In an eye-opening decision, a judge in the Middle District of Florida held that the unique whistleblower, or “qui tam,” provision of the federal False Claims Act (FCA) violates the Appointments Clause of Article II of the United States Constitution because it illegally confers “core executive power” on a private citizen to act on behalf of the United States.
In United States ex rel. Zafirov v. Florida Medical Associates LLC, No. 19-1236 (M.D. Fla. Sept. 30, 2024), Judge Kathryn Kimball Mizelle held that the relator – a whistleblower who brings FCA claims on behalf of the federal government – qualifies as an officer of the United States and that, because she was not constitutionally appointed, the underlying case must therefore be dismissed. This unprecedented decision – which will almost certainly be appealed – could upend enforcement of a 160-year-old statute that is arguably the government’s most common and potent tool in rooting out fraud against the government.
Background
The qui tam provision of the FCA permits any individual to bring a suit on behalf of the United States for alleged false or fraudulent claims submitted to the government for payment. This individual is known as the “relator.” After filing suit, the case remains under seal, and the United States has 60 days to determine whether it will intervene in the suit. If the government chooses to intervene, it takes control of the case, though the relator may still be eligible to receive a portion of any recovery. If the government declines to intervene, the relator may continue to pursue the non-intervened case on her own. Under the FCA, the relator may recover 15 to 30 percent of any total recovery. The United States may, at any time, decide to move to dismiss the suit, regardless of whether it has intervened or not.
In Zafirov, the relator-plaintiff sued her employer and others under the FCA, making otherwise routine allegations involving Medicare fraud. After the United States declined to intervene in the case, the defendants filed a motion for judgment on the pleadings several years later. They argued that the FCA’s qui tam provision violated the Appointments Clause and other provisions of Article II of the United States Constitution. This led the United States to intervene to contest these constitutional arguments. In deciding that the qui tam provision of the FCA violated the Appointments Clause, Judge Mizelle did not need reach the other constitutional arguments.
Judge Mizelle first found that an FCA relator is an officer of the United States, reasoning that a relator possesses “significant authority” to enforce the civil law on behalf of the United States. Judge Mizelle rejected Zafirov’s arguments based on decisions from other courts because they did not examine “the long line of Supreme Court precedents explaining that enforcement authority and charging discretion are core executive power.” She also dispatched with the argument that relators’ “enforcement authority” is limited to the duration of a lawsuit because determining who constitutes an “Officer[] of the United States” turns on the enforcement authority itself, not how long it lasts.
Second, according to Judge Mizelle, relators also occupy a “continuing position established by law” because “the office of an FCA relator is continuous even if it is not continually filled,” meaning that a federal office continually exists even if an individual does not always occupy it. Comparing relators to bank receivers, Judge Mizelle found that relators “are empowered to initiate litigation on behalf of the United States to enforce a complex regulatory scheme with serious implications for the public fisc and for targeted defendants. Thus, like bank receivers, relators are officers of the United States.”
After finding that relators qualify as “Officers of the United States,” and thus require oversight, Judge Mizelle concluded that Article II contains no “qui tam exception.” Zafirov argued that the qui tam provision survived constitutional scrutiny because such laws have existed for hundreds of years and early Congresses enacted analogous statutes. Judge Mizelle rejected that argument, stating that “the Constitution prevails over practice, especially when the text is clear and the practice is neither continuous nor challenged.”
Among other things, Judge Mizelle cited a concurrence by Justice Kavanaugh, which cautioned against attributing historical significance to a practice implicating the separation of powers and inherited from England because the country had fought a war “to free itself from British law and practices and rid itself of tyrannical British rule.”
Judge Mizelle also dispensed with the argument that early qui tam statutes insulate the FCA’s qui tam provision, noting that Zafirov could not demonstrate how these early enactments showed that Article II permitted such litigation authority under the FCA. Finally, observing that relators are not constitutionally appointed, Judge Mizelle dismissed the case, holding that the FCA’s qui tam provision “directly defies the Appointments Clause by permitting unaccountable, unsworn, private actors to exercise core executive power with substantial consequences to members of the public.”
Key takeaways
The first implication is that a significant provision of the FCA, upon which the United States relies in combatting fraud, is at risk of being found unconstitutional in its current state. Since 1987, the government has received over $59 billion under the FCA, with $3 billion in 2019 alone. Although the United States Department of Justice (DOJ) may bring its own suit under the FCA, nearly 90 percent of cases today are initiated under the qui tam provision. Relators bring a significant number of cases, especially in the aftermath of crises when many employers and companies may benefit from increased government spending. Should Judge Mizelle’s ruling in Zafirov be upheld, DOJ would be left without a key resource it uses to combat alleged fraud, unless Congress amends the FCA to address the issues raised in the opinion.
Judge Mizelle’s ruling also continues a recent trend in courts reining in the authority of subordinates within the Executive Branch. For example, in United States v. Arthrex, the Supreme Court held that the Administrative Patent Judges (APJs) serving on the Patent Trial and Appeal Board (PTAB) wielded “unreviewable authority,” whose review powers were “incompatible with their appointment by the Secretary to an inferior office.” 594 U.S. 1, 23 (2021). The Court held that the “insulation of PTAB’s decisions from any executive review” meant that the APJs exercised power that “conflict[ed] with the design of the Appointments Clause ‘to preserve political accountability.’” Id. at 17.
Although Judge Mizelle’s opinion is certainly shocking, it is not the first judicial attack against the qui tam provision. For example, in United States ex rel. Polansky v. Executive Health Resources, Inc., Justice Thomas dissented from the majority opinion and questioned the provision’s constitutionality, stating that it inhabits “something of a constitutional twilight zone.” 599 U.S. 419, 449 (2023) (Thomas, J., dissenting). He concluded that “there is good reason to suspect that Article II does not permit private relators to represent the United States’ interests in FCA suits.” Id. at 451.
Justice Kavanaugh issued a concurrence in the same case, joined by Justice Barrett, where they did not directly question the qui tam provision’s constitutionality, but rather stated that “the Court should consider competing arguments on the Article II issue in an appropriate case.” Id. at 442 (Kavanaugh, J., concurring). Judge Mizelle’s decision aligns with the analysis provided from Justice Thomas regarding this issue, which Justices Kavanaugh and Barrett signaled an interest in addressing, making it a continuation of existing judicial scrutiny.
If it stands, Judge Mizelle’s decision would be a significant development for defendants and putative defendants in FCA actions. Although DOJ has increased its gatekeeper function in recent years by seeking to affirmatively dismiss meritless (or otherwise problematic) FCA lawsuits, DOJ typically allows qui tam plaintiffs to proceed, even when it declines to intervene, forcing defendants to engage in costly litigation. The Zafirov decision would eliminate such actions.
In any event, Judge Mizelle’s decision will likely not be the last word; Zafirov will likely be appealed to the Eleventh Circuit. Litigants in other jurisdictions may cite the case in support of similar arguments, potentially leading other courts to wrestle with the same questions. Whether Zafirov represents a seismic shift or becomes a forgotten footnote remains to be seen. For now, Judge Mizelle’s opinion merits the attention of FCA litigants and practitioners alike.
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