On a path that likely leads to the U.S. Supreme Court, the Eleventh Circuit Court of Appeals held oral argument last week in United States ex rel Zafirov v. Florida Medical Associates, LLC, et al. Judges Elizabeth L. Branch, Robert J. Luck and District Court Judge Federico A. Moreno, probed the constitutional questions and historical context that underpin the False Claims Act’s qui tam provision.
As we have previously addressed, Zafirov held that the FCA’s qui tam provision which permits whistleblowers a/k/a “relators” to file and litigate FCA suits on behalf of the United States to be unconstitutional on the grounds that it violates the Appointments Clause of Article II of the Constitution. Prompted by a recent dissent by Justice Thomas in Polansky and concurrences by Justices Brett Kavanaugh and Amy Coney Barrett that questioned the constitutionality of the qui tam provision, Zafirov reexamined this previously settled question of law.
If the Eleventh Circuit sustains the District Court’s holding that the qui tam provision is unconstitutional, such an opinion would have repercussions throughout the United States and ensure that the Supreme Court would decide the issue. The overwhelming number of False Claims Act cases either start out as qui tams or proceed solely as qui tams because the federal government declines to intervene. If the qui tam provision were found to be unconstitutional, that would severely curtail the government’s False Claims Act enforcement and, unless corrected by new legislation, likely result in far fewer False Claims Act cases.
Much of the argument centered around the question of control – one of two key legal questions in deciding whether a self-appointed qui tam relator violates the Appointments Clause of Article II. Specifically, are relators wielding authority that only officials appointed and supervised by the government may be permitted to wield? The government argued that in bringing and pursing qui tam actions, relators “cannot compel the government to do anything” and counsel stressed the government’s continuing oversight of qui tams pursued by relators. Analogizing bringing a qui tam to driving a car, relator counsel pressed that the qui tam relator “is driving the car but the government is in the passenger seat and can take over at any time.”
Counsel for the defendants maintained that that there was “no doubt that relators exercise significant government authority” and that relators are not “properly accountable” to the Executive Branch. Counsel for the U.S. Chamber of Commerce forcefully argued the government’s lack of control over qui tams, and labeled relators as “self-appointed bounty hunters” who, unlike private litigants, suffer no injury on their own but who are nonetheless permitted to “prosecute laws on behalf of the government.”
Judge Luck posed most of the questions on government control over qui tams to the parties. Two of his concerns stood out:
- Relators, in contrast to independent counsel who are appointed by the government, appoint themselves to serve as counsel and to bring a qui tam action.
- By filing a qui tam, relators obligate (as required by the FCA) the government to devote its resources to investigate relator claims.
Relator’s counsel sought to assuage Judge Luck’s concerns by drawing a parallel between the qui tam provisions and private discrimination lawsuits brought pursuant to Title VII. Relator’s counsel argued that just like relators, Title VII plaintiffs have to file their private claims first with the government, i.e., the EEOC, which requires the government to investigate those private claims before a Title VII plaintiff can file a lawsuit. Judge Luck disagreed with that attempted parallel, but relator’s counsel pressed that “either way [government] investigatory resources are being used.”
As we anticipated, the history of qui tam statutes in the founding era and how the nation’s founders and early Congresses understood and interpreted Article II of the Constitution was a central topic of oral argument. Indeed, relator’s counsel opened by proclaiming that history provides the answer “to the question.” Government counsel further emphasized that there was a lot of enforcement of qui tams after the third Congress and noted that qui tams had a much broader function in American law as shown by the experience in the states. Counsel for the defendants countered that “from an originalist perspective” the history of qui tams in the founding era is “indeterminate” and is “insufficient to overcome clear constitutional principles.” The defendants base their position on the constitutional text and it cannot be overcome by “scant evidence” as to the meaning and constitutionality of qui tam statutes in the founding era. “History,” he claimed, is “no longer the silver bullet” for deciding this issue.
Judge Luck appeared struck by the evidence that acceptance and use of qui tams may be found not simply in the post-ratification period but also in the period prior to the Constitution’s ratification as well.
The question of government control of a relator’s qui tam and a relator’s accountability to the government is a key question not only for the Appointments Clause, but it is also key for determining whether qui tams violate two other provisions of Article II: the “Take Care” and “Vesting” provisions. Though the defendants challenged the qui tam provision’s constitutionality on Take Care and Vesting grounds in the District Court, the court did not address these arguments in its decision. On appeal, the defendants argued the government’s lack of control over qui tams also determines whether the Executive Branch sufficiently exercises its “vested” constitutional responsibility to “take care” that the civil prosecution of qui tam cases is properly carried out.
At oral argument, counsel for the defendants and the chamber both advanced that qui tams violate Article II overall because there is “no doubt relators exercise significant government authority and they are not properly accountable to the executive.” As counsel for the Chamber summed up: “Once you conclude there is exercise of authority, insufficient supervision and control, that is the end of the analysis.”
By emphasizing that qui tams violate the Take Care and Vesting clauses, the defendants appeared to be avoiding the second key legal question in deciding whether qui tams violate the Appointments Clause of Article II: whether a qui tam relator occupies a “continuing” position. That is, is a qui tam plaintiff’s position personal to the relator who brought the suit such that only a specific relator can occupy it? Or, is the relator’s position similar to that of a continuing government office or position which can be staffed by anyone properly appointed? Zafirov held that relator’s position was a continuing one, and to satisfy the Appointments Clause, relators must be appointed by the Executive Branch.
At the start of oral argument, the government contended that relators do not occupy a continuing position in bringing a qui tam. The defendants and the Chamber did not appear to adequately rebut this contention. In fact, Judge Branch commented that the if a relator goes into bankruptcy or dies, the relator’s qui tam is still maintained in the name of the relator – a position contrary to that of the District Court in Zafirov. Judge Luck observed that relators may have “another problem under Article II but not the Appointments [clause].” Judge Luck even asked the government “why we should address take care [and vesting] clauses?” The government, of course, had “no problem” with remanding “that issue” to the District Court.
Overall, the court’s questions at oral argument did not indicate a clear favorite. While the Take Care and Vesting clause issues were technically before the Eleventh Circuit, the District Court had not addressed their applicability in its decision. Hence, we would not be surprised if the court decided the issue of the Appointments Clause in favor of the government but remanded the case back to the District Court both to develop a fuller record and to decide the applicability of the other two constitutional provisions. Either way, we anticipate a decision in several months.
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