequentially. Thus, contractors should be aware that qui tam filings are not necessarily precluded simply because another qui tam case is pending on the same issue. Contractors should also note that the filing of a qui tam action may toll the statute of limitations for an additional three years for subsequently filed lawsuits if the pending action serves as the government's first notice of the facts giving rise to the claim.

The decision provides a bit of certainty on the one hand relative to tolling under the WSLA, while introducing on the other hand a bit of uncertainty associated with the risk of multiple FCA lawsuits stemming from the same operative conduct. Contractors can rest assured that they will no longer have to defend against civil and administrative claims brought after the expiration of the statute of limitations; however, they may face duplicative suits over a protracted period of time as long as those suits are not pending at the same time.

Less-welcomed decisions were recently issued en banc by the Ninth Circuit in US ex rel. Hartpence v. Kinetic Concepts, Inc., No. 12-55396 (9th Cir. July 7, 2015) and US ex rel. Godecke v. Kinetic Concepts, Inc., No. 12- 56117 (9th Cir. July 7, 2015), which allow an individual to be both a relator and a source for public disclosure. For the past 23 years, the Ninth Circuit has followed the "hand in the disclosure" requirement, whereby an FCA suit is barred if the underlying wrongdoing was previously disclosed publicly, unless the relator played a part in publicly disclosing the allegations and information on which their suits were based. The lower court had dismissed the whistleblowers' claims, ruling that they were based on publicly disclosed information and therefore the relators were not the original sources. Following recent precedent from the Supreme Court's decision in Rockwell Int'l Corp. v. United States, 549 U.S. 457 (2007), whereby the Supreme Court held that the "direct and independent knowledge" that a relator must have to qualify as an original source is the information upon which his or her complaint is based rather than the information underlying the public disclosure, the Ninth Circuit held that it does not matter whether the relator also played a role in the public disclosure of the allegations that are part of his suit. The unanimous en banc ruling effectively makes it easier for whistleblowers to establish original source status in the Ninth Circuit.

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