In a potentially seismic development, a federal district court held that the False Claims Act's qui tam provisions violate the Constitution's Appointments Clause—a ruling that, if upheld, would upend the landscape of FCA litigation.
In a major development in False Claims Act ("FCA") litigation, a federal district court in Florida held that the FCA's qui tam provisions are unconstitutional in United States ex rel. Zafirov v. Florida Medical Associates, LLC, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024) (Mizelle, J.). The court held that relators—private parties who sue on behalf of the United States—are "Officers of the United States" subject to Article II's Appointments Clause. It then dismissed the case because the FCA's qui tam provisions could not, consistent with the Appointments Clause, properly appoint a relator to be an officer, and because the government had declined to intervene (except to address the Article II issue).
To be an "Officer," a person must exercise "significant authority" under the laws of the United States and hold "a continuing position established by law." Lucia v. SEC, 585 U.S. 237, 245 (2018). The court held that a relator's power to bring an FCA action constituted "significant authority" under federal law—particularly given the FCA's "daunting monetary penalties" and the decisions relators make in FCA litigation that bind the federal government. The court then found that a relator holds a "continuing position" by analogizing to an independent counsel. Citing opinions from Justices Thomas and Kavanaugh raising the Appointments Clause issue in the Supreme Court's recent Polansky decision, Judge Mizelle departed from older decisions of multiple Courts of Appeals and rejected the "historical pedigree of qui tam provisions," reasoning that "the Constitution prevails" over historical practice.
The court next found that the relator's position violated Article II—regardless of whether the relator functioned as a "principal officer" (who must be appointed by the president and confirmed by the Senate) or as an "inferior officer" (who must be appointed by the president, the head of an executive department, or a court)—because the Appointments Clause did not allow a relator to "self-appoint" by bringing suit under the FCA. The court concluded that this constitutional infirmity required dismissal.
It appears inevitable that this decision will be appealed to the Eleventh Circuit and, potentially, to the Supreme Court. In the meantime, Zafirov provides support for a dispositive argument against FCA suits. Defendants should make sure to preserve this argument in any FCA litigation.
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