Supreme Court Finds Wartime Suspension of Limitations Act Does Not Toll the False Claims Act Statute of Limitations
On May 26, 2015, the United States Supreme Court decided Kellogg, Brown & Root Services, Inc. et al. v. U.S. ex rel. Carter. Even though this case did not involve a health care provider or the provision of health care services, the decision is one of significant impact for the health care industry. One of the fundamental questions of the case was whether the longstanding Wartime Suspension of Limitations Act (“WSLA”) applies to civil false claims under the False Claims Act (“FCA”).
The FCA imposes liability upon a party that knowingly presents a false or fraudulent claim to the government for payment. Recall that FCA actions are often at the forefront of government enforcement efforts against health care providers due to the harsh financial damages that may be assessed, including treble damages. Unresolved Stark and anti-kickback violations implicitly lead to FCA liability. Under the Affordable Care Act, the retention of overpayments is an express violation of the FCA.
Under the FCA, a qui tam action must be brought within the later of six years of the alleged violation or within three years of the date by which the government should have known of the violation. Thus, an FCA qui tam allegation brought against a provider would potentially be barred by the statute of limitations if brought more than six years after the alleged wrongful act. However, the WSLA suspends the statute of limitations for “any offense” involving fraud against the Federal government. If WSLA applied to FCA claims, FCA claims would not be subject to any time bar. Such a finding would be material to providers, especially those that have old unresolved potential Stark or anti-kickback violations, because tax-exempt financings and acquisitions or divestitures are often contingent on there being no outstanding Stark or anti-kickback exposure.
Historically the WSLA was only effective when the United States was at war. However, in 2008, Congress amended the WSLA to apply whenever Congress authorizes the use of the armed forces under the War Powers Resolution. This is the authority under which the United States has intervened in Iraq and Afghanistan.
Fortunately, the Supreme Court determined that the phrase “any offense” in the WSLA applies only to criminal actions and not civil FCA claims. The Court noted that the term “offense” used in the statute is most often utilized to refer to crimes and not civil cases. Had Congress intended to expand the application of WSLA to civil fraud cases, it normally would have done so by using more express statutory language directly implicating civil fraud cases. As a result, the Supreme Court answered definitely that civil FCA actions, as so often arise in the health care industry, continue to be subject to the FCA statute of limitations.