Courts Affirm Constitutionality of FCA Qui Tam Provision
On September 30, 2024, Judge Kathryn Mizelle in the Middle District of Florida granted a defense motion for judgment on the pleadings and dismissed an FCA case after concluding that the FCA’s qui tam provision is unconstitutional. U.S. ex rel. Zafirov v. Fla. Medical Assoc. LLC, No. 19-cv-1236, Dkt. No. 346 (M.D. Fla. Sept. 30, 2024).
Judge Mizelle first concluded that FCA relators are “officer[s] of the United States,” because they 1) “exercise significant authority pursuant to the laws of the United States,” in the form of possessing civil enforcement authority on behalf of the United States, and 2) “occupy a ‘continuing’ position established by law,” because “the position of relator does not depend on the identity of the person initiating the action, as any ‘person’ can be the relator if she satisfies the statutory prerequisites.” Based on the foregoing, she determined that qui tam relators must be appointment in a manner consistent with the Appointments Clause, which is not satisfied by a relator’s “self-appointment.” The opinion was predicated almost entirely on dicta by Justice Thomas in a dissent in the case of United States ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). The dicta questioned but did not answer whether the qui tam device violates Article II’s appointments clause because this determination was unnecessary to rule on the matter before the Court. Justices Kavanaugh and Barrett concurred in the query.
At odds with longstanding appellate precedent, the Zafirov opinion ignores the oversight mechanisms and safeguards built into the FCA to ensure the Government can maintain control of declined cases as the real party in interest. It has gotten little traction in the ensuing weeks. In early November, a federal court in the Eastern District of Tennessee criticized it as an “outlier” that relies “chiefly on selections of dissents, concurrences, and law review articles” while “whistl[ing] past precedent.” United States ex rel. Adams v.Chattanooga Hamilton Cty. Hosp. Auth., 2024 U.S. Dist. LEXIS 209546, at *7-9 (E.D. Tenn. Nov. 7, 2024). Other district courts in the Eleventh Circuit have reached the same conclusion. E.g. United States ex rel. Butler v. Shikara, 2024 U.S. Dist. LEXIS 181390, at*40-41 (S.D. Fla. Sep. 6, 2024) (rejecting Thomas dicta as basis to find qui tam unconstitutional).
Indeed, prior to Zafirov, the Sixth Circuit, Ninth Circuit, Tenth Circuit, and Fifth Circuit (en banc) have all affirmatively upheld the constitutionality of the qui tam provisions with robust discussions as to why there is no violation of the appointments clause. See United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 751-58 (9th Cir. 1993); United States ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1040-42 (6th Cir. 1994); Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753-58 (5th Cir. 2001) (en banc); United States ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 787, 804-07 (10th Cir. 2002). Prior to Zafirow and Justice Thomas’s dicta, these appellate courts and district courts nationwide have been near unanimous in concluding relators are not officers subject to the appointmenta cause because (1) their duties are temporary; and (2) they do not wield government power, instead being subject to significant government oversight during the pendency of a qui tam that leaves in place government ability to intervene, monitor and limit discovery, and dismiss or settle the action over relator objections. United States ex rel. Wallace v. Exactech, Inc., 703 F. Supp. 3d 1356, 1366 (N.D. Ala. 2023) (summarizing appellate cases and rejecting argument).
Zafirov acknowledged the statutory provisions that allow the Government to control qui tam litigation but took issue with the fact that judicial review remains and courts must give qui tam relators an opportunity to be heard and express their position. This ignores that the standard is highly deferential and a Court must nearly always acquiesce to the Government’s determination that dismissal or settlement is in the best interest of the United States absent evidence the Government is engaged in active malfeasance. Zafirov is on appeal with the Eleventh Circuit. It seems unlikely that the Eleventh Circuit will break rank with other appellate decisions, but if it does, the case is poised for Supreme Court review.