(Adds reaction, details of legal fight)
By Lawrence Hurley
WASHINGTON, May 26 (Reuters) - The Supreme Court on Tuesday handed a victory to defense contractor KBR Inc in its legal fight with a former employee who filed a whistleblower suit accusing it of defrauding the U.S. government over water purification work in Iraq.
The justices ruled 9-0 that a law that extends the time frame for fraud claims committed against the United States during wartime does not apply to civil claims, meaning former employee Benjamin Carter waited too long to bring his case.
Halliburton Co, which spun off KBR in 2007, was also named as a defendant in the lawsuit.
The ruling was not a total win for KBR, as the justices sent the case back to a lower court for further proceedings.
Carter, who worked in Iraq as a water purification operator, filed the lawsuit at issue in the case in 2011 under the federal False Claims Act, which allows individuals to sue on behalf of the government and claim a portion of the proceeds if the case is successful.
Carter said KBR, a leading contractor in Iraq following the 2003 U.S.-led invasion, billed the U.S. government for water purification services at two sites in early 2005 but did not actually start providing the service until May of that year.
The Supreme Court ruled that a law called the Wartime Suspension of Limitations Act, which extends court deadlines during a time of war, applies only to criminal fraud cases, not civil claims like this one.
“We are optimistic we can still pursue the case,” said Carter’s attorney, David Stone.
John Elwood, an attorney for KBR, said there are no live issues left and the company will ask that the case be dismissed.
KBR appealed to the high court after the 4th U.S. Circuit Court of Appeals ruled in favor of Carter in March 2013.
The case is KBR v. United States, U.S. Supreme Court, No. 12-1497. (Reporting by Lawrence Hurley; Editing by Will Dunham)