Whistleblowers

Issues

The False Claims Act has a number of subsections under which contractors may be found liable for defrauding the federal government. Contractors may be found liable under subsection (a)(1) only if someone presented a fraudulent bill to the federal government. Subsections (a)(2) and (a)(3) do not spell out the same "presentment" requirement in explicit terms. Do these subsections still include a "presentment" requirement that there be proof that a false bill was sent to the government, or is it enough to show that the fraudulent bill was paid with federal funds?

Court below

United States Court of Appeals for the Sixth Circuit

In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government, but rather billed the company directly above them in the chain of production. The company directly above them did not include these bills when submitting for payment from the government. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without evidence that the federal government actually relied on a fraudulent bill. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the fraudulent bill was actually presented to the federal government. The ultimate decision by the Supreme Court could have important economic consequences for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act.

Questions as Framed for the Court by the Parties

Whether a plaintiff asserting a cause of action under Section 3729(a)(2) or Section 3729(a)(3) of the False Claims Act is required to prove that a false claim was submitted to the federal government, or whether it is sufficient to establish that the claim was paid using federal funds.

In 1863, Congress passed the False Claims Act ("FCA") to address problems associated with private contractors who had cheated the federal government throughout the Civil War. United States v. Allison Engine Co., 471 F.3d 610, 614 (6th Cir.

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acondon

mlitvin

Edited by

tbirnbaum

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Kellogg Brown & Root v. United States ex rel. Carter

Issues

1) Does the Wartime Suspension of Limitations Act—which tolls the statute of limitations for an offense that involves fraud against the United States during wartime—apply to civil fraud claims and require a formal declaration of war?

2) Once a party files a suit, does the False Claim Act bar all subsequent suits based on similar facts indefinitely or only while the initial suit is pending before a court?

Court below

United States Court of Appeals for the Fourth Circuit

Benjamin Carter brought an action under the False Claims Act (“FCA”), alleging that Kellogg Brown & Root (“KBR”) had misrepresented water purification work and falsified time sheets in order to overbill the United States government. In this case, the Supreme Court will have the opportunity to resolve whether the Wartime Suspension of Limitations Act (“WSLA”) applies to civil suits brought under the FCA and whether the FCA bars all subsequent suits after a party files a suit based on the same underlying facts. KBR contends that the WSLA tolls the statute of limitations only for criminal suits and that the FCA bars every suit subsequent to the first suit filed on similar facts. Carter counters that the WSLA tolls both criminal and civil suits and that the FCA bars subsequent suits only when a similar suit is pending before a court. The Court’s ruling will affect whistleblowers as well as businesses and health care providers that supply services to the United States government.

Questions as Framed for the Court by the Parties

1) 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.

2) Whether, contrary to the conclusion of numerous courts, the False Claims Act’s 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.

Kellogg Brown & Root (“KBR”) had a government contract to supply logistical services to the United States military in Iraq. See U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171, 174 (4th Cir. 2013). For about three months in 2005, Benjamin Carter worked for KBR as an operator of a water purification unit.