A recent federal court decision has the potential to significantly impact the future of False Claims Act (FCA) lawsuits initiated by whistleblowers and to upend the FCA. In United States of America ex rel. Clarissa Zafirov v. Florida Medical Associates, LLC, et al, No. 8:19-cv-01236 (M.D. Fla. Sept. 30, 2024), the US District Court for the Middle District of Florida dismissed an FCA qui tam initiated lawsuit, finding the FCA’s qui tam provisions to be unconstitutional and “idiosyncratic.”
US District Court Judge Kathryn Kimball Mizelle reasoned that the relator, Clarissa Zafirov, did not have the authority to “appoint” herself as an officer and prosecute the corporate entities on behalf of the United States. The crux of Judge Mizelle’s holding was that a relator under the FCA is not appointed by either the executive branch or a court to act as an officer under the Appointments Clause of the US Constitution. Thus, she reasoned the qui tam provision of the FCA violates the Appointments Clause.
In her decision, Judge Mizelle acknowledged the complexity of the FCA regulations and FCA litigation, and the various interpretations they may be subject to. She also explained that the FCA encourages litigation by relators, most of whom are private parties who can be awarded up to 30% of the proceeds of any judgment or settlement. Judge Mizelle further explained that not only does the FCA allow a relator to direct litigation, but also to bind the federal government without direct accountability to anyone in the executive branch. She reasoned that because a relator possesses civil enforcement authority on behalf of the United States, a relator is subject to the Appointments Clause, but because relators are not appointed pursuant to a constitutionally mandated process, FCA qui tam lawsuits are unconstitutional.
This decision follows a June 2023 US Supreme Court decision, United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), in which Justice Clarence Thomas questioned the constitutionality of the FCA’s qui tam provisions under the Appointments Clause, and Justices Kavanaugh and Barrett agreed with those constitutional concerns.
The Zafirov decision will certainly be appealed to the Eleventh Circuit, and eventually to the US Supreme Court. If upheld, it will upend the FCA as a majority of FCA cases are initiated by relators. We will continue to monitor developments and provide updates.