In a mixed ruling for healthcare providers, the U.S. Supreme Court last week refused to extend the statute of limitations in civil fraud lawsuits. But the ruling could make it easier for some whistle-blowers to file fraud lawsuits over issues previously brought to court.
The high court unanimously ruled in Kellogg, Brown & Root Services Inc. v. United States ex. rel. Carter that the Wartime Suspension of Limitations Act extends statutes of limitations only in criminal cases during times of war, not in civil cases such as those filed by whistle-blowers under the False Claims Act.
But it also decided that federal law does not prohibit whistle-blowers from filing cases making the same allegations as those made in previous cases if the earlier cases already had been dismissed for reasons other than their merits.
If the court had extended the statute of limitations for all whistle-blower cases, “it would have opened up a floodgate of arguments by whistle-blowers that there's essentially no statute of limitations in healthcare civil cases,” said Larry Freedman, an attorney with Mintz Levin in Washington who defends providers in False Claims Act cases.
Maureen Mudron, deputy general counsel for the American Hospital Association, called that “good news for hospitals.” A different legal outcome, she said, “would have resulted in efforts to revive decades-old stale civil claims … and impose significant unwarranted costs on healthcare providers.”
But Freedman said the second part of the ruling could encourage “tactical gamesmanship” by whistle-blowers, requiring providers to defend against multiple actions.
David Chizewer, an attorney with Goldberg Kohn, a Chicago law firm that represents whistle-blowers, said that part of the decision could mean strong whistle-blower cases will no longer be blocked by earlier, weaker ones.
It paves “a wider path for the case that is most likely to be successful to see the light of day,” he said.
Healthcare industry groups had argued that whistle-blowers shouldn't be allowed to file repetitive lawsuits after earlier, similar lawsuits were dismissed.
The purpose of whistle-blower suits, they said, is to alert the government to potential fraud, making multiple cases about the same issue unnecessary.
The court said, however, that the False Claims Act bars lawsuits from being filed only when similar cases are “pending,” and that does not include cases that already have been dismissed. “Why would Congress want the abandonment of an earlier suit to bar a later, potentially successful suit that might result in a large recovery for the government?” the opinion stated.