The U.S. Supreme Court generally tends to let District and Circuit Courts sort out False Claims Act disputes – it has only opted to review a small handful of cases. However, the closely-watched military fraud case involving defense contractor Kellogg Brown & Root (KBR) and its subsidiary, Halliburton, Inc., will soon face the judicial music as the high court has opted to review the case.
Procedurally, this is known as a granting certiorari. In clearer terms, it means the Court has reviewed the issues presented and decided the case merits a determination by the Court. The Court receives thousands of Petitions for a Writ of Certiorari throughout the year, and generally only opts to hear a small handful of the cases. In general, the Supreme Court typically grants Writ in cases where the federal Circuits are contradicting one another or a definitive ruling is needed to iron out a highly divisive constitutional issue (e.g., constitutionality of the Affordable Care Act).
We have reported on the impact of this case in the past. As you may recall, the KBR case involves the application of the Wartime Suspension of Limitations Act – a statute designed to extend the statute of limitations to bring a False Claims Act case in times of war.
The fraud alleged in the case occurred when KBR was working with the United States military in Iraq. According to the complaint, KBR was allegedly overbilling the U.S. government for reverse-osmosis water-purification services. A relator subsequently filed a False Claims Act case against the company, which was promptly dismissed by the District Court for being filed too late.
The Fourth Circuit reversed the District Court’s decision and held that the Wartime Suspension of Limitations Act applied and the relator should be permitted additional time to bring his case forward. KBR has strenuously argued that the WSLA does not apply to this case because the alleged fraud occurred during the conflict in Iraq – which was not the result of an official declaration of war by Congress. The Fourth Circuit rejected this line of reasoning, instead explaining that the United States has not officially declared war since World War Two, and requiring a Congressional declaration would be too formalistic.
Circuit Courts Inconsistent
One of the most common reasons the Supreme Court is willing to grant a Petition for Writ of Certiorari involves inconsistent applications of the same statute in the various U.S. Courts of Appeal. This is decidedly the issue in the KBR case, as courts across the nation have come to contradictory opinions on the applicability of the WSLA in this type of scenario.
Several U.S. District Courts and Courts of Appeal have held that, in order for the WSLA to apply to extend a relator’s ability to file suit under the False Claims Act, Congress must have officially declared war. Others have held that this requirement was never the intent behind the statute. These courts further argue that the statute is designed to allow those engaged in wartime conflict, who often need additional time to properly file their claim, to bring a case.
The Supreme Court is set to review this issue in its upcoming October 2014 term.
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If you are thinking about commencing a False Claims Act case and would like to discuss the process, please contact us today for a consultation.