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FCA Statute of Limitations Issues

August 10, 2012 by  
Filed under False Claims Act Articles

FCA statute of limitations issues can be quite complex.(August 10, 2012):  The False Claims Act (FCA) is the primary civil enforcement used by the government to address the improper submission of false or fraudulent claims to the government for payment.  Under the FCA, a defendant can be held liable for significant penalties and treble damages, per false claim.  Moreover, under the FCA, a whistleblower can bring an action on behalf of the government and may be eligible to receive a share of any recoveries.  How long does a defendant have to bring an FCA case?  As discussed below, FCA statute of limitations issues can be somewhat complex.  If your are facing a potential FCA case, it is imperative that you retain experienced legal counsel to advise you of your rights.

I.  FCA Statute of Limitations:

The statute of limitations for False Claims Act (FCA) cases is quite long and presents several complex issues to be considered. The basic FCA statute of limitations is 6 years, or 3 years after the government knew or should have known about the fraud, up to a maximum of 10 years. This often raises questions including when “should” the government know about a certain fraud, especially if it long standing and continuous? What if the government should have known about the case 4 years ago, but the 6 year timeframe has not yet run?

II.  Impact of the Wartime Suspension of Limitations on FCA Cases:

A little known statute was recently used in a case in Texas to completely toll the statute of limitations. The court in U.S. v. BNP Paribas SA employed the “Wartime Suspension of Limitations” statute to toll the statute of limitations beyond what it would have normally been. The Wartime Suspension of Limitations provides that, “the running of any statute of limitations applicable to . . . fraud or attempted fraud against the United States or . . . connected with or related to the prosecution of the war . . . shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation . . . or concurrent resolution of Congress.” 18 U.S.C. 3287.

Importantly, the suspended statute of limitations must be “connected with or related to the prosecution of the war.” In the Paribas case, the court in the Southern District of Texas (which includes Houston) held that a major French bank whose subsidiary was involved in exporting was sufficiently related to the prosecution of a war to toll the FCA statute of limitations, despite the fact that the company is not specifically a contractor for the Department of Defense or otherwise involved in war efforts. The Paribas decision raises many questions:

  • What constitutes a “war”? The United States’ last official declaration of war occurred on June 5, 1942 against Romania , Hungary, and Bulgaria during WWII. But as you know, the United States has been, and currently is, frequently engaged in military conflicts around the globe. What about NATO peacekeeping missions, or limited interventions? Under Paribas, it appears that “war” is construed broadly, and any military intervention funded by Congress could be sufficient to activate the statute.
  • What is the connection or relation of the war to the specific fraud?  In Paribas, the defendant was an exporter of grain dealing with the Department of Agriculture. While not specifically related to the war, an argument can be made that the exportation of food supplies, especially by a major international company, could have a sufficient effect on our military, its ability to obtain food and other supplies, and international relations. But what about healthcare? Certainly claims made under the TriCare program that were found to be false could be tolled by the Wartime Suspension of Limitations. But what about standard Medicare and Medicaid claims? Is the health of the nation sufficiently connected to war efforts to justify completely tolling the statute of limitations?

Obviously, this decision raises important concerns for anyone involved in FCA litigation, or anyone thinking about engaging in FCA litigation. On both sides, whistleblowers and FCA accused alike, this should be a major issue that your legal counsel must consider.

Robert Liles, David Parker, and Paul Weidenfeld are experienced in counseling clients on FCA statute of limitation and other litigation related matters.  Moreover, they have handled a variety of FCA cases. For a free consultation to discuss the FCA statute of limitations issues raised in Paribas or for other questions regarding the FCA, please call today at: 1 (800) 475-1906.

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