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November 28, 2012

New Interpretation of the Wartime Suspension of Limitations Act

In a case of first impression, United States v. BNP Paribas SA, a federal judge in the Southern District of Texas recently held that the Wartime Suspension of Limitations Act (the "WSLA," 18 U.S.C. § 3287) applies to claims asserted under the False Claims Act (the "FCA," 31 U.S.C. §§ 3729, et seq.), suspending the running of the FCA's six-year statute of limitations because of the military conflicts in Iraq and Afghanistan. If applied more broadly, the decision could dramatically weaken the FCA statute of limitations defense while the United States remains "at war."

Congress enacted the WSLA during World War I to extend the statute of limitations for offenses involving fraud or attempted fraud against the United States. After its repeal in 1927, Congress re-enacted the WSLA to address claims arising out of World War II. Congress amended the WSLA in 2008, expanding its reach by providing that the United States is "at war" when Congress enacts a "specific authorization" for the use of armed forces, and extending the limitations suspension period from three years to five years after hostilities are declared ceased. The WSLA now provides, in relevant part, as follows:

When the Unites States is at war or Congress has enacted a specific authorization for the use of the Armed Forces . . . the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof . . . shall be suspended until five years after the termination of hostilities as proclaimed by the President, with notice to Congress, or by a concurrent resolution of Congress.

The language of the WLSA does not limit its application to a particular class of "fraud or attempted fraud" against the United States. It also does not specifically differentiate between civil fraud and criminal fraud, although the term "offense" and legislative history suggest that the WSLA was meant to apply to the latter.

In BNP Paribas SA, the United States sued BNP Paribas North America ("BNP") in October of 2011, alleging a violation of the FCA. The government claimed that in September of 2005 BNP submitted a fraudulent reimbursement claim to the United States Department of Agriculture under a federal commodity guarantee program. Because the claim was filed more than six years after BNP filed the allegedly false claim, BNP moved to dismiss the action as time-barred. The government relied on the WSLA to oppose BNP's motion, arguing the WSLA suspended the FCA's statute of limitations because the United States was at war when the claim was submitted. In denying BNP's motion, the court agreed with the government's argument, concluding that the United States was "at war" in 2005 in Iraq and Afghanistan.

The BNP Paribas case presents a number of interesting issues for practitioners. If other federal courts adopt the decision's rationale, claims that ripened at any point during the Iraq and Afghanistan conflicts may not be deemed time-barred until five years after those conflicts are formally concluded by Presidential proclamation. In addition, aggressive government attorneys may seize on the decision and attempt to apply it to pending and future FCA cases, even those not involving military contracting fraud. In at least one case already, the United States Department of Justice has taken the position that the WSLA applies in FCA cases involving federal health care programs. Consequently, anyone defending against an FCA claim should be aware that the six-year statute of limitations might not be as conclusive as once originally thought.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact Daniel J. French or Gabriel M. Nugent, Co-Chairs of the White Collar Practice Area.

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