Good for the Civil Goose, Good for the Criminal Gander on the Statute of Limitations

Readers concerned with the potential for parallel civil and criminal fraud proceedings will be interested in a recent development out of the Tenth Circuit regarding application of a potentially indefinite tolling statute. In its October decision in United States v. DeLia, a panel held that the Wartime Suspension of Limitations Act (WSLA) does not operate to toll the statute of limitations for healthcare fraud prosecuted under 18 U.S.C. § 1347. 906 F.3d 1212 (10th Cir. 2018). The panel reached this conclusion by following guidance from the Supreme Court's FCA decision in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter—a landmark case from 2015 in which the Court determined that suspension does not apply to civil statutes of limitations, and indicated courts should apply the statute narrowly in all contexts. The DeLia decision makes the Tenth Circuit the first circuit of which we are aware to address the question of whether the WSLA applies to criminal health care fraud offenses under 18 U.S.C. § 1347.

The underlying case in DeLia involves allegations that the physician defendant had pre-signed thousands of blank prescription forms for his staff to issue while he was deployed in Afghanistan and unable to see patients himself. The indictment issued seven months after the statute of limitations expired, but the district court had held that the WSLA had tolled the statute and permitted the case to go to trial where the defendant was convicted.

Initially devised after World War I, the WSLA suspends the statute of limitations for "any offense . . . involving fraud or attempted fraud against the United States or any agency thereof…." 18 U.S.C. § 3287. The law tolls the statute of limitations while the United States is at war and for five years following the "termination of hostilities." The general idea is that if the government is fighting a war, then it is probably too busy to uncover and prosecute those defrauding it. The catch, however, is that the federal government—not to mention the scope and duration of modern "hostilities"—has grown exponentially since the WSLA's enactment. For a country now seemingly perpetually involved in international conflict, the WSLA could theoretically have operated as a free ticket for the Department of Justice to bypass any statute of limitations for fraud, regardless of whether there was any actual impairment to its ability to detect it.

As it relates to civil liability, the Supreme Court in Carter drew a firm line in the sand three years ago, making it clear that the WSLA applies only to criminal charges but not to the civil FCA. In a unanimous opinion, the Justices drew from the text, structure, and history of the WSLA to emphasize that the statute should be narrowly construed, with any ambiguity in favor of repose. Id. at 1975.

The Tenth Circuit's decision to decline application of the WSLA to the fraud charged in DeLia leaned heavily on the Court's mandate in Carter to construe the statute narrowly and in favor of repose. But instead of drawing the distinction for which the defendant had advocated (which would have limited application of the WSLA to war-related fraud), the court relied on a semantic misstep by the prosecution. Instead of charging an offense that requires proof of fraud against "the United States" (to which the WSLA would potentially apply), the court knocked the government for prosecuting him under 18 U.S.C. § 1347, which criminalizes defrauding a "health care benefit program." And because fraud against the federal government was not an essential element of the crime charged, the court found that the WSLA could not apply to toll. The panel left open the question of whether the WSLA might have applied had the government charged the defendant under 42 U.S.C. § 1320a-7b (relating to fraud "involving Federal health care programs") instead.

We trust our readers will forgive us for this brief foray into criminal jurisprudence, as compared to our usual FCA fare. Particularly in light of the government's increasing focus on pursuing both criminal and civil fraud based on the same fact pattern (see the entry on the Yates Memo in our glossary), decisions like the Tenth Circuit's here may be more and more relevant to FCA practitioners in the future.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.