Is The False Claims Act Dead?
October 8, 2024
In this Surety Today: The Blog post we consider the question of whether the dreaded and feared False Claims Act is dead? A federal judge in Tampa, Florida ruled on September 30, 2024, that the qui tam whistleblower aspect of the False Claims Act is unconstitutional. United States Of America ex rel. Clarissa Zafirov v. Florida Medical Associates, LLC, No. 8:19-CV-01236-KKM-SPF, 2024 WL 4349242, at *1 (M.D. Fla. Sept. 30, 2024). Specifically, the court ruled that the qui tam provisions of the False Claims Act violate the Appointments Clause of Article II of the U.S. Constitution because whistleblowers exercise executive-branch power without accountability to the President. The judge stated that whistleblowers are effectively acting as officers of the United States when they initiate and prosecute civil fraud lawsuits on behalf of the government and the Appointments Clause requires such officers to be appointed by and accountable to the President, but False Claims Act whistleblowers meet neither of those criteria.
The False Claims Act case at issue was filed by a former Florida physician, Clarissa Zafirov, who accused her former employer and several other Florida health care providers of defrauding Medicare by misrepresenting patients’ medical conditions. In accordance with False Claims Act procedures, the Justice Department declined to intervene in Ms. Zafirov’s case several years ago, but under the qui tam provisions of the Act she was permitted to proceed with the case. In fact, the majority of False Claims Act cases are filed and prosecuted by the whistleblower without Justice Department involvement. Although, under the False Claims Act procedures, the Justice Department does have the right to dismiss such cases under certain circumstances.
Renewed questions about the constitutionality of the qui tam aspect of the False Claims Act have been circulating since a 2023 dissent by Justice Thomas in a Supreme Court case addressing the Justice Department’s authority to dismiss False Claims Act suits it initially declined to pursue. In his dissent, Justice Thomas noted the “constitutional twilight zone” of the Act’s qui tam provisions, highlighting “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.” Justices Kavanaugh and Coney Barrett filed a concurring opinion in which they indicated that they shared Justice Thomas’ concerns about the constitutionality of the law and that the Court should eventually grant review of the Appointments Clause issue.
There have been numerous challenges to the constitutionality of various aspects of the False Claims Act over time without success. The plaintiff in this case has already stated that she will appeal. So, we will have to stay tuned to find out if the False Claims Act survives.
If you have questions regarding the issues discussed in this post, please do not hesitate to contact Michael A. Stover, Esq. (410-659-1321/mstover@wcslaw.com) or any member of the Surety and Fidelity Practice Group.