The Middle District of Florida Court Finds the Qui Tam Provision of the False Claims Act Unconstitutional because a Relator is an “Officer” of the United States
Despite all previous Circuit Courts holding that the FCA is constitutional under Article II, the court held that an FCA relator is an officer of the United States must be appointed and dismissed the case.
On September 30, 2024, the Middle District of Florida granted the defendants’ Motion for Judgment on the Pleadings in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., finding the qui tam provision of the False Claims Act (“FCA”) unconstitutional.
This is the first court to find the qui tam provision FCA unconstitutional, an argument that has been raised often by defendants since Justice Thomas raised Article II concerns in his dissent in Polansky.[1]
This declined case was filed under seal in 2019. The relator sued her employer and other defendants, arguing that the defendants misrepresented patients’ medical conditions to Medicare. After many years of litigation, following the Polansky decision, the defendants moved for Judgment on the Pleadings arguing that the qui tam provision is unconstitutional.
The defendants argued that it is unconstitutional under Article II for two reasons. First, the defendants postulated that the provision violates the Take Care Clause and the Vesting Clause. The defendants maintained that the FCA “den[ies] the President necessary removal authority and sufficient supervisory control over [the relator.]” Second, the defendants contended that the provision violates the Appointments Clause because the relator acts as an officer even though they are not appointed.
After the defendants filed their motion, the court held oral arguments on April 22, 2024. Participants included the parties, the U.S. Chamber of Commerce as amicus curiae, the Department of Justice, and the Anti-Fraud Coalition,[2] engaging in nearly four hours of discussion.
Following oral argument and supplemental briefing of the history of qui tam in the U.S., the court held that the FCA provision is unconstitutional and dismissed the case, resting on three conclusions.[3] First, that an FCA relator is an officer of the state because she exercises “significant authority,” including civil litigation authority on behalf of the United States. Second, that the historical pedigree of the qui tam actions in the United States is unpersuasive – choosing to ignore analogous statutes and their enforcement throughout the history of the country, back to the founding. Finally, that dismissal is appropriate because the relator was not “constitutionally appointed.”
Officer of the United States
In analyzing whether the relator qualifies as an officer of the United States, the court applied a two-part test. This test assessed whether the relator “exercis[es] significant authority pursuant to the laws of the United States” and “occup[ies] a ‘continuing’ position established by law.” The court concluded that, because the relator possesses civil enforcement authority and statutory duties, she is indeed an officer subject to the Appointments Clause.
Significant Authority
The court provided several justifications for why a relator has “significant authority.” The court explained that a relator has civil litigation powers based on language in a case called Buckley v. Valeo, 424 U.S. 1 (1976), which stated that an individual is an officer if, an individual has power to “conduct[] civil litigation in the courts of the United States for vindicating public rights,” and if the individual has “broad administrative powers.” The relator may initiate FCA enforcement, which the court considered “indistinguishable from the Executive Branch’s ‘exclusive authority and absolute discretion to decide whether to prosecute a case.’” The court also maintained that the relator has the power to determine “how to prioritize and how aggressively to pursue legal actions against defendants who violate the law.” The court rejected the relator’s, the government’s, and the Anti-Fraud Coalition’s arguments distinguishing Buckley from the present case without much meaningful analysis.[4] The court also rejected the contention that the relators are “ordinary private plaintiffs,” stating that the relator’s do not have personal injury and are intent on vindicating public rights.
Continuous Position
The court next determined the relator “occupies a continuing position established by law.” The court reasoned that the relator has “unfettered freedom to prosecute the action as she determines best. She may choose which defendants to sue (and which not to sue, for reasons of her own), which theories to raise, which motions to file, and which evidence to obtain.” Additionally, the court concluded that despite a relator’s general involvement in only one case with no access to government resources, the relator’s position was “continuous and permanent” because she could continue to prosecute the case and exercise statutory duties, powers, and emoluments. The court further held that the relators are temporary-yet-continuing officers under the test laid out in U.S. v. Donziger, 38 F.4th (2d Cir. 2022), cert. denied 143 S. Ct. 868 (2023) because the relators’ positions are not “transient or fleeting,” “do not depend on the identity of the person occupying it,” and are “more than incidental to the regular operations of government.”
Historical Context
Turning to historical context, the court asserted that the pedigree does not override the Constitution. It identified three flaws in the relator’s historical analysis, despite thorough and detailed briefing by relator, the government, and The Anti-Fraud Coalition: a lack of clarity in distinguishing public and private proceedings in early qui tam statutes, overstatements regarding the applicability of historical cases, and a failure to recognize that the Constitution takes precedence. The court conceded that while there are examples of historical qui tam statutes, those cases are not similar to the current case brought by Zafirov. Additionally, the court noted that any statutes that are similar cannot overcome the plain language of the Constitution, and that the relator failed to provide a justification for how the qui tam provision “comport[s]” with the Appointments Clause.[5]
The court resolved “[b]ecause Zafirov is an officer, there is no question that she is improperly appointed.” The court explained that the relator cannot “self-appoint” herself to initiate an action on behalf of the government.
Dismissal
The court dismissed the case, determining that the relator is an improperly appointed officer without the authority to enforce or prosecute the claims. It asserted that, in the absence of a congressional amendment, the relator cannot initiate or bring the case on behalf of the government. The court did not reach the defendants’ other Article II argument.
Conclusion
This is just an overview of the district court’s holding – stay tuned for additional thoughts on the case in the coming weeks from The Anti-Fraud Coalition.
Grace Swindler is the Director of Legal Education of The Anti-Fraud Coalition
[1] In his dissent in Polansky, Justice Thomas questioned whether the qui tam provisions of the False Claims Act ran afoul of Article II of the U.S. Constitution, because the Executive Branch or its officers, in his opinion, are exclusively responsible for enforcing federal law, and if the government does not have the power to take over a qui tam suit from a relator at any time during the litigation, it is ceding that control to private citizens. He also suggested that because relators were not appointed officers of the United States, a private relator could not represent the interests of the government in litigation.
[2] The Anti-Fraud Coalition amicus brief in Zafirov.
[3] The court also found that the defendants’ motion was timely, as the Article II challenge did not affect subject matter jurisdiction and did not prejudice the relator, being purely legal.
[4] “In the end, none of Zafirov’s arguments overcome the reality that an FCA relator initiates a lawsuit that ‘seek[s] daunting monetary penalties against private parties on behalf of the United States in federal court… Zafirov’s power to enforce public law through litigation necessarily satisfied the first step for officer status’”
[5] “When the Constitution is clear, no amount of countervailing history overcomes what the States ratified.”
