False Claims Act Ruling Offers New Grounds for Defending Whistleblower Claims

In a recent decision from the U.S. District Court for the Middle District of Florida, Judge Kathryn Kimball Mizelle declared the qui tam provision of the False Claims Act (FCA) unconstitutional, raising significant questions about the future of whistleblower litigation. The case, United States ex rel. Zafirov v. Florida Medical Associates LLC, challenges whether private individuals (qui tam relators) can represent the government in FCA claims without violating the Appointments Clause of the U.S. Constitution. The ruling could have broad implications, particularly in higher education, where FCA suits are prevalent.

The case centers on the Appointments Clause, which dictates that officers of the United States must be appointed by the President, the courts, or department heads. The Court found that allowing private whistleblowers to pursue FCA claims on behalf of the government violated this clause, as qui tam relators are not appointed under its terms. It also rejected a key precedent set in Riley v. St. Luke’s Episcopal Hospital, which held that the FCA’s structure was constitutional.[1]

The ruling follows a growing trend in recent Supreme Court decisions, advocating for more oversight of those wielding executive power. In a 2023 case, Justice Clarence Thomas raised similar concerns, asserting that the FCA’s qui tam provisions may conflict with the Constitution’s Appointments Clause. As a result, this decision could influence ongoing and future FCA cases, giving entities new strategies to challenge whistleblower lawsuits based on the court’s constitutional argument.

While this ruling diverges from decisions in other jurisdictions, such as a prior ruling from the U.S. Court of Appeals for the Sixth Circuit, it may signal a shift in how these cases are prosecuted, potentially offering more protections and fewer litigation risks for educational institutions and other similarly situated organizations.

This ruling brings potential relief for institutions facing FCA claims, including higher education entities that have increasingly become targets of whistleblower lawsuits. If upheld, this could provide a pathway for educational institutions and others to challenge the basis of many FCA claims, which can be burdensome and costly. This ruling could also lead to a reduction in opportunistic whistleblower actions, allowing institutions to focus on their primary missions without the looming threat of FCA litigation. Thompson Coburn’s Higher Education Practice is closely monitoring these developments and adjusting strategies to support clients as the legal landscape evolves.  

A link to the Court’s opinion in full is linked here.