United States ex rel. Carter v. Halliburton Co.

710 F.3d 171

UNITED STATES ex rel. Benjamin CARTER, Plaintiff–Appellant,

v.HALLIBURTON CO.; Kellogg Brown & Root Services, Inc.; Service Employees International, Inc.; KBR, Inc., Defendants–Appellees.

No. 12–1011.

United States Court of Appeals, Fourth Circuit.

Argued: Oct. 26, 2012.

Decided: March 18, 2013.

ARGUED:William Clifton Holmes, Dunlap, Grubb & Weaver, PC, Leesburg, Virginia, for Appellant. John Martin Faust, Law Office of John M. Faust, PLLC, Washington, D.C., for Appellees. ON BRIEF:Thomas M. Dunlap, David Ludwig, Dunlap, Grubb & Weaver, PC, Leesburg, Virginia, for Appellant. Craig D. Margolis, Tirzah S. Lollar, Kathryn B. Codd, Vinson & Elkins LLP, Washington, D.C., for Appellees.

Before AGEE, WYNN, and FLOYD, Circuit Judges.

Reversed and remanded by published opinion. Judge FLOYD wrote the majority opinion, in which Judge WYNN joined. Judge WYNN wrote a separate concurring opinion. Judge AGEE wrote a separate opinion concurring in part and dissenting in part.

OPINION

FLOYD, Circuit Judge:

Appellant Benjamin Carter appeals the district court's dismissal of his complaint with prejudice. The matter was initiated upon Carter's filing of a qui tam lawsuit under the False Claims Act (FCA), 31 U.S.C. § 3729. The subject matter underlying this case involves Appellees'—Halliburton Company; KBR, Inc.; Kellogg Brown & Root Services, Inc.; and Service Employees International, Inc. (collectively KBR)—alleged fraudulent billing of the United States for services provided to the military forces serving in Iraq. The district court concluded that it lacked subject matter jurisdiction over Carter's claims because of the False Claims Act's first-to-file bar, 31 U.S.C. § 3730(b)(5). The district court also held that Carter's complaint had been filed beyond the six-year statute of limitations in the FCA and was not tolled by the Wartime Suspension of Limitations Act (WSLA), 18 U.S.C. § 3287, which the court ruled does not apply to non-intervened qui tam cases. Accordingly, the district court dismissed Carter's complaint with prejudice. Because we conclude that the district court had subject matter jurisdiction and find that the WSLA applies to this action, we reverse. Further, because it may be appropriate for the district court to make factual findings to consider the public disclosure claim urged by KBR, we remand so the district court can consider this issue.

I.

In his complaint, Carter brings a qui tam action under the False Claims Act, 31 U.S.C. §§ 3729 through 3733. The FCA allows the United States to bring suit to recover funds and also allows, through the Act's qui tam provisions, for a private plaintiff (relator) to sue in place of the government and keep a share of the proceeds. See31 U.S.C. § 3730(a)–(d). Carter alleges that KBR falsely billed the United States for services performed in Iraq. Specifically, Carter alleges that KBR “knowingly presented to an officer or employee of the United States Government ... false or fraudulent claims for payment or approval in violation of 31 U.S.C. § 3729(a)(1).” Carter goes on to allege that KBR “knowingly made, used, or caused to be made or used, false records or statements to get false or fraudulent claims paid or approved by the Government” in violation of 31 U.S.C. § 3729(a)(2).

KBR provided logistical services to the United States military in Iraq under a government contract. Carter worked for KBR as a reverse osmosis water purification unit (ROWPU) operator at two camps in Iraq from mid-January 2005 until April 2005. Carter was hired to test and purify water for the troops in Iraq. Carter claims that KBR was in fact not purifying water during the time period but was repeatedly misrepresenting to the United States that it was. Carter submits that water purification did not actually begin until May 2005. Further, Carter maintains that he and his fellow employees were instructed to submit time sheets for twelve-hour days for work that they performed on ROWPU functions. During this time, Carter states that he was actually not working any hours on ROWPU functions. Carter also contends as part of an overall scheme by KBR to overbill the government for labor charges, that all trade employees were required to submit time sheets totaling exactly twelve hours per day and eighty-four hours per week and that it was “routine practice” of the employees to do so regardless of actual hours worked. As a result, according to Carter, the United States paid KBR for work not actually performed.

Carter filed his original complaint under seal on February 1, 2006, in the United States District Court for the Central District of California. United States ex rel. Carter v. Halliburton Co., No. 06–cv–0616 (C.D.Cal. filed Feb. 1, 2006). After over two years of investigation into the matter, the action was unsealed in May 2008. Shortly thereafter, the case was transferred to the Eastern District of Virginia in October 2008, at which point Carter amended his complaint. United States ex rel. Carter v. Halliburton Co., No. 08–cv–1162 (E.D.Va. filed Feb. 1, 2006). The district court dismissed Carter's first amended complaint without prejudice in January 2009 for failure to plead fraud with particularity. Carter then amended his complaint for a second time and re-filed his complaint in January 2009 ( Carter 2009 ). KBR then moved to dismiss Carter's second amended complaint under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, which the district court granted in part. The district court, however, refused to dismiss counts 1 and 4. Count 1 alleged a scheme by KBR to submit fraudulent claims for payment to the government, and count 4 alleged fraudulent statements knowingly made to the government to receive claims for payment. At this point, KBR answered the remaining allegations and the case proceeded through discovery, which closed in March 2010.

In March 2010, one month before the scheduled trial date, the parties were contacted by the United States Department of Justice, who informed them of the existence of a False Claims Act case containing similar allegations filed under seal in December 2005, in the United States District Court for the Central District of California, United States ex rel. Thorpe v. Halliburton Co., No. 05–cv–08924 (C.D.Cal. filed Dec. 23, 2005). Thorpe also alleges that KBR's standard operating procedure was billing twelve hours per day, without regard to the actual hours worked to perpetuate a scheme to overbill the government. In April 2010, KBR filed a motion to dismiss Carter 2009, arguing that Thorpe constituted a “related” action under FCA § 3730(b)(5). In response, Carter argued that Thorpe was materially different from his case because he focused on KBR's alleged fraudulent misrepresentation to the government that KBR was actually performing water services for which it was submitting bills.

The district court rejected Carter's characterization, reasoning that he must show that KBR employees were reporting hours that they did not work and the fact that KBR was not performing water services is merely evidence that the time sheets were false. The district court dismissed Carter 2009 without prejudice on May 10, 2010. Carter, No. 08–cv–1162. Carter appealed the dismissal on July 13, 2010.

Thereafter, the United States District Court for the Central District of California dismissed the Thorpe action on July 30, 2010. In response, Carter re-filed his complaint ( Carter 2010 ) in the United States District Court for the Eastern District of Virginia while his appeal was still pending. United States ex rel. Carter v. Halliburton Co., No. 10–cv–864 (E.D.Va. filed Aug. 4, 2010). When Carter re-filed his complaint, he also sought to dismiss his appeal in the 2009 action. This Court granted Carter's motion to dismiss his appeal on February 14, 2011. Meanwhile, Carter 2010 proceeded in the district court and, on May 24, 2011, the district court dismissed Carter's complaint without prejudice, on the grounds that Carter had filed Carter 2010 while Carter 2009 was still pending on appeal, thereby creating his own jurisdictional bar under the FCA's first-to-file provision. Carter, No. 10–cv–864. Carter chose not to appeal this ruling.

However, Carter re-filed his complaint ( Carter 2011 ) on June 2, 2011. United States ex rel. Carter v. Halliburton Co., No. 11–cv–602 (E.D.Va. filed June 2, 2011). The district court unsealed the complaint on August 24, 2011. The complaint in this case is identical to the earlier 2010 complaint as well the second amended complaint filed in 2009. After the complaint was unsealed, KBR moved to dismiss the action, arguing that the complaint was barred by two related actions, that the case was time barred, and that the case was barred by the public disclosure provision of the FCA.

At the time Carter 2011 was filed, two allegedly related cases were pending: United States ex rel. Duprey, No. 8:07–cv–1487 (D.Md. filed June 5, 2007) and another action—that is under seal—filed in Texas in 2007. Duprey and the Texas action allege that KBR “knowingly presented, or caused to be presented, to an officer or employee of the United States Government, false or fraudulent claims for payment or approval in violation of 31 U.S.C. § 3729(a)(1).” Since at least March 2003, KBR provided shipping and transportation support in Iraq for the United States military. The Duprey relator was employed by KBR as a truck driver in Iraq from March 27, 2005, to January 15, 2006. The Texas relators were also truck drivers in Iraq, and at least one relator was present in Iraq during the period of September 2003 to March 15, 2004. Both complaints allege substantially similar claims, namely that KBR had a policy that its drivers enter time sheets reflecting a twelve hour workday and an eighty-four hour work week, without regard to actual hours worked. The relators alleged that this practice was widespread throughout KBR's operations in Iraq and elsewhere....