Court finds False Claims Act whistleblower provisions unconstitutional

In United States ex rel. Zafirov v. Florida Medical Associates, a Middle District of Florida court followed Justice Thomas’s lead and held that the FCA’s qui tam provisions facilitate an unconstitutional delegation of power by turning private relators into de facto unappointed officers of the United States.² The court found that dismissal of the whistleblower’s action was the appropriate remedy. Other courts, including a Southern District of Florida court, have reached the opposite conclusion, finding that Justice Thomas’s dissent in Polansky was not binding precedent and conflicted with other Supreme Court holdings.³ In addition to these cases, other litigants are advancing similar arguments in courts throughout the country, creating a high likelihood that there will be a circuit split on this important issue.

Zafirov is notable because the holding marks the first time that a district court has embraced Justice Thomas’s dissent in Polansky.¹ Clarissa Zafirov brought a qui tam action in 2019 against her employer and other defendants for allegedly misrepresenting patients’ medical conditions to Medicare. The government initially declined to intervene, and Zafirov litigated the case for the next five years.

In its opinion dismissing the case, the court concluded that the FCA’s qui tam provisions violate the Appointments Clause in Article II of the Constitution. According to the court:

"[t]he FCA allows a relator not only to direct litigation, but also to bind the federal government without direct accountability to anyone in the Executive Branch. A relator need not consult with the federal government before filing suit, nor does she receive a commission or swear an oath of loyalty to the United States. Instead, a relator enjoys unfettered discretion to decide whom to investigate, whom to charge in the complaint, which claims to pursue, and which legal theories to employ."⁴

The court found that this construct renders an FCA relator a de facto unappointed officer of the United States who occupies a continuing position of authority during the course of litigation, in violation of the Appointments Clause. The court further concluded that the FCA’s long history does not exempt FCA relators from the Appointments Clause, and that the only permissible remedy was dismissal.⁵ The court reached its conclusion despite the government filing two separate briefs, including one which focused entirely on founding-era historical evidence of qui tam enforcement.⁶ The government also intervened for the sole purpose of defending the constitutionality of the qui tam provisions, demonstrating the government’s significant interest in this question.⁷

After Justice Thomas penned his dissent in Polanksy, an eventual circuit split on the constitutionality of the qui tam provisions appeared likely. With multiple district courts now reaching different conclusions, the odds of a likely circuit split have increased even further. In the meantime, Zafirov sets the stage for more FCA defendants to advance constitutional arguments. 

Constitutional concerns about the FCA’s qui tam provisions are supported by statistical evidence that FCA settlements have become increasingly divorced from government enforcement priorities. In the first five years after the 1986 amendments to the qui tam provisions, only 22% of FCA settlements resulted from qui tam cases. In the last five years, that number has jumped to 70%, and total settlements associated with declined qui tams have skyrocketed to nearly half of all FCA recoveries in 2022.⁸

A Department of Justice policy memo, published in 2018, sought to deal with this issue by empowering DOJ attorneys to dismiss meritless FCA actions brought by relators. Nonetheless, whistleblowers have become increasingly emboldened to pursue declined qui tams with financial backing from litigation finance firms. Indeed, despite a large number of meritless FCA claims filed every year, DOJ rarely exercises its dismissal authority.⁹ As a result, the 2018 memo (known colloquially as the Granston memo) has done little to close the widening schism between FCA recoveries and government enforcement priorities. Against this backdrop, it is no wonder that courts are now rethinking whether the FCA’s qui tam provisions are a permissible