Florida Federal Court Declares the FCA’s Qui Tam Relator Appointments Unconstitutional

On Sept. 30, the U.S. District Court for the Middle District of Florida declared the qui tam provisions of the federal False Claims Act unconstitutional. The Court, in United States Of America ex rel Clarissa Zafirov v. Florida Medical Associates, LLC., took issue with the “unfettered discretion [of private relators] to decide whom to investigate, whom to charge in the complaint, which claims to pursue, and which legal theories to employ.”

Under the FCA, any “person,” known as a “relator,” may file a lawsuit in the Federal Government’s name to prosecute alleged false monetary claims made to the United States. If the relator is successful, she/he may collect an “award” of up to 30% of the proceeds, which can be quite significant given the potential for treble damages under the FCA. If the Government declines to intervene, as it does in the vast majority of actions, the relator prosecutes the action without direction from the Government.

The Florida Medical Associates Court found that an FCA relator possesses all the traditional indicia of holding a constitutional office, i.e., an “officer of the United States” under Article II of the US Constitution. As such the FCA’s de facto appointment of the relator in this case as the Justice Department’s “avatar” in litigation “defies the Appointments Clause by permitting unaccountable, unsworn, private actors to exercise core executive power with substantial consequences to members of the public.” Because the Court found the relator to be a self-appointed officer of the Executive Branch, the Court concluded that there “is no question that she is improperly appointed” and that as a result, she lacks any prosecutorial authority.

The Court granted the defendants’ motion for judgment on the pleadings which resulted in the dismissal of this single case. Accordingly, the decision has limited immediate impact beyond the matter before the Court. However, the Court’s conclusion that the relator was unconstitutionally appointed will likely trigger additional challenges in other federal courts. Further encouraging future challenges to the FCA’s qui tam provisions are several recent Supreme Court decisions which suggest several current Justices have doubts about the constitutionality of qui tam relators as the FCA presently provides. Notably, Justice Clarence Thomas offered the following in a recent dissent: “[T]here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.”

Clark Hill’s Government Contracts and Regulatory team will continue to monitor forthcoming challenges to the FCA qui tam relators and are standing by to advise companies involved in ongoing, or future, FCA actions.

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