The FCA’s Qui Tam Provisions Under Fire

Last year, Justice Clarence Thomas's dissent in United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023) ("Polansky"), resurrected an old debate about whether the False Claims Act (FCA) qui tam provisions violate Article II of the Constitution. Under this theory, the FCA qui tam provisions improperly give a private party the authority to control litigation on behalf of the United States, a responsibility that the Constitution exclusively vests in the Executive Branch. We predicted that Justice Thomas's dissent could open the door to a constitutionality defense for defendants resisting qui tam suits. Yesterday, our prediction came true.

Judge Kathryn Mizelle of the U.S. District Court of the Middle District of Florida held that the FCA qui tam provisions violate Article II's Appointments Clause by permitting "unaccountable, unsworn, private actors to exercise core executive power with substantial consequences to members of the public."

The FCA allows private individuals, known as "relators," to bring lawsuits in the name of the United States against any person who knowingly presents a false claim for payment to the United States. 31 U.S.C. § 3730(b)(1). A victorious relator may collect a typical award of 15 to 30 percent of the government's total recovery, 31 U.S.C. § 3730(d), and thus is designed to encourage private individuals to bring suit on the government's behalf. The FCA allows a relator to initiate and direct litigation on the government's behalf. Unless the Department of Justice (DOJ) decides to intervene in the case, the relator can bind the federal government without direct accountability to anyone in the Executive Branch. Absent intervention by the DOJ, a relator enjoys unfettered discretion to decide who to investigate, who to charge in the complaint, which claims to pursue, and which legal theories to employ. Furthermore, a relator decides whether to appeal and which arguments to preserve, thereby shaping the broader legal landscape for the federal government.

In 2019, Clarissa Zafirov sued her employer and other defendants, alleging that they violated the FCA by misrepresenting patients' medical conditions to Medicare. Zafirov never asserted that the defendants' allegedly illegal conduct harmed her; instead, like a United States Attorney, Zafirov proceeded on behalf of the United States. After the DOJ declined to intervene, Zafirov litigated the action on behalf of the United States for the next five years.

In Zafirov ex rel. United States v. Florida Medical Associates, LLC, the defendants successfully argued that Zafirov exercised significant authority under the continuing position of relator but lacked proper appointment under the Constitution. As a result, the court dismissed the case.

Specifically, the defendants asserted that the FCA qui tam provisions violated the Appointments Clause because a relator is an improperly appointed officer of the United States. Judge Mizelle agreed, concluding: (1) an FCA relator is an officer of the United States because they exercise significant authority pursuant to the laws of the United States and occupy a continuing position established by law, (2) historical examples of qui tam provisions do not exempt an FCA relator from the Appointments Clause, and (3) because Zafirov is not constitutionally appointed, dismissal is the only permissible remedy.

In order to be an "Officer of the United States," one must exercise significant authority pursuant to the laws of the United States and occupy a continuing position established by law. Judge Mizelle explained that the power to initiate an enforcement action in the name of the United States to vindicate a public right constitutes significant authority. This enforcement authority is inherent in, and crucial to, the executive power. Furthermore, an FCA relator occupies a continuing position established by law because they have statutorily defined duties, powers, and emoluments.

As a result, Judge Mizelle determined Zafirov was an officer subject to the Appointments Clause. The Appointments Clause allows Congress by law to vest the appointment of inferior officers in the President, the head of an executive department, or a court. By contrast, the FCA qui tam provisions permits any "person" to appoint themselves by initiating an enforcement action. Because self-appointment does not satisfy the Appointments Clause, the defendants' constitutional challenge succeeded, and the only remedy was to dismiss the case.

Although this decision is likely to be appealed and is not binding on other courts, it is a welcome development for FCA defendants and defense attorneys. At a minimum, yesterday's decision will lead to further questioning of the constitutionality of qui tam actions.

In Polansky,Justices Kavanaugh and Barrett echoed Justice Thomas's concerns in a concurring opinion, noting that "the Court should consider the competing arguments on the Article II issue in an appropriate case." Polansky, 599 U.S. at 442. That's three justices already expressing public support for reconsidering the constitutionality of the FCA qui tam provisions. If the right case makes its way to the Supreme Court, it may not be challenging to find a fourth justice willing to grant certiorari. We have previously raised this same argument and will continue to monitor decisions from other federal courts addressing the constitutionality of the qui tam provisions.

Public link

Please use the above public link if you want to share this noodl on another website.