Zafirov One Year Later: Constitutional Challenges to the False Claims Act’s Qui Tam Provision

In the year since the historic Zafirov ruling, False Claims Act (FCA) defendants across the country are now regularly challenging the FCA’s qui tam provision as unconstitutional. Though no other federal court has followed Judge Mizelle’s lead in the year since she issued Zafirov, the underlying arguments are gaining some traction.

Recently, Judge Lynn Adelman of the Eastern District of Wisconsin reached the opposite conclusion in US ex rel. Heath v. Wisconsin Bell, Inc. Judge Adelman’s decision is notable because, unlike several other jurisdictions where circuit precedent governs the issue, the Seventh Circuit has not squarely addressed the constitutionality of the qui tam structure. In other words, like Judge Mizelle, Judge Adelman was free to consider the competing arguments presented by this issue of first impression.

For some background, last term, the US Supreme Court remanded Wisconsin Bell after holding that claims made to the Education-Rate Program — which subsidizes school internet costs through an unusual funding mechanism — fall within the FCA’s ambit. Like in Polansky, Justices Thomas and Kavanaugh wrote a short concurring opinion (again) urging the Supreme Court to take up the qui tam issue given the “substantial constitutional questions under Article II.” Despite the two justices having questioned the constitutionality of the provision, Judge Adelman found that the FCA’s qui tam device is constitutional.

First, Judge Adelman concluded that a relator is not an “Officer of the United States” under the Constitution’s Appointments Clause, because a relator (1) does not exercise “significant authority” and (2) does not occupy a “continuing and permanent” position. As to the former, Judge Adelman emphasized that a relator lacks “unfettered” discretion: a relator must notify the government of its FCA claim; the government has an opportunity to investigate and decide whether to intervene; the government may elect to take over the case; the government may dismiss the case over the relator’s objections; and the government may monitor and influence the case even without intervening. As to the latter, Judge Adelman explained that the relator position is not “continuous and permanent” as it starts and ends with the particular matter, in sharp contrast to offices like the Attorney General of the United States, which persist even after the holder vacates the position.

Second, Judge Adelman concluded that the qui tam provision does not violate the Take Care Clause because the government retains ultimate control of the lawsuit, whether it intervenes or not. He also underscored the country’s “long tradition” of qui tam devices dating back to the First US Congress.

Judge Mizelle, however, is not without judicial support. Two Fifth Circuit judges — Judge Stuart Kyle Duncan and James C. Ho — have authored concurrences questioning the qui tam mechanism’s compatibility with Article II. In US ex rel. Montcrief v. Peripheral Vascular Associates, P.A., Judge Duncan, drawing on Justice Thomas’ dissent in Polansky, explained that:

• The qui tam mechanism violates the Appointments Clause because relators perform functions reserved for properly appointed officers, including litigating on behalf of the United States without approval from the government, and because relators occupy a “continuing position.”

• The qui tam device violates the Take Care Clause by allowing private persons to enforce federal law, a core executive function. Judge Duncan pointed to Montcrief as an example. The relator there obtained a multi-million-dollar verdict without the government’s intervention and advanced legal positions on appeal that the government did not support.

Similarly, in US ex rel. Gentry v. Encompass Health Rehabilitation Hospital of Pearland, LLC, Judge Ho criticized relators as “neither appointed by, nor accountable to, the President” and emphasized that “in an appropriate case, we should revisit whether there are serious constitutional problems with the qui tam provisions of the False Claims Act.” Judge Ho went on to say that “the law is advanced when we allow a single judge to stand against and tide and identify error.” For now, however, the Fifth Circuit’s 2001 precedent upholding the constitutionality of the qui tam provision remains binding unless overturned en banc or by the Supreme Court.

These statements by the federal judiciary have breathed new life into constitutional attacks on the qui tam provision. For example, in US ex rel. Penelow v. Janssen Products L.P., a declined qui tam case, the relator obtained a $1.64 billion judgment following a jury trial in 2024 — the largest verdict in the history of the FCA. On appeal to the Third Circuit, Janssen, supported by amici from the pharmaceutical industry, argued that “[v]esting relators with such sweeping and unchecked executive authority threatens to unsettle the government’s reimbursement regime and frustrate patient care.” The US Department of Justice (DOJ) intervened to vigorously defend against the constitutional arguments, but in the same brief, arguably rejected the relator’s theory of liability. Janssen latched on to the dissonance between the DOJ and the relators as evidence of the “stark conflict between Article II and the FCA’s qui tam device,” and highlighted that “[r]elators were awarded a billion-dollar judgment on a legal theory that the Government, the real party in interest, has historically rejected and expressly rejected here.”

Until the Supreme Court definitively resolves the issue, we expect the Janssen-like challenges to relator-initiated FCA actions will continue. In the meantime, we are closely monitoring developments in the lower courts. Oral arguments before the Eleventh Circuit in the Zafirov appeal are set for December 12, and the government filed a brief defending the constitutionality of the qui tam provision. Should the Eleventh Circuit adopt Judge Mizelle’s reasoning, the resulting split with other circuits would materially increase the odds of Supreme Court review.