On Monday September 30, 2024, the U.S. District Court for the Middle District of Florida held that the qui tam provision of the federal civil False Claims Act (FCA) is unconstitutional under the Appointments Clause of Article II of the Constitution. In a decision with potentially seismic implications for litigation under the FCA, Judge Kathryn Kimball Mizelle granted judgment on the pleadings for the defendant in United States ex rel. Zafirov v. Florida Medical Associates, LLC, No. 19-cv-01236 (M.D. Fla. May 20, 2019), finding that the qui tam relator lacked authority to represent the government's interests in civil litigation.

Since its inception in 1863, the FCA has contained a qui tam provision, now codified at 31 U.S.C. §§ 3730(b), authorizing private whistleblowers to "conduct the action" while standing in the shoes of the government if certain conditions are met. At various times, courts and academics have questioned the constitutionality of this qui tam provision, including under the Article II Appointments Clause and the Article III requirement that litigants suffer a personal "injury in fact." 

Last year, the permissibility of the qui tam provision under Article II was again called into question by Justice Clarence Thomas's dissenting opinion in United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023). Specifically, in a portion of the dissent with which Justices Brett Kavanaugh and Amy Coney Barrett agreed, Justice Thomas stated that "there are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation." Id. at 449. And, while not expressing agreement with Justice Thomas's view that the Polansky case itself should be remanded for further proceedings on the constitutionality of the qui tam provision, Justices Kavanaugh and Barrett stated that "the Court should consider the competing arguments on the Article II issue in an appropriate case." Id. at 442.

Since the Polansky decision, at least two courts have addressed the question of the constitutionality of the qui tam provision. First, in an FCA case in the District Court for the District of South Carolina, the defendant moved for judgment on the pleadings based on the argument that the qui tam provision is unconstitutional under Article II. United States ex rel. Shepherd et al. v. Fluor Corp. Inc. et al., No. 13-cv-02428. However, on September 13, the Shepherd court denied the defendants' motion on the basis that the defendants had not raised the Article II question as an affirmative defense in their pleadings. The court also noted that, "even if it is time to revisit the matter [of the constitutionality of the qui tam provision], it is equally true that 'lower federal courts should not pass on questions of constitutionality... unless such adjudication is unavoidable.'" Order at 5 (cleaned up). Nevertheless, the court noted that the defendants could seek leave to amend and, if granted, raise the issue in a motion for summary judgment. Id. 

Issued just over two weeks later, the Zafirov decision did not hesitate in addressing the constitutional question. In Zafirov, the plaintiff was a physician who claimed that her former employer fraudulently submitted altered "risk-adjustment scores" to Medicare in violation of the FCA. Over the five years after the case was filed, the government declined to intervene, leaving Zafirov – now a Canadian resident – to pursue the government's interests through private counsel. Taking the invitation from the Polansky dissent, the defendant argued that Zafirov's asserted authority to conduct the case was an exercise of "core executive power" by an unappointed private individual and therefore unconstitutional.

Judge Mizelle, a former clerk to Justice Thomas, followed the framework set out by his Polansky dissent in finding that a qui tam relator exercises a "core executive power" requiring appointment by the president under Article II's Appointments Clause. She stated:

A relator exercises core executive power by deciding "how to prioritize and how aggressively to pursue legal actions against defendants who violate the law." Indeed, the ability to initiate an FCA enforcement action for "daunting monetary penalties against private parties on behalf of the United States" is indistinguishable from the Executive Branch's "exclusive authority and absolute discretion to decide whether to prosecute a case." In sum, by suing on behalf of the United States to secure "essentially punitive" penalties, a relator performs a "traditional, exclusive function of the government" that is integral to the "administration and enforcement of the public law." 

Op. at 20-21 (citations omitted).

The Zafirov decision is likely to be appealed to the Court of Appeals for the Eleventh Circuit and the decision by the circuit court will be closely watched. The most significant question, however, remains how the Supreme Court will view the issue if it is presented with it in the near future, as seems likely. In the meantime, defendants are likely to be emboldened to continue to invoke the Appointments Clause as a basis to dismiss claims brought by qui tam relators under the FCA. 

For more information, please contact:

Alex L. Sarria, asarria@milchev.com.com, 202-626-5822

Jason N. Workmaster, jworkmaster@milchev.com, 202-626-5893

Bradley E. Markano, bmarkano@milchev.com, 202-626-6061

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