On September 30, 2024, Judge Kathryn Mizelle of the U.S. District Court for the Middle District of Florida issued a noteworthy decision in United States ex rel. Zafirov v. Florida Medical Associates, LLC, holding that the qui tam provisions of the False Claims Act (FCA) are unconstitutional. This breaks away from precedent reaching back over a century. Although it may be overturned at the Court of Appeals level, it is unusual enough to warrant conversation.
The False Claims Act
The FCA, 31 U.S.C. § 3729, was enacted in 1863 and creates liability for anyone who, among other things, submits fraudulent claims for payment or withholds payments owed to the United States. While the FCA allows the federal government to prosecute offenders, its qui tam provisions also allow a private person, or “relator” to file suit, as a whistleblower, in the name of the United States. After the relator files their complaint, the government may, but is not required to, intervene as a plaintiff. If the relator prevails, they can collect up to thirty percent of the proceeds of the monetary judgment or settlement in the action.
The Zafirov Decision
In 2019, relator Clarissa Zafirov, in United States ex rel. Zafirov v. Florida Medical Associates, LLC, filed a complaint against her employer and the other defendant healthcare entities, claiming they violated the FCA by committing Medicare fraud. The federal government declined to intervene. Still, Zafirov continued to litigate the claim for the next five years.
On February 16, 2024, the defendants jointly filed a motion for judgment on the pleadings or to dismiss for lack of subject matter jurisdiction arguing that the FCA’s qui tam provisions violate the Vesting and Take Care Clauses and the Appointments Clause of Article II of the Constitution.
Article II of the Constitution enumerates the powers and duties of the President—the Vesting Clause grants, or vests, executive powers in the President; the Take Care Clause requires the President ensure that the laws are faithfully executed; and the Appointments Clause requires the President, subject to the advice and consent of the Senate, nominate and appoint certain officers, while allowing Congress to vest the appointment of inferior officers in the President alone, in the Courts of Law, or in the Heads of Departments.
Here, the court’s analysis centered around whether a relator is an “Officer of the United States” under the Appointments Clause in Article II. Upon review, the court, applying the two-part framework laid out in Lucia v. U.S. Securities and Exchange Commission, found a relator is an “Officer” subject to the Appointments Clause as they hold significant authority pursuant to the laws of the United States and occupy a continuing position established by law. Additionally, the court recognized that the Appointments Clause only allows Congress to vest the appointment of inferior officers in the president, the head of an executive department, or a court. Therefore, the court concluded the FCA’s qui tam provisions, which allow any person to self-appoint by initiating an action, are unconstitutional under Article II. The court held that because Zafirov, as a relator, was an officer subject to the Appointments Clause under Article II, she lacked the authority to prosecute the case against the defendants. The court then dismissed Zafirov’s case with prejudice. Having ruled for the defendants on the issue presented under the Appointments Clause, the court declined to address the issues raised under the Take Care and Vesting Clauses.
Future Implications
The issues addressed in this decision are significant as the qui tam provisions generally encourage litigation brought by private individuals. In effect, qui tam litigation generates increased revenue for the federal government, as reflected by the nearly $ 2.7 billion in recoveries reported in 2023 alone. On the other hand, when the government decides not to intervene, the Department of Justice and other federal agencies still devote significant resources to monitoring the litigation at the cost of pursuing other cases.
This decision follows the United States Supreme Court’s 2023 decision in United States, ex rel. Polansky v. Executive Health Resources Inc. There, the court did not directly address Article II. However, potential issues regarding inconsistencies in the FCA’s provisions and Article II were raised in Justice Kavanaugh’s concurrence and Justice Thomas’s dissent.
Pre-Polansky, our Fifth, Sixth, Ninth, and Tenth Circuits, all issued decisions upholding the constitutionality of the FCA’s qui tam provisions. Thus, it is likely that Zafirov will appeal Judge Mizelle’s conflicting decision to the Eleventh Circuit. Should the Court of Appeals agree with Judge Mizelle, the decision will be ripe for review by the United States Supreme Court.
We will continue to monitor any appeals.
