What would you do if your employer acted unethically? Would you let it go or would you say something? Benjamin Carter, a whistleblower and a contracted federal employee, decided that the actions of his company weren’t just. His strong values led him to tell that his company was committing fraud and taking advantage of their position.
In May, the Supreme Court issued a unanimous ruling in Kellogg Brown & Root v. United States. The question presented to the Court was: Whether 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.
Whether, contrary to the conclusion of numerous courts, the False Claims Act’s (FCA) 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.
CASE BACKGROUND
Kellogg Brown & Root Services, Inc. (“KBR”) provided logistical services to the U.S. military in Iraq under a multi-year government contract. Benjamin Carter, the respondent worked for contactor as a water purification operator. From January 2005 to April 2005 he alleged witnessed that KBR had billed for services that were not performed or not performed properly. He subsequently filed a qui tam suit complaining against the petitioners, in a case know as Carter I.
In 2010, right before the trial was set to start, the Government informed both parties that about an earlier filed qui tam lawsuit that was filed, United States ex. Rel. Thorpe v. Halliburton Co., that had contained similar claims. Under the FCA, this appeared to be in violation of the “first-to-file” bar; therefore, it was dismissed by the District Court; the respondent then repealed the decision. Carter was sure to quickly file a new complaint, in what is known as Carter II, but this was also dismissed because Carter I was still pending on appeal. Knowing he was at an impasse, the respondent voluntarily withdrew his appeal and in June 2011, more than six years after the alleged incident in Iraq, he filed a third appeal known as Carter III, which is the case now in question.
After this filing, the petitioners sought dismissal of this case under the first-to-file rule because there were two cases in two different states that had been filed in the time Carter waited to file again. The court decided that the case was dismissed with prejudice because of one of the other pending suits from a different state. Additionally, they decided that they WSLA applies only to criminal cases and that the respondent civil claims were untimely.
Furthermore, the Fourth Circuit reversed, rejecting the District’s Court’s claim interpretation of both the first-to-file and WSLA issues. They concluded that the WSLA does, in fact, apply to civil cases as well, so the case was filed on time. The Court of Appeals also held that the first-to-file rule ceases to apply once a case was dismissed. Since The Fourth Circuit decided at a time when both other cases out of state were dismissed, the court held that the respondent had the right to refile his case and remanded Carter III with instructions to dismiss without prejudice.
Right as this was done the respondent filed Carter IV, only to find that the case was again dismissed because the petition for a writ of certiorari in Carter III was still pending. The Supreme court granted the petition for the case to be heard, reversing and affirming in part.
DECISION
In Kellogg Brown & Root Services, Inc. v. United States Ex. Rel Carter , No. 12-1497 (U.S. May 26, 2015), the Supreme Court held that respondent Benjamin Carter had a right to refile his case because he did not violate the False Claims Act (FCA) first-to-file bar. Carter, who worked for Kellogg Brown & Root (KBR) as a government contractor providing logistical services to the U.S. military in Iraq, filed a whistleblower lawsuit against his former company. He alleged that KBR was engaging in fraudulent billing practices under the False Claims Act which prohibits making “a false or fraudulent claim for payment or approval,” 31 U.S.C. §3729(a)(1), to the U.S.. Government. Just before the initial trial was to take place in 2010 the government informed the parties that a complaint of similar nature had previously been filed. The district court decided (without prejudice) to dismiss Carter’s suit under the FCA’s “first-to-file” rule, which bars a new suit if there is one pending, §3730(b)(5). Subsequently, when Carter refiled his suit in 2011, KBR motioned to dismiss by arguing that the FCA’s six-year statute of limitations had expired and that there was still related matter pending. The U.S. Court of Appeals for the Fourth Circuit reversed the district court. The appellate held that there was no pending matter to prevent Carter from proceeding with his claim and that the Wartime Suspension of Limitations Act (WSLA) applied not only to criminal cases, but also civil cases such as Carter’s. Therefore, the respondent had a right to refile his case.
In a unanimous decision written by Justice Alito, the Supreme Court reversed in part the appellate ruling that the act applied to both criminal and civil cases, stating it only applied to criminal cases after their extensive review of the WSLA’s text. The court reasoned that the FCA’s first-to-file bar keeps new claims out of the court only if new claims are still alive, not in perpetuity. They read §3730(b)(5) to conclude that the term pending, in this case, was in accordance with an ordinary dictionary definition. The court did not want the term pending to mean first-filed, which prevented Carter from bringing the suit again because of another “pending” case. Finally, the court remanded the case to back to the U.S. Court of Appeals for the Fourth Circuit.
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