The Supreme Court is considering whether to hear two whistleblower cases under the False Claims Act (“FCA”), both on appeal from the Fourth Circuit.  The Supreme Court has asked the U.S. Solicitor General to weigh in before the Court decides whether to hear either case.  The two cases are Kellogg Brown & Root Services Inc. et al v. U.S. ex rel Carter, case no. 12-1497, and U.S. ex rel. Nathan v. Takeda Pharmaceuticals North America Inc. et al., case number 12-1349.

As we previously reported, Carter  presents the question whether the Wartime Suspension of Limitations Act (“WSLA”) applies to civil claims, rather than just criminal claims, and whether the WSLA applies even without a formal declaration of war.  In that case, Carter alleges his employer submitted false claims to the government regarding work performed in Iraq in 2005.  He originally brought his case in 2006, but the case was dismissed several times and, ultimately, not refilled until 2011 – outside the six-year statute of limitations applicable to FCA claims. 

The WSLA applies when the United States is at war, or when Congress has enacted specific authorization for the use of the Armed Forces.  In those circumstances, the statute suspends the limitations period for any claims involving fraud or attempted fraud against the United States until five years after hostilities are terminated through a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.

The Fourth Circuit held that the Authorization for the Use of Military Force against Iraq, issued by Congress on October 11, 2002, triggered the application of the WSLA.  Therefore, Carter was able to bring his claims against his employer at any time until five years after those hostilities are formally terminated by Congress and the President.  

Takedea asks the Court to decide how specifically a whistleblower must describe the false claims he alleges were presented to the government for payment.  Federal Rule of Civil Procedure 9(b) requires a fraud claim to be pled with specificity.  In Takeda, the whistleblower, Noah Nathan, claimed that his employer had defrauded Medicare by overprescribing for stomach acid drug prescriptions.  Nathan alleged that 90 percent of the drug prescriptions were for gastroesophageal reflux disease – for which only a 30-miligram dose is approved – but more than 90 percent of the prescriptions issued were for 60-milligram doses.  Nathan claimed, therefore, that the drug was being prescribed for off-label uses.  He further claimed that, in light of this over-prescription, it was reasonable to infer that Takeda was being reimbursed for unapproved purposes.

The Fourth Circuit dismissed Nathan’s claim, finding that he had failed to allege with sufficient specificity false claims that were allegedly submitted to the government.  Nathan did not allege, for example, details about the particular prescriptions written by pharmacists for Medicare patients, that those prescriptions were ever filled, or that corresponding claims for reimbursement were ever submitted to the government.

As we previously noted, Carter represents the first time a Court of Appeals has explicitly held that the WSLA applies to civil cases where the United States is not a plaintiff or intervenor in the qui tam action.  Other plaintiffs are starting to follow Carter’s lead, and, therefore, the Court’s decision, should it chose to take the case, will be important for employers with government contracts in areas of active hostilities.  If it is heard, Takeda may provide the Court an opportunity to give even more teeth to Rule 9(b) by requiring that the underlying fraud in an FCA claim be pled with particular specificity.