Are the qui tam provisions of the False Claims Act an unconstitutional delegation of authority to private citizens? One federal court, accepting an invitation from a Supreme Court dissent, ruled the answer is yes.

In an opinion issued yesterday dismissing a False Claims Act case, Judge Kathryn Kimball Mizelle of the U.S. District Court for the Middle District of Florida ruled that the statute’s provisions that permit a private citizen to bring a claim for a violation of the False Claims Act in the absence of intervention by the Federal Government are an unconstitutional delegation of executive authority that violated the Appointments Clause of Article II of the Constitution.

According to the court, the qui tam provisions, as strengthened by the False Claims Act Amendments Act of 1986 (Pub. L. No. 99-562), established a mechanism whereby “unaccountable, unsworn, private actors” are permitted “to exercise core executive power with substantial consequences to members of the public.” The court ruled that such a provision was unconstitutional as it permitted a private citizen to stand in as the “avatar in litigation” in which the interest of the United States is in issue.

Decision was invited by dissent in Polansky

This decision comes on the heels of a dissent, included in the Supreme Court’s decision in 2023 in United States ex rel. Polansky v. Executive Health Resources, Inc. (599 U.S. 419), that appeared to invite this ruling. In that case, the Supreme Court determined that the United States could dismiss a qui tam action whenever it decides to intervene, whether at the outset of the litigation or later.

Judge Mizelle’s opinion drew from the dissent authored by Justice Clarence Thomas and referenced by Justices Amy Coney Barrett and Brett Kavanaugh in their concurring opinion. In the dissent, Justice Thomas argued that “[t]here 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.” Justice Kavanaugh agreed in his concurring opinion and invited further litigation by stating “the Court should consider the competing arguments on the Article II issue in an appropriate case.”

This was such a case, according to Judge Mizelle, who mentioned that the Eleventh Circuit and the Supreme Court had set aside any consideration of the impact of Article II on the qui tam provisions. In this case, the court found that the relator had been prosecuting the case since 2019 without intervention or assistance from the Federal Government. The substantial power that she held as the primary plaintiff in the case, according to the court, lifted her to the level of officer of the United States: a level that was not supported by any constitutional authority.

Opinion could eviscerate enforcement of FCA

The court’s decision, if allowed to stand on appeal, could threaten the enforcement impact of the False Claims Act. As noted annually by the U.S. Department of Justice, False Claims Act actions account for billions of dollars in fraud recoveries every year, and until 2023, more than two-thirds of the actions brought every year are qui tam actions initially brought by a whistleblower. Even with an uptick in government-brought cases recently, that amounted to only 41% of all FCA cases in 2023. Although the government could intervene in more FCA cases to seek to resolve this issue, that may present a challenge in light of the government’s limited resources, particularly when today, there are many sophisticated law firms that regularly pursue FCA cases through trial.

Stay tuned for a likely appeal to the Eleventh Circuit, but it is telling that at least three Supreme Court justices have invited a challenge to the qui tam provisions, and no doubt more litigants – and judges – will accept the invitation to scrutinize a vehicle available since the Civil War to challenge purported fraud on the government. Although FCA enforcement today is largely focused on healthcare providers serving patients, as opposed to contractors supplying guns that won’t shoot, it is also a law that is widely supported across political lines. As a result, it is unlikely that any attempt by some courts to upend the FCA will be met with acquiescence.   

Reed Smith will continue to follow developments as to qui tam actions and the False Claims Act. If you have any questions about this court decision or aspects of the False Claims Act, please do not hesitate to contact the health care lawyers at Reed Smith.