In a decision last Thursday, the United States District Court for the District of Columbia held that the Wartime Suspension of Limitations Act (WSLA) does not apply to the current version of the False Claims Act (FCA). United States ex. rel. Landis v. Tailwind Sports Corporation, No. 10–cv–00976 (RLW), 2014 WL 2772907, at *39-42 (D.D.C. June 19, 2014), available here. This is a significant decision that is the first to counter many recent decisions holding that the FCA’s statute of limitations is suspended indefinitely by the WSLA until formal conclusion of the conflicts in Iraq and Afghanistan.
During times of war, the WSLA suspends statutes of limitations for offenses involving fraud against the United States until five years after termination of hostilities. 18 U.S.C. § 3287. Originally enacted in 1942 and amended in 1944, the WSLA is intended to allow the United States sufficient time to investigate and prosecute fraud offenses committed against it during times of war when it is distracted by the demands of war. The FCA’s standard, codified statute of limitations bars claims brought more than six years from the violation date, or more than three years from when the government knew or should have known about the violation, but in no event more than ten years after the violation date, whichever occurs last. 31 U.S.C. § 3731(b). Recently, though, several courts have held that the FCA’s statute of limitations has been suspended by the WSLA based on the conflicts in Iraq and Afghanistan — which are not yet considered terminated for purposes of the WSLA — thus reviving otherwise stale claims in the cases and creating the potential for nearly indefinite tolling of the FCA’s statute of limitations. Courts have even applied the WSLA to cases with no connection to wartime hostilities and cases where the government has declined to intervene.
Until last Thursday, almost all present-day authority supported the application of the WSLA to the FCA. The Landis decision essentially reached the opposite conclusion — that the WSLA does not apply to the post-1986 versions of the FCA. The Landis court observed that the WSLA applies only to cases that “include fraud as an essential ingredient” (citing two 1953 Supreme Court cases, Bridges and Grainger); that the post-1986 versions of the FCA provide that “no proof of specific intent to defraud is required”; and that Rule 9(b), which applies to FCA cases, allows allegations of intent, knowledge, and condition of mind to be averred generally. Landis, 2014 WL 2772907, at *41. The court thus concluded that “it is clear in this Circuit that civil FCA actions under the modern version of the statute do not require proof of fraud as an ‘essential element’”; that the relator does not contend that proof of specific intent to defraud is required for his FCA claims; and, therefore, that the WSLA does not toll the statute of limitations for the FCA claims in the case. Id. at *41-42.
At least one court has rejected the argument relied on by the Landis court — that the WSLA does not apply to the post-1986 versions of the FCA because they do not include fraud as an essential ingredient. See United States v. Wells Fargo Bank, N.A., No. 12 CIV. 7527 JMF, 2013 WL 5312564, at *12 (S.D.N.Y. Sept. 24, 2013). The Landis court did not consider other arguments FCA defendants have made against application of the WSLA to the FCA. With the exception of a split in authority for cases where the government has declined to intervene, courts have rejected most of these arguments as well. These arguments include:
- The WSLA should only be applied to criminal “offenses,” not civil claims like those brought under the civil FCA;
- The WSLA should only extend to claims related to wartime contracting;
- The WSLA should only apply in FCA cases where the government has intervened;
- Because of the FCA’s ten-year statute of repose, FCA cases still may not be brought more than ten years from the alleged violation dates given that (a) the WSLA should only apply to statutes of limitations, not to statutes of repose, and (b) the FCA’s absolute ten-year limit should supersede the WSLA even if the WSLA did apply to it;
- Applying the WSLA without limitations like the FCA’s statute of repose risks indefinite tolling, which is contrary to the Supreme Court’s ruling in Gabelli v. SEC.
- The pre-2008 version of the WSLA was not triggered by the Iraq and Afghanistan conflicts because the United States was not “at war” during those conflicts as defined by that version of the statute; and
- The retroactive application of the post-2008 version of the WSLA, which was triggered by the Iraq and Afghanistan conflicts, is unconstitutional.
Still, as the first decision to flatly reject the application of the WSLA to the FCA, the Landis decision is a significant development for current and potential FCA defendants seeking to apply the FCA’s standard, codified statute of limitations to stale claims and wishing to avoid the WSLA’s nearly indefinite tolling of that statute of limitations.