Summary
In a decision much anticipated by qui tam litigators, the 11th Circuit Court of Appeals this week ruled that the qui tam provision of the False Claims Act (FCA) does not violate the Appointments Clause in Article II of the U.S. Constitution, reversing and vacating a Middle District of Florida decision from September 2024. Notwithstanding the 11th Circuit’s ruling, uncertainty about the qui tam provision will remain given that three sitting Supreme Court Justices have expressed strong skepticism about the constitutionality of this provision.
The Upshot
- On September 1, the 11th Circuit in United States ex rel. Zafirov v. Florida Medical Associates, LLC vacated a Middle District of Florida decision dismissing a relator’s FCA claims and ruled that the qui tam provisions of the FCA do not violate the Appointments Clause because relators “are not officers of the United States subject to the Appointments Clause.”
- Central to the 11th Circuit’s ruling was its conclusion that relators “do not occupy a continuing position,” and are thus “not officers of the United States subject to the Appointments Clause.”
- With this recent decision, the 11th Circuit has joined all four other circuit courts of appeal that have held that the FCA’s qui tam provisions do not violate the Appointments Clause—the Fifth, Sixth, Ninth, and 10th Circuits—eliminating for now the potential of a circuit split on this issue.
The Bottom Line
Attorneys in Ballard Spahr’s White Collar Defense and Investigations Group have deep experience defending corporate clients in government investigations and qui tam actions brought under the False Claims Act. Please contact us for more information.
In a September 2024 decision from the Middle District of Florida in United States ex rel. Zafirov v. Florida Medical Associates, LLC, Judge Kathryn Kimball Mizelle ruled that the qui tam provision of the False Claims Act (FCA) is unconstitutional under the Appointments Clause in Article II of the U.S. Constitution. That decision, which Ballard Spahr previously wrote about on October 4, 2024, created an opportunity for a split among circuit courts of appeal.
Just this week, the 11th Circuit vacated Judge Mizelle’s order dismissing the Zafirov case, and joined the Fifth, Sixth, Ninth, and 10th Circuits in holding that the qui tam provisions of the FCA do not violate the Appointments Clause. Writing for a three-judge panel, Judge Elizabeth L. Branch wrote that “relators are not officers of the United States because they do not occupy a continuing position established by law.”
Central to the 11th Circuit’s holding was its conclusion that relators do not hold a “continuing position” and thus are not government officers who must be presidentially appointed under the test described in the Supreme Court’s 2018 decision in Lucia v. Securities and Exchange Commission. The Court’s analysis relied heavily on two Supreme Court opinions from the late 1800s: United States v. Germaine (1879) and Auffmordt v. Hedden (1890).
The Court first found that “a relator’s intermittent, nonpermanent tenure tends to show that he does not hold a continuing position.” The Court explained its finding that a relator’s tenure is “occasional and temporary” as opposed to “permanent” because it “lasts the length of one case, a relator may bring multiple cases in a year or none, and relators are not required to keep a place of business.” Further, the Court noted that if the government or the court dismisses a relator’s claim, that relator would have “no remaining duties.”
The Court examined second the duration of a relator’s role, finding it was appropriate to analyze duration the same way it evaluated tenure: by asking whether a relator’s duties are “permanent” or “occasional and intermittent.” Reiterating the nonpermanent nature of a relator’s tenure, the Court found that a relator “does not have a position with duration that makes him an officer.” In doing so, the Court rejected the notion that the overall length of a relator’s tenure is dispositive, explaining that the Supreme Court “has not focused on the overall length of a person’s time fulfilling his duties when evaluating the duration of the position.”
Next, the Court rejected the notion that a relator’s monetary recovery in the event of a successful FCA case constitutes a “continuing emolument.” The Court relied on four factors to reach its conclusion, explaining that a relator: (1) only receives a one-time contingent payment; (2) does not receive compensation “through any regular appropriation”; (3) works only on an “intermittent basis” (i.e., “whenever he has a claim to pursue and the litigation is active”); and (4) does not face any real penalty for a “refusal to perform.”
Finally, the Court examined a relator’s duties, finding that a relator “occupies a personal role,” as opposed to one where his role can “be assumed by anyone else (except for the Attorney General when the government intervenes).” The Court explained that, even where a relator “dies or goes bankrupt,” his estate continues the claim on his behalf, and as such, “the role of relator remains personal because the relator is not replaced.”
It’s worth noting that the Court did not comment on the dissenting opinion in the 2023 Supreme Court case United States ex rel. Polansky v. Executive Health Resources, Inc., in which Justice Thomas noted that “[t]here are substantial arguments that the qui tam device is inconsistent with Article II [of the U.S. Constitution] and that private relators may not represent the interests of the United States in litigation.” In a separate concurring opinion, Justice Kavanaugh (joined by Justice Barrett) noted his agreement with Justice Thomas, adding that “the Court should consider the competing arguments on the Article II issue in an appropriate case.”
Conclusion
The 11th Circuit’s decision in Zafirov dealt the latest blow to the potential for a circuit court split on the question of whether the qui tam provision of the FCA violates the Appointments Clause, and consequently, on the possibility of the Supreme Court having to step in to resolve the question. Even without a circuit split, however, the Supreme Court may still be inclined to examine the issue, particularly in light of the concurring and dissenting opinions in Polansky.
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