Supreme Court Renders Good News-Bad News Whistleblower Decision
Yesterday’s U.S. Supreme Court decision is good news and bad news for both whistleblowers and government contractors, including health care providers–a win for whistleblowers on one important issue, for contractors on another.
Kellogg Brown & Root (KBR) had a contract to provide water purification for the U.S. Army in Iraq. Former employee Ben Carter filed a qui tam suit claiming that KBR didn’t provide the services. The trial court dismissed under the first-to-file rule because of an earlier suit against KBR. When the earlier suit was dismissed, Carter refiled. The court dismissed under the first-to-file rule because Carter’s own earlier case was pending on appeal. He voluntarily dismissed his appeal and filed a third time.
KBR moved to dismiss on the grounds that two other cases had been filed between Carter’s first and third filings. The court granted the dismissal. The court also ruled that the Wartime Suspension of Limitations Act (WSLA), suspending the statute of limitations during armed conflict, suspends only criminal actions. So Carter had filed too late.
The 4th Cir. reversed both rulings. It held the WSLA applies to civil as well as criminal actions and that the first-to-file rule ceases to apply once the earlier-filed case is dismissed.
The Supreme Court reversed the 4th Cir. on the WSLA issue, holding that it suspends the statute of limitations only for criminal actions—not civil actions. This is a win for contractors.
The first-to-file statute says that when an action is filed, no one may bring another action based on the facts underlying that “pending” action. KBR argued that “pending” was shorthand for “first-filed.” Under that theory, the earlier cases filed against KBR, although dismissed, still barred Carter’s suit.
The Supreme Court ridiculed that theory, pointing out that it would mean that the trial of Socrates is still “pending.” This holding is, of course, good news for would-be whistleblowers.
The decision is Kellogg Brown Root v. U.S. ex rel. Carter, No. 12-1497.