The Federal District Court for the Middle District of Florida (“the Court”) in United States ex rel. Zafirov v. Florida Medical Associates, LLC et al., recently held that a relator’s role as set forth in the False Claims Act’s (“FCA”) qui tam provision is unconstitutional under Article II’s Appointments Clause and dismissed the case.
Case Background
In 2019, the relator filed a lawsuit against her former employer and other defendants, claiming violations of the FCA from the defendants’ alleged misrepresentations of patients’ medical conditions to Medicare. The government chose not to intervene, leaving the relator to litigate the matter against the defendants.
After five years of litigating the case without the government’s involvement, the defendants challenged the FCA’s qui tam provision on constitutional grounds. Specifically, the defendants argued that the FCA’s qui tam provision violated Article II’s Take Care Clause and Vesting Clause because the FCA denied the President necessary removal, authority and supervision over a relator. The defendants also argued that the FCA’s qui tam provision violated Article II’s Appointment Clause because a relator is an improperly appointed officer of the United States.
FCA Relator Role Ruled Unconstitutional Under the Appointments Clause
The Court agreed with the defendants’ argument, holding that the FCA relator was unconstitutional under the Appointments Clause. The Court reasoned that the relator was exercising core executive powers including the power to initiate, prosecute and control litigation on behalf of the United States. Such powers, as the Court explained, are typically reserved for officers who are appointed under the Appointments Clause. The first paragraph of the Court’s opinion clearly stated its reasoning:
For five years, Clarissa Zafirov has prosecuted various corporate entities on behalf of the United States, pursuing treble damages and other daunting monetary penalties for alleged harms to the public fisc. Zafirov has determined which defendants to sue, which theories to raise, which motions to file, and which evidence to obtain. If the action proceeds to an appeal, Zafirov will decide which arguments to preserve, further binding the federal government. Yet no one—not the President, not a department head, and not a court of law—appointed Zafirov to the office of relator. Instead, relying on an idiosyncratic provision of the FCA, Zafirov appointed herself. This she may not do.
The Court also dismissed the relator’s arguments that the historical practices excused FCA’s relators from constitutional requirements. The Court noted that “no amount of countervailing history overcomes” what is required by the Constitution. Because the relator could not articulate how the FCA’s qui tam provision comported with Article II, the Court concluded that the relator’s appointment was unconstitutional. Accordingly, the Court dismissed the case.
This decision is in conflict with a recent order on motions to dismiss in United States ex rel. Butler et al.v. Shikara, et al. from the Southern District of Florida. It is unlikely that the Eleventh Circuit Court of Appeals will allow these conflicting decisions to both stand, suggesting that the Court of Appeals is likely to consider this issue on appeal. Additionally, similar motions have been ruled on, or are pending, across the nation. It is, therefore, likely that the issue will eventually find its way to the Supreme Court, where three Justices have already raised the same questions about the constitutionality of the FCA.
Practical Takeaways
- Continued Risk of FCA Enforcement: While the Court’s ruling challenges the ability of private individuals to bring FCA lawsuits, it does not diminish the government’s power to enforce the FCA.
- Importance of Compliance Programs: Health care providers should have robust compliance programs in place. A strong compliance program can prevent mistakes that lead to costly FCA actions or serve as a mitigating factor in litigation.
- Stay Informed on Future Legal Development: This case is likely a precursor to future legal challenges in other jurisdictions. Health care providers should monitor any future challenges affecting the FCA, including a possible appeal by the relator here to the Eleventh Circuit Court of Appeals.
If you have questions or would like more information about this topic, please contact:
- David Honig at (317) 977-1447 or dhonig@hallrender.com;
- Kathryn Jones at (248) 457-7846 or kejones@hallrender.com;
- Kathryn Daggett at (317) 977-1415 or kdaggett@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
