You May Be Talking to the Agency About Your Claim, But those Conversations Don’t Toll the Statute of Limitations

Many of the contractor’s claims were barred by the CDA’s statute of limitations. The contractor argued the limitations period was tolled by the parties’ settlement negotiations. The CBCA said negotiations, even if promising, do not toll the statute of limitations.

South Texas Health System v. Department of Veterans Affairs, CBCA 6808

• Contract and Claim – The contractor provided medical services for veterans and invoiced the VA for those services. The contractor filed and appealed several claims for unpaid invoices. The parties settled those claims. But after the contract ended, the contractor submitted additional claims for 393 invoices. The VA denied those claims, and the contractor appealed.
• Exhaustion of Administrative Remedies – The contract referred to an administrative appeal process. The agency argued the contractor had failed to exhaust that process before filing its claims. The board found the administrative appeal process was discretionary, not mandatory. The contractor didn’t need to exhaust the administrative appeals before submitting a claim.
• Releases – The VA alleged the claims were barred by a release the contractor signed when it settled the previous claims. However, the board found that the release had a limitation—it only applied to claims that could have been asserted in that previous appeal. The new claims had not been previously submitted to the contracting officer and thus could not have been resolved in the previous appeal. The release didn’t apply.
• Statute of Limitations – The board, however, found 262 of the 393 claims at issue were barred by the CDA’s statute of limitations. Those 262 invoices had been denied and thus accrued more than six years before the contractor submitted them.
• Equitable Tolling – The contractor argued that the statute of limitations had been while the parties had negotiated the claims. But the board noted that the mere continuance of negotiations, even where settlement looks likely, does not toll the statute of limitations.

The contractor is represented by Christian B. Nagel and Kelsey M. Hayes of Holland & Knight LP. The government is represented by David G. Fagn of the Department of Veterans Affairs.

–Case summary by Craig LaChance, Senior Editor