Federal Judge Finds Qui Tam Enforcement of False Claims Act Unconstitutional

A federal judge in Florida has held that qui tam enforcement of the False Claims Act (“FCA”) is unconstitutional, finding that the relator in a Medicare fraud dispute qualifies as an “Officer” of the executive branch who was “improperly appointed” in violation of the Appointments Clause of 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) (Mizelle, J.). Despite objections from the government (which appeared solely to defend the constitutionality of the statutory scheme) and several amici, the court dismissed the underlying FCA action with prejudice based on this constitutional finding. The decision sets up a likely appeal to the Eleventh Circuit and a potential showdown at the Supreme Court, where the government could face scrutiny from at least three Justices who, just last year, suggested that qui tam provisions may be “inconsistent” with Article II. See infra (discussing Justice Thomas’s dissent and Justice Kavanaugh’s concurrence, joined by Justice Barrett, in U.S. ex rel. Polansky v. Executive Health Resources, Inc.).

In her suit, relator Clarissa Zafirov alleged that the defendant medical providers (and her former employers) had misrepresented patients’ medical conditions to Medicare. The government declined to intervene, and Zafirov proceeded with the litigation under the qui tam provisions of the FCA, which entitle private citizens to pursue actions on behalf of the government and to obtain a sizable percentage of any recovery. In their motion for judgment on the pleadings, which was filed under Federal Rule of Procedure 12(c) more than five years into the litigation, the defendants asserted that the FCA’s qui tam provisions violate the Take Care and Vesting Clauses of Article II, due to the lack of removal authority and supervisory control over a relator, as well as the Appointments Clause of Article II, arguing that a relator is an improperly appointed officer of the United States. The court ruled for the defendants on the Appointments Clause question and therefore declined to address the arguments arising under the Take Care and Vesting Clauses. Zafirov, 2024 WL 4349242, at *3-*4.

In assessing whether Zafirov qualified as an “officer” of the United States, the court examined whether Zafirov, as a relator, exercised “significant authority pursuant to the laws of the United States” and “occupie[d] a continuing position established by law.” See Lucia v. SEC, 585 U.S. 237, 245 (2018). The court answered both questions affirmatively. Analogizing to SEC administrative judges, administrative patent judges, and the Director of the Consumer Financial Protection Bureau, the court found on the first question that an FCA relator “wields significant authority because she conducts civil litigation in the courts of the United States for vindicating public rights.” Zafirov, 2024 WL 4349242, at *7 (quoting Buckley v. Valeo, 424 U.S. 1, 140 (1976) (cleaned up)). In so doing, the court rejected “non-binding” decisions from the Fifth (en banc), Sixth, Ninth, and Tenth Circuits that had reached a contrary conclusion, noting that “[n]one of those circuits examined, much less reconciled, the long line of Supreme Court precedents explaining that enforcement authority and charging discretion are core executive power, especially when coupled with the authority to impose a punitive sanction.” Id. at *8-*9. According to the court, examining those Supreme Court precedents mandated the conclusion that “initiat[ing] a lawsuit that seeks daunting monetary penalties against private parties on behalf of the United States in federal court [is a] quintessentially executive power [that] necessarily satisfies the first step for officer status.” Id. at *11 (quoting Seila L. LLC v. Consumer Fin. Prot. Bureau, 591 U.S. 197, 219 (2020) (cleaned up)).

Having found that Zafirov wielded significant federal authority in prosecuting her action, the court made quick work of the second stage of the “officer” analysis, finding that the position of FCA relator is a “continuing” one under federal law. Id. The court noted that the FCA (1) imposes statutory duties on relators, (2) grants significant power to relators, and (3) provides for financial rewards to relators. Accordingly, the court held that “[t]he existence of statutorily defined duties, powers, and emoluments confirms that a relator holds a continuing office.” Id. (citing United States v. Germaine, 99 U.S. 508, 511 (1878)). Having found that Zafirov satisfied both steps of the “officer” analysis, the court addressed whether the historical existence of qui tam statutes created an exception to the general constitutional rule. The court concluded that the founding-era precedents on which Zafirov and the government relied were, at best, conflicting in their guidance and failed to provide clear grounds to obviate the requirement that federal officers must be appointed in the constitutionally mandated manner. Id. at *15-*18.

While Judge Mizelle’s decision to strike down the qui tam provisions of the FCA, a statutory scheme that has existed since the Civil War, marks a break with the decisions of several courts of appeal that have upheld the FCA’s constitutionality, the Zafirov opinion builds on numerous recent decisions by the Supreme Court (as well as individual Justices’ opinions) underscoring the necessity of oversight over those who wield executive power. See, e.g., U.S. ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419, 449 (2023) (Thomas, J., dissenting) (“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.”); Id. at 442 (Kavanaugh, J., concurring with Barrett, J.) (same); see also, e.g., Seila L., 591 U.S. 197 (finding CFPB Director’s insulation from removal unconstitutional); Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477 (2010) (same as to PCAOB members). Accordingly, the case (and others like it) bears monitoring as it proceeds to a near-certain appeal in the Atlanta-based Eleventh Circuit.

For more information about the case and its implications, please reach out to your usual contact on the Ropes & Gray litigation and enforcement team.