Halliburton, KBR Whistle-Blower’s Case Revived on Appeal

Halliburton Co. and KBR Inc. must face a whistle-blower lawsuit that was revived by a federal appeals court, which ruled that military operations in Iraq exempted the plaintiff from a six-year deadline for filing claims.

In a 2-1 ruling today, the U.S. Court of Appeals in Richmond, Virginia, reversed a lower-court judge’s dismissal of a case against the companies filed by Benjamin Carter under the False Claims Act. Carter’s claims that Halliburton and KBR falsely billed the U.S. in 2005 triggered the Wartime Suspension of Limitations Act even though the Justice Department declined to intervene in the case, the judges said.

“Whether the suit is brought by the U.S. or a relator is irrelevant to this case because the suspension of limitations in the WSLA depends on whether the country is at war and not who brings the case,” U.S. Circuit Judge Henry Floyd wrote in the ruling.

Carter, who worked for KBR as an operator in a water purification unit in 2005, alleges the companies billed the U.S. government for purifying water for four months at two Iraqi camps that year when it hadn’t done so. He also alleges the he and his colleagues were instructed to submit time sheets showing that they worked 12-hour days on the purification when he hadn’t worked on it at all.

Carter first sued in 2006. That case and three subsequent complaints were dismissed on procedural grounds. In sending the case back to U.S. District Judge James Cacheris in Alexandria, Virginia, the appeals court said Carter’s claims may still be barred under a different provision of the false claims law.

Dissenting Judge

U.S. Circuit Judge G. Steven Agee, in a dissenting opinion to today’s decision, said people might allow false billing to continue knowing that they have more than a decade to file a claim and that their reward is tied to the size of a recovery.

“Private party relators will be inclined to delay, allowing their potential recovery to increase, knowing that the government is unlikely to discover the fraud, and therefore unlikely to be the first to bring a claim against the perpetrators,” Agee said.

Susie McMichael, a spokeswoman for Houston-based Halliburton, referred questions to KBR, stating that the activity alleged in the lawsuit was pursuant to a KBR contract.

John Elolf, a spokesman for Houston-based KBR, said in a statement that the company was disappointed with the ruling and “respectfully disagrees” with the majority’s opinion.

“KBR is continuing to study the decision and weighing our options,” he said. “We believe the underlying case is without merit, and we are confident that it will ultimately be dismissed.”

The case is United States ex rel. Benjamin Carter v. Halliburton Co., 12-01011, U.S. Court of Appeals for the Fourth Circuit (Richmond).