Supreme Court False Claims Act Decision

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A recent SUPREME COURT FALSE CLAIMS ACT DECISION was handed down on May 26, 2014.  Ending a trend of anti-relator rulings, this time, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Court handed out a split decision.  It favored defendants by ruling that the Wartime Suspension of Limitations Act (WSLA) does not apply to civil actions under the False Claims Act.  But, it gave relators new hope by holding that the so-called “first to file” bar, 31 U.S.C. § 3730(b)(5), applies only when there is a case that is “pending” at the time a related case is filed.  If the prior case is dismissed for whatever reason, the first to file bar is not applicable to a second filed case.

What are the implications of this Supreme Court False Claims Act Decision?  With respect to time bar limitations, one has to continue to be vigilant about pursuing meritorious FCA cases as soon as possible and certainly within 6 years under the FCA’s statute of limitations period, 31 U.S.C. § 3731(b).  As for the new interpretation of the first to file bar, relators and their counsel should be more willing to consider filling cases even when there is reason to believe that a similar case has already been filed because it might have been dismissed.  Relators and counsel may also want to review former cases that were dismissed on first to file grounds to make sure the correct standard was applied.  Even if the first to file bar does not preclude a second filed action, however, there may still be a number of procedural hurdles that a second in time relator will face.  These include the public disclosure bar, the statute of limitations and principles of res judicata.  An already complicated issue just became more so.

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