Landmark Ruling on the Constitutionality of the False Claims Act “Qui Tam” Provisions

Landmark Ruling on the Constitutionality of the False Claims Act “Qui Tam” Provisions

According to an article by law firm Morgan Lewis, US District Judge Kathryn Kimball Mizelle ruled in United States ex rel. Zafirov v. Florida Medical Associates, LLC that the qui tam provisions of the False Claims Act (FCA) violate the Appointments Clause of Article II of the Constitution. 

The decision, which took place on September 30, 2024, echoes Justice Thomas’s dissent in United States ex rel. Polansky v. Executive Health Resources (2023), which invited further scrutiny of the FCA. This ruling contradicts several other district and circuit court rulings that upheld the FCA’s constitutionality.

The case began in May 2019 when Dr. Clarissa Zafirov, a physician, filed a qui tam action under the FCA, alleging that Florida Medical Associates and private Medicare Advantage organizations artificially inflated risk adjustment scores to secure higher payments from the government. The US declined to intervene, and after several motions to dismiss, the case proceeded to discovery. Following the Supreme Court’s Polansky ruling in June 2023, the defendants argued that the FCA’s qui tam provisions violated the Appointments Clause, setting the stage for Judge Mizelle’s eventual decision.

Judge Mizelle focused her analysis on the Appointments Clause, concluding that qui tam relators, by exercising “core executive power,” function as officers of the United States without proper appointment by the Executive. The court dismissed the government’s authority to intervene in or dismiss qui tam actions, labeling it “back-end supervision” that fails to mitigate a relator’s substantial prosecutorial discretion.

For law firms, the article notes that the Zafirov decision signals a significant constitutional challenge to the Fair Claims Act, particularly for healthcare and defense contractors. While this ruling may not yet be the prevailing view, firms should closely monitor appellate developments, as this case could reshape the landscape of FCA litigation.