The cost and risk associated with allegations under the FCA create a heightened importance on defining the scope of the claims that are at issue. Accordingly, the applicable statute of limitations is critical in determining both whether allegations of FCA are timely filed and in limiting the extent of the claims at issue if the wrongful conduct is alleged to be longstanding. In recent years, whistleblowers have argued that the FCA statute of limitations should be tolled pursuant to the Wartime Suspension of Limitations Act (WSLA). Such arguments were accepted by several courts, which expanded the scope of potential claims and liability under the FCA. However, in a recent decision, the United States Supreme Court has determined that the WSLA does not apply to civil actions that are brought under the FCA.
Generally, the FCA's statute of limitations (31 USC 3731(b)) provides that civil actions under 31 USC 3730 cannot be brought (1) more than 6 years after the violation occurred, or (2) more than 3 years after the material facts are known or should be known by an official of the United States, but in no event more than 10 years after the violation occurred. This two-pronged statute of limitations has prompted substantial litigation and circuit splits regarding the applicability of the second prong to cases in which the Government declines intervention and regarding the persons who constitute an appropriate "official of the United States." It is critical to review the applicable case authority in a particular jurisdiction to understand the manner in which the statute of limitations has been applied in that jurisdiction.
The WSLA suspends the statute of limitations for "any offense" that involves allegations of fraud against the Government. Since 2008, the WSLA has been applied in situations where Congress has provided "a specific authorization for the use of the Armed Forces." Recently, whistleblowers have been arguing that the WSLA is applicable to all actions that are brought under the FCA and that the statute of limitations should be tolled. Such an argument, if accepted, would both permit relators to proceed with claims that would otherwise be time-barred and also expand the scope of potential liability.
In the case of Kellogg, Brown & Root Services, Inc. v. United, the United States Supreme Court analyzed the applicability of the WSLA to civil actions that are brought under the FCA. The Supreme Court considered the history and amendments of the WSLA and determined that the use of the term "offense" within the WSLA was intended to apply only to criminal offenses. Accordingly, the Supreme Court determined that the WSLA could not be used to toll the running of the statute of limitations for civil cases that are brought under the FCA.
This holding has two critical implications for defendants in civil FCA actions:
- Where a relator's allegations are based on claims that are entirely beyond the applicable statute of limitations, defendants will be able to argue that such claims are time barred and relators will not be able to assert that the WSLA salvages such claims; and
- Defendants will be able to rely on the FCA's statute of limitations as providing the outer constraints on the scope of potential liability rather than being confronted with arguments that a relator has an unbounded ability to pursue aged claims due to WSLA tolling.
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