Fight over False Claims Act whistleblower provision heats up on appeal
At first glance, it might seem far-fetched to suggest a whistleblower law that’s been on the books for decades, invoked in more than 15,000 cases and has yielded over $44 billion in redress for taxpayers is unconstitutional.
But on closer inspection, a fight over the “qui tam” provision of the False Claims Act before the Atlanta-based 11th U.S. Circuit Court of Appeals is shaping up to be a potential game-changer that could upend the federal government’s ability to combat fraud.
The looming showdown has grabbed the attention of heavyweight interest groups on all sides that have weighed in with 16 friend-of-the-court briefs. The key question: Does the 162-year-old law’s qui tam mechanism, which empowers private whistleblowers to sue defendants for defrauding the federal government and pocket a share of the proceeds as a reward, impermissibly infringe on executive branch authority?
(The term qui tam, in case you’re wondering, refers to the first two words of a Latin phrase that translates as “Who sues on behalf of the king as well as himself.”)
In six filings on Monday, conservative public interest law firms, former Republican attorneys general and business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, urged the appeals court to uphold a decision last fall by a federal judge in Tampa who found the qui tam provision unconstitutional.
U.S. District Judge Kathryn Mizelle in September ruled that the law’s qui tam mechanism violates the Appointments Clause of Article II of the U.S. Constitution because the whistleblowers — known as relators in False Claims Act lingo — are acting as officers of the United States, exercising executive-branch power without accountability to the president.
“A relator enjoys unfettered discretion to decide whom to investigate, whom to charge in the complaint, which claims to pursue, and which legal theories to employ,” Mizelle wrote, as well as determining whether to appeal and which arguments to preserve.
Siding with the Trump administration’s U.S. Justice Department in arguing Mizelle got it wrong is an unlikely alliance that includes plaintiffs’ lawyers, consumer advocates and Republican Senator Charles Grassley, architect of updates to the law in 1986.
It wasn’t a given that the DOJ under Attorney General Pam Bondi would stay the course in favor of the qui tam provision on appeal. While the Trump administration has been vocal about rooting out government fraud, the administration also embraces the notion of a strong executive. But during Bondi’s confirmation hearing in January, Grassley pressed her for assurances that she would continue to defend the constitutionality of the False Claims Act. Bondi promised that “of course” the DOJ would do so.
A DOJ spokesperson did not respond to a request for comment.
In its brief, the DOJ calls Mizelle’s decision an “outlier,” and points to historical context and legal precedent to support use of the qui tam provision.
Mizelle, a former clerk to U.S. Supreme Court Justice Clarence Thomas who was appointed to the bench in 2020 by President Donald Trump, wasn’t the first judge to consider whether the qui tam passes constitutional muster. Between 1993 and 2002, five federal courts of appeal held that it did.
But those decisions came before Thomas in a 2023 dissent in another False Claims Act case criticized the “constitutional twilight zone” of the qui tam mechanism.
In a concurrence, Justices Brett Kavanaugh and Amy Coney Barrett said they shared Thomas’ concerns and that the court should eventually grant review of the Appointments Clause issue.
To me, this suggests that however the 11th Circuit rules, the case may be Supreme Court-bound. Little wonder amici are already lining up to influence the decision.
The underlying dispute began ordinarily enough.
In 2019, Florida physician Clarissa Zafirov accused her ex-employer and several other Florida healthcare providers of defrauding Medicare by misrepresenting patients’ medical conditions. For example, her lawyers said, the defendants allegedly coded one of Zafirov’s patients as having a traumatic foot amputation while her subsequent exam “showed the patient plainly had both feet.”
Zafirov’s counsel from Morgan Verkamp did not respond to request for comment.
Paul, Weiss, Rifkind, Wharton & Garrison appellate practice head Kannon Shanmugam, who represents the Florida Medical Associates and other healthcare providers, declined comment for this column.
The DOJ typically intervenes in several dozen False Claims Act cases each year, assuming control of the litigation from the relator. When that happens, big payouts often are the result — about $47 billion from 1986 to 2023, according to government statistics.
By contrast, in the more numerous cases where the feds stay on the sidelines, whether because the evidence was weak or for other reasons, relators who litigated on their own netted about $5 billion.
The DOJ opted not to intervene in Zafirov’s case. Depending on how the 11th Circuit sees it, that could have a big impact.
Mizelle in her decision wasn’t clear if her constitutional analysis only applies to qui tam cases like Zafirov’s where DOJ didn’t intervene – or if all qui tam cases, even the ones the government leads, violate the Appointments Clause.
The Florida healthcare providers in their brief argue the holding should be broadly construed, and that qui tam cases also violate the Take Care and Vesting Clauses.
Intervention by the DOJ “does not cure the statute’s constitutional infirmities,” they argue, since, for example, the government lacks discretion to choose and when to bring suit and has no mechanism to remove the relator.
As for those who defend the law, they say that the analysis misses a crucial step.
Relators are not government employees, argues the liberal Constitutional Accountability Center, so how can they be subject to Appointments Clause restrictions in the first place? The court “created a public office where none exists.”
Oral argument hasn’t been scheduled, but would likely come in the summer or fall.