The Constitutionality Issues of the FCA’s Qui Tam Provisions

The False Claims Act (FCA) is a crucial enforcement tool designed to combat fraud against the U.S. government. However, the FCA’s qui tam provisions have been exploited by some plaintiffs’…

The False Claims Act (FCA) is a crucial enforcement tool designed to combat fraud against the U.S. government. However, the FCA’s qui tam provisions have been exploited by some plaintiffs’ lawyers, leading to a rise in frivolous lawsuits. This misuse usurps the role of the executive branch to enforce the law and poses a significant threat to the reputation and operations of companies caught up in abusive qui tam litigation.

In a new op-ed published in the National Law Journal, FCA experts Robert Salcido and Emily Gerry highlight how the qui tam provisions of the FCA violate the separation of powers and argue that the Supreme Court should find it unconstitutional.  

As the op-ed notes, “Under the FCA, private citizens (known as relators) can file suits on behalf of the government (known as qui tam actions).” And “[r]elators may receive a substantial bounty from a recovery.” Because of the prospect of a large payday, plaintiffs’ lawyers are incentivized to file as many qui tam lawsuits as possible.

The authors also note how “Congress, the courts, and the Department of Justice (DOJ) have understood that relators generally seek to advance their own interests rather than the public interest.” The result of this self-interest, however, has been to undermine and interfere with the government’s operations.

This is because relators have the authority to choose private parties as targets for legal action while claiming to act on behalf of the government, which can present serious problems for the government. In 2018, the then-director of the DOJ’s Commercial Litigation Branch, Fraud Division, identified multiple cases that highlighted the problems with qui tam lawsuits in a memo known as the Granston Memo. Some of these cases risked exposure of classified information or military secrets or posed significant economic harm to the country, or interfered with the government’s ability to administer its programs. Because of the FCA’s qui tam provisions, however, the “DOJ lacks the unfettered ability to dismiss or limit relators’ lawsuits at will.”

According to Salcido and Gerry, Congress allowed this to happen when it expanded the relators’ power in the mid-80s. It gave relators the ability to oppose settlements and dismissals of qui tam lawsuits, limiting the government’s ability to oversee litigation that relators are bringing in the government’s name. As they note, “the president has more power over the attorney general, who can be discharged at will, than over a relator, who cannot be discharged without court approval.”

Salcido and Gerry end the op-ed by calling on the U.S. Supreme Court to find the qui tam provisions of the FCA unconstitutional. They write that, during its last term, the Court heard a case called U.S. ex rel. Polansky v. Executive Health Resources, where “three justices noted that there are ‘substantial arguments’ that the False Claims Act qui tam provisions do not conform with Article II of the Constitution and suggested that the [C]ourt consider their constitutionality in an appropriate case.”

This issue might be before the Court sooner than later. There are at least two federal court cases challenging the FCA’s constitutionality. The U.S. Chamber of Commerce Litigation Center filed amicus briefs in them, U.S. ex rel. Shepherd v. Fluor Corp and U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, urging the courts to find the qui tam provisions unconstitutional.

If the Court does not cure this constitutional problem, plaintiffs’ lawyers will continue to exploit the FCA, and they will continue to interfere with the executive branch’s duty to “take Care that the Laws be faithfully executed.”