Whistleblower Validity Challenged in False Claims Act Cases
December 1, 2024
Executive Summary
A recent court decision found the False Claims Act’s qui tam clause unconstitutional. The ruling could undermine the use of whistleblowers.
- While the recent ruling has limited applicability, it could be influential.
- The U.S. Supreme Court could take up the issue.
- Defendants can cite the ruling in defense of whistleblower allegations.
By Greg Freeman
A recent court decision in Florida marks the first time a court has found the False Claims Act’s qui tam clause unconstitutional. The decision could lead to changes in how whistleblowers pose risks to healthcare organizations.
The case at hand centers on the debate over whether private individuals who file lawsuits under the False Claims Act (FCA) are “whistleblowers” or self-appointed “special prosecutors.” U.S. District Judge Kathryn Kimball Mizelle dismissed a case involving Medicare Advantage fraud, ruling that qui tam relators who file lawsuits under the FCA are essentially acting as “officers of the United States” and thereby violating the U.S. Constitution’s Appointments’ Clause, which requires such officers to be appointed by the president, a court, or the head of a federal department.
Although the opinion in United States ex rel. Zafirov v. Florida Medical Associates, LLC, only applies specifically to the defendants in the Medicare case, it is a significant blow to the legality of qui tam cases, says Paul D. Werner, JD, attorney with the Buttaci Leardi Werner law firm in Princeton, NJ.
“What made this case different was it was ultimately dismissed by the court under the theory that the False Claims Act is effectively unconstitutional because it has deputized a lay person as an agent of the government in violation of Article II. The judge tells the story of why a relator isn’t just a party to the case, but they are, in fact, an extension of the government and, as an extension, as an officer of the United States, because they have not been appointed in accord with Article II, and allowing them to act as an officer is unconstitutional and invalidates the claim,” he explains.
On its surface, the decision seems like a stretch in reasoning, Werner says, but it actually is not. A 2022 U.S. Supreme Court decision led by Justice Clarence Thomas came to a similar conclusion, he says.
It is not entirely inconceivable that this is an issue that could make its way up the ladder to the U.S Supreme Court because there are at least two other justices who have, over time, signaled that they may have these sort of similar qualms about Article II. I think we will start to see the emergence now of a circuit split on this constitutionality issue, because now that one judge went out and was willing to sign their name to an opinion on it, it will come up in more cases, and we will see other people render opinions on it,” he says. “Once we get to a place where there’s a circuit split, if Thomas can convince one other person to come over to his side and grant cert, this is something that could make its way up the ladder.”
That would have a significant chilling effect on FCA cases, Werner says. However, it is important to remember that the government can bring an FCA case without a relator and does it all the time. So even a supportive ruling from the Supreme Court would not negate the FCA.
In some jurisdictions like Florida, New York, and Texas, the government focuses very heavily on healthcare, and their healthcare fraud task forces have plenty of rank-and-file prosecutors who work the healthcare fraud angle, Werner says. A ruling limiting whistleblower participation probably would not affect them all that much, he says.
“But go into other parts of the country where they don’t have fraud task forces or departments, and they’re going to rely much more heavily on someone bringing that information to them. Not being able to rely on those folks, I think, could have a real potential impact from a defense perspective,” Werner says. “The fact that this is even out there is useful because defense attorneys now have something to cite, to at least roll the dice that they’ll convince a judge that this is right. It can be a little bit of a counterbalance against the basically unfettered leverage that [Department of Justice] has over everybody in these cases, as it currently stands.”
Source
- Paul D. Werner, JD, Buttaci Leardi & Werner, Princeton, NJ. Telephone: (609) 799-5150. Email: [email protected].
Greg Freeman has worked with Relias Media and its predecessor companies since 1989, moving from assistant staff writer to executive editor before becoming a freelance writer. He has been the editor of Healthcare Risk Management since 1992 and provides research and content for other Relias Media products. In addition to his work with Relias Media, Greg provides other freelance writing services and is the author of seven narrative nonfiction books on wartime experiences and other historical events.
A recent court decision in Florida marks the first time a court has found the False Claims Act’s qui tam clause unconstitutional. The decision could lead to changes in how whistleblowers pose risks to healthcare organizations.
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