United States ex rel Carter v. Halliburton Co., No. 12-1011

Decided: March 18, 2013

The Fourth Circuit Court of Appeals reversed the dismissal of a qui tam action that the district court held was barred by the statute of limitations and the first-to-file bar under the False Claims Act (“FCA”).  Carter brought a qui tam action against Halliburton Company, KBR, Inc., Kellogg, Brown, & Root Services, Inc. (collectively “KBR”) for alleged fraudulent billing of the United States for services provided to the military serving in Iraq.  KBR provided logistical support to the United States military in Iraq under a government contract; Carter worked for KBR in a water purification unit.  Carter alleged that no water purification took place for over four months when KBR represented it was and was billing the government during that time, and further, that employees were instructed to submit time sheets for 12 hour days, 7 days per week when that time was not actually worked.  Carter’s action was originally filed February 1, 2006; the complex procedural history of his complaint involved his lawsuit being dismissed twice and this action was re-filed on June 2, 2011.  The district court held his action was barred by the statute of limitations, but Carter alleged, and the Fourth Circuit agreed, that the Wartime Suspension of Limitations Act (“WLSA”) tolled the statute of limitations.

Under the WSLA, the running of the statute of limitations is tolled for actions involving fraud against the United States until three years after the termination of hostilities as proclaimed by the President.  The question presented to the court was what the term “at war” means for the purposes of the WSLA.  The Fourth Circuit determined that the term does not require a declaration of war, and the “at war” status ceases at the time of a Presidential proclamation.  Therefore, the WLSA governs the relevant time period in this action.  Next, the Court interpreted the term “offense” in the WLSA to include civil actions like this one and rejected KBR’s argument that it applies only to criminal cases.  The Court also concluded that the WLSA does apply only to cases that are brought by a relator, and not to cases where the United States is a party as KBR alleged.

Next, the Court considered whether Carter’s action was barred by the first-to-file rule under the FCA.  The Court adopted the “material elements” test which states that a later suit is barred if it is based upon “the same material elements of fraud” as the earlier suit even if the allegations include somewhat different details.  The two other lawsuits that barred Carter’s suit were both dismissed; therefore, those lawsuits cannot have a preclusive effect on Carter’s suit.  KBR argued in the alternative that the Court should affirm the dismissal on the alternative ground of the public disclosure bar.  The FCA’s public disclosure bar removes subject matter jurisdiction for FCA claims that are based upon matters that have been disclosed publicly unless the relator was the original source of the allegations.  The Court declined to address this issue for the first time on appeal.  The case was reversed and remanded to the district court.

Judge Wynn wrote separately in concurrence to respond to the dissent and emphasize the reasoning why the Court held that the WLSA applied to the instant case.  Judge Agee wrote separately concurring in part and dissenting in part.  Judge Agee agreed with the majority that the first-to-file bar did not bar this case, but did not agree that the WLSA applied to toll the statute of limitations.

Full Opinion

-Jennifer B. Routh

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