On Tuesday, the Supreme Court issued its long-awaited opinion addressing the applicability of the Wartime Suspension of Limitations Act (WSLA) to claims under the False Claims Act. In Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Supreme Court decided that the WLSA does not apply to FCA claims but is instead limited to criminal offenses.
However, the Court did affirm the appellate court’s decision on the first-to-file bar, finding that the first-to-file bar only precludes subsequent suits while the first suit is actually pending in court. Once the preclusive suit has been dismissed or is no longer active, it cannot bar any future suits under the first-to-file provision.
The Tenth Circuit says, “yes.”
In Vanlandingham v. Grand Junction Regional Airport Authority, the district court dismissed the plaintiff’s claim under the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3730(h), because it found that she had released the claim when she signed a severance agreement at the termination of her employment with the defendant.
The plaintiff, while working for the airport authority, learned that the defendant had been obtaining federal funds for the construction of a perimeter fence for purposes that were not allowed under federal law. When she refused to tell tenants of the airport what she believed was a lie about the fence construction, she was demoted and ultimately terminated. When she was fired, she was presented with a severance agreement that contained a general release of claims. She received severance pay and other material benefits for signing the agreement. After signing the agreement, which the plaintiff said was signed under duress, she consulted an attorney and filed her anti-retaliation claim.
The Tenth Circuit affirmed the district court’s dismissal under Rule 12(b)(6). First, it found that under the totality of the circumstances–the applicable standard–the plaintiff had knowingly and voluntarily released her anti-retaliation claim. The court found the language of the severance agreement, while broad, was specific enough to cover this type of claim, that the plaintiff was not unsophisticated, and that the plaintiff was provided a cooling-off period in which to revoke the agreement, which she failed to exercise.
On the question of whether public policy prohibited the release of such claims, the Tenth Circuit noted that the anti-retaliation provision of the False Claims Act is different than substantive claims under the statute. While there is significant legal authority for the proposition that parties cannot waive substantive claims under the False Claims Act, the Tenth Circuit held that the “difference” between the statutory language for substantive claims and anti-retaliation claims means that “the FCA does not preclude Ms. VanLandingham’s waiver of her private retaliation claim.”