Are Whistleblower Cases Under the Federal False Claims Act Without Government Intervention Unconstitutional?

A recent ruling on September 30, 2024, by a federal judge in Florida has stirred debate by declaring that certain whistleblower cases under the federal False Claims Act (FCA) are unconstitutional. These cases, known as qui tam actions—where private whistleblowers bring lawsuits on behalf of the government—have long been a key feature of the FCA. The ruling has significant implications for healthcare providers and other entities targeted under these provisions.

What Are Qui Tam Cases? 

FCA whistleblower cases are also known as qui tams which is Latin for “in the name of the king.” The term is derived from a Latin phrase which roughly translates to “he who brings an action for the king as well as for himself.” A whistleblower (also known as a “relator”) brings a court case against a health care provider on the government’s behalf alleging the filing of false claims against the Medicaid, Medicare, or other federal health care programs. The government, and not the relator, is considered the plaintiff in the lawsuit. After investigating the matter, the government decides whether or not to “intervene” (take the case over). If so, and the government is successful against the health care provider, the whistleblower receives a share of the money collected by the government, typically 15%-25%. If the government chooses not to intervene in the whistleblower’s court case, the whistleblower becomes the plaintiff. In this situation, the whistleblower must pursue the lawsuit itself and incur the often enormous costs of the litigation. Of course, this is not what the whistleblower had hoped for, and the case typically ends at this point.

The Florida Federal District Court Decision 

In U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, Judge Kathryn Kimball Mizelle ruled that FCA cases brought by relators without government intervention are unconstitutional. The judge found that under the U.S. Constitution’s Appointments Clause (Article II), only officials appointed by the President, the head of an executive department, or a court may act with executive authority on behalf of the government.

Judge Mizelle argued that self-appointment by whistleblowers who decide which defendants to sue and which evidence to gather improperly grants them executive power, violating the separation of powers doctrine. These self-appointed actions are deemed unconstitutional and must be dismissed.

A Break from Previous Case Law 

The Florida federal court decision conflicts with rulings from other jurisdictions. For example, in Riley v. St. Luke’s Episcopal Hospital, the 5th Circuit Court of Appeals upheld the constitutionality of the FCA’s qui tam provisions, finding no violation of the Appointments Clause. However, in a notable dissent, Judge Jerry Smith raised concerns about private relators wielding executive authority without oversight, echoing the separation of powers argument adopted in the Florida case.

The constitutional debate gained further traction following United States ex rel. Polansky v. Executive Health Resources, Inc., where Justice Clarence Thomas, in a dissenting opinion, suggested that allowing private relators to represent the government might be unconstitutional. He questioned whether Congress could authorize non-government actors to bring civil litigation on the government’s behalf.

What This Means for Healthcare Providers 

The FCA imposes severe penalties on healthcare providers that submit false claims to federal health care programs, whether due to fraud, errors, or negligent billing practices. Providers found liable under the FCA can face treble damages (three times the amount of the false or fraudulent claims), plus penalties of nearly $28,000 per claim. They may also be responsible for attorneys’ fees and the costs of the investigation.

If other courts follow the Florida ruling and declare qui tam provisions unconstitutional when the government does not intervene, healthcare providers could gain a significant degree of protection from litigation. Dismissals would likely follow if cases were pursued solely by private relators without government involvement. This shift could reduce the volume of whistleblower lawsuits, discouraging frivolous claims and removing the financial incentive for whistleblowers who seek a share of any recovery.

Looking Ahead 

The decision in U.S. ex rel. Zafirov is expected to be appealed to the 11th Circuit, and other federal courts are likely to weigh in on the issue in the near future. Given the evolving legal landscape, healthcare providers involved in FCA litigation should stay informed about developments in this area.

For more information or legal guidance, please contact David R. Ross, Esq. at dross@oalaw.com or (518) 312-0167.

Olivia Vecchio, Law Clerk, contributed to this article.