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The False Claims Act (“FCA”) is intended to fight fraud against the U.S. Government, allowing the Attorney General to enforce it but also enabling private citizens, or “relators,” to file lawsuits under its controversial “qui tam” provisions (the “Provisions”). In 2023, in a Supreme Court decision, Justice Clarence Thomas raised constitutional concerns about the Provisions in his dissenting opinion in United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023) (“Polansky”), suggesting they improperly grant litigation control vested in the executive branch of the U.S. Government to private individuals in contravention of Article II of the Constitution.
Additionally, Justice Kavanaugh, joined by Justice Barrett, submitted a concurring opinion stating that they agree with Justice Thomas’ dissenting opinion 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.” This indicates that there are, at least, three justices that would consider arguments on the constitutionality of the Provisions and could potentially find them to be in violation of Article II.
If the qui tam provisions are found to be unconstitutional, private relators may be barred from initiating lawsuits under the FCA, thereby restricting the authority to bring such actions exclusively to the Attorney General. This will likely result in a material decrease in the volume of FCA cases filed against companies.
Under Article II, the Constitution vests executive power in the president, who must “take Care that the Laws be faithfully executed” (the “Take Care Clause”). Article II also gives the president power to nominate, with Senate approval, “all other officers of the United States, whose appointments are not herein otherwise provided for and which shall be established by law” (the “Appointments Clause”). Federal circuit and district courts considering either or both of these clauses have generally found that the Provisions do not violate the Constitution.
In the wake of Polansky, on September 30, 2024, a court in the Middle District of Florida (the “Florida district court”) dismissed an FCA relator case, finding the Provisions are unconstitutional. This decision will almost certainly be appealed to the U.S. Court of Appeals for the Eleventh Circuit. As appeals progress, the issue may reach the U.S. Supreme Court, bringing broader implications, especially considering the opinions of Justices Thomas, Kavanaugh, and Barrett.
In 2023, in his dissenting opinion in Polansky, Justice Clarence Thomas reignited a longstanding debate concerning the constitutionality of the Provisions under Article II of the Constitution. This perspective argues that the Provisions “have long inhabited something of a constitutional twilight zone. There 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.”
The Florida district court determined that the relator in a Medicare fraud dispute qualified as an “Officer” of the executive branch who was “improperly appointed,” thereby violating Article II of the Constitution. U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 8:19-CV-01236-KKM-SPF, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024). This decision will likely be appealed to the Eleventh Circuit, possibly reaching the Supreme Court.
In holding the Provisions unconstitutional, the court assessed whether the relator exercised “significant authority pursuant to the laws of the United States” and held “a continuing position established by law,” affirming both inquiries. The court rejected “non-binding” decisions from several federal appeals courts that had reached opposing conclusions. According to this court, appellate decisions failed to reconcile the extensive Supreme Court precedents that define enforcement authority and charging discretion as fundamental executive powers. The court concluded that initiating a lawsuit to seek significant monetary penalties against private parties on behalf of the United States in federal court constitutes a quintessentially executive power.
Pre-Polansky, the U.S. Courts of Appeal for the Fifth (Riley v. St. Luke's Episcopal Hosp., 252 F.3d 749 (5th Cir. 2001) (en banc)), Sixth (United States ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032 (6th Cir. 1994)), Ninth (United States ex. rel. Kelly v. Boeing Company, 9 F.3d 743 (9th Cir. 1993)), and Tenth (United States ex rel. Stone v. Rockwell International Corporation, 282 F.3d 787 (10th Cir. 2002)) Circuits considered the constitutionality of the Provisions and found that they do not violate Article II. Post-Polansky, numerous federal district courts have reached the same conclusion. See, e.g., United States ex rel. Miller v. ManPow, LLC, No. 2023 WL 8290402, at *5 (C.D. Cal. Aug. 30, 2023) (holding that qui tam provisions do not violate the Constitution because “it is logically inescapable that the history of qui tam lawsuits is conclusive on the constitutionality of the FCA qui tam provisions with respect to Defendant's Article II challenges”) (internal quotation marks and citation omitted).
These courts have concluded that qui tam relators are not officers under the Appointments Clause. According to Supreme Court precedent, an “officer” must have “tenure, duration, continuing emolument, or continuous duties.” Furthermore, an officer’s responsibilities must be permanent rather than occasional or temporary. The courts point out that relators’ authorization to pursue FCA claims is not permanent; their roles are temporary and last only for the duration of the specific lawsuit. The courts have also clarified that relators do not exercise governmental power. Their authority is limited by the Government's involvement; right to intervene, oversee and restrict discovery; and discretion to settle the case without the relators’ consent. Consequently, these have courts concluded that relators do not qualify as officers under the Appointments Clause.
Many of these courts have also analyzed the FCA Provisions under the Take Care Clause of Article II, concluding that they do not violate this clause either. See, e.g., Riley v. St. Luke's Episcopal Hosp., 252 F.3d 749, 753 (5th Cir. 2001). These courts have found that that relators are civil litigants who, despite bringing actions on behalf of the United States, possess limited powers, do not have criminal investigatory or prosecutorial authority, and are subject to executive oversight. The Provisions therefore do “not interfere with the President's constitutionally assigned functions under Article II's Take Care Clause.” Id.
Proponents and opponents of the Provisions will be watching the Eleventh Circuit closely, as it is expected to hear an appeal from the Florida district court’s decision. This matter holds broader significance, as an appropriate case could eventually reach the Supreme Court, potentially bringing Justice Thomas’ dissenting opinion into focus for consideration at the highest judicial level.
28 October 2024
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