By Kristin Graham Koehler and Joshua Fougere, partners at Sidley Austin LLP.  The authors would like to thank Christopher Ross, a former Senior Managing Associate, and David Ahnen, a former Summer Associate, at Sidley for their assistance. All views stated here are those of the authors.

At the end of the Supreme Court’s last term, three Justices delivered a shot across the bow on the False Claims Act’s qui tam provisions—raising questions about, and stating an interest in considering, the constitutionality of those provisions.

On its face, the Court’s decision in United States ex rel. Polansky v. Executive Health Resources, 599 U.S. 419 (2023), was a fairly typical statutory interpretation case.  It concerned whether and when the government retains the ability to dismiss a lawsuit brought in the government’s name by a third party—called a “relator”—notwithstanding the relator’s objections to the government’s desire to dismiss the case.1  The Court held that the government retains the right to seek dismissal at any point after intervening in the case, even if the government had decided not to intervene and not to prosecute the case at the outset.

Lurking behind the Polansky decision, however, is a much more fundamental question about the constitutionality of the qui tam device:  can Congress, consistent with separation-of-powers principles, permissibly delegate to private parties the Article II authority to prosecute a case in the government’s name?  In a concurring opinion (Justices Kavanaugh and Barrett) and a dissenting opinion (Justice Thomas), three Justices indicated their willingness to decide that question in a future “appropriate case.”2  And three is a meaningful number—just one vote shy of the four needed to grant certiorari.

This Legal Backgrounder introduces readers to the separation-of-powers issues associated with the qui tam provisions and how the question might percolate to the Court.  We first provide some general background on qui tam provisions.  We then summarize the main constitutional arguments against the qui tam provisions (many of which were made in an amicus brief that we filed in Polansky on behalf of Washington Legal Foundation).  Finally, we consider how the question of qui tam’s constitutionality could arrive at the Court.

Background on Qui Tam Provisions

The False Claims Act creates civil liability for “any person” that presents false or fraudulent claims for payment to the federal government.3   However, it includes an “unusual” public-private enforcement scheme.4  In addition to authorizing the Department of Justice to bring civil actions against alleged violators of the statute,5 the statute also authorizes private third parties to sue.6  These third-party suits by “relators” are known as qui tam cases.

Thus, the FCA deputizes ordinary citizens to identify alleged fraud against the government and to sue “in the name of the Government.”7  This is the case even though the actual injury was suffered entirely by the government.8  Unless the government decides to intervene, moreover, the relator takes over the case—investigating, prosecuting, and shaping the litigation as the relator sees fit.  And, when a relator is successful, he or she might be rewarded with up to 30 percent of the recovered money and attorneys’ fees.9  Given these incentives, the Supreme Court has said that “qui tam relators are different in kind than the Government. They are motivated primarily by prospects of monetary reward rather than the public good.”10

Today’s FCA is also quite different from—and much more sprawling than—the one Congress first envisioned and enacted.  The statute was originally enacted during the Civil War after the government suffered “stupendous frauds” by the suppliers of necessary war provisions.11  But as the size and scope of government has grown—and as the complexity of government regulations has increased proportionately—the FCA has taken on a life of its own.  Alongside that growth, in 1986, Congress dramatically expanded relators’ power—so much so that the Court described the amendments as “essentially creat[ing] a new cause of action.”12  Nowadays, relators and their counsel are often opportunistic bounty hunters seeking to convert the byzantine tangle of regulatory obligations into a never-ending source of qui tam lawsuits.

Arguments Against The Qui Tam Provisions’ Constitutionality

“[S]eparation of governmental powers into three coordinate Branches” is essential to our system of divided government.13  Within this system, “the executive power—all of it—is vested in a President.”14  The Framers were acutely wary of dividing the Executive’s authority, because doing so would threaten to “impede or frustrate the most important measures of the government, in the most critical emergencies of the state” or divide the nation into “irreconcilable factions.”15  The Constitution’s Take Care Clause thus vests executive power in one Executive, ensuring national uniformity in the application of the laws.16  That power, moreover, includes “the discretion to decide whether to prosecute a claim, and the control of litigation brought to enforce the government’s interests.”17  Only when the Executive retains “sufficient control” over governmental lawsuits can a law “ensure that the President is able to perform his constitutionally assigned duties.”18

The case against the qui tam provisions’ constitutionality follows directly from these central principles.  As Justice Thomas’ syllogism in Polansky puts it: (1) if the entirety of executive power belongs to the President alone and his duly appointed officers, (2) and if conducting civil litigation to vindicate public rights is an executive power, (3) then qui tam lawsuits brought by (unappointed) citizen-relators are unconstitutional.19  And the provisions’ purported “historical pedigree” does not insulate them from these flaws:  the “provisions have long inhabited something of a constitutional twilight zone,” and “historical patterns cannot justify contemporary violations of constitutional guarantees.”20

How the Supreme Court Might Address the Constitutionality of Qui Tam Provisions in Future Cases

Although the Supreme Court has never previously confronted whether the qui tam provisions collide with Article II,21 three Justices are on record as saying that now is the time to do so.  And the invitation comes from a Supreme Court that has indicated an increased willingness to excise unconstitutional outgrowths of the administrative state.22

So what might make an “appropriate case” and what should the FCA defense bar do with the invitation?

One approach is already being litigated in the Northern District of Alabama.  In United States ex rel. Wallace v. Exactech Inc., the defendants filed a motion for judgment on the pleadings, arguing that the qui tam provisions violate Article II’s Appointments Clause and Take Care Clause.23  The government recently filed a Statement of Interest opposing the motion,24 and it is awaiting a decision.  That case presents the question whether any FCA case in which the government has declined to intervene is unconstitutional and tees up a broad facial attack on the statute.

Another approach might be to target cases in which the Article II intrusion is at its apex.  Somewhat ironically, Polansky’s reiteration of the government’s strong—though not absolute—dismissal authority over qui tam lawsuits may make this kind of “appropriate case” more challenging to find.  Indeed, several courts of appeals have confronted questions about the qui tam provisions’ constitutionality, but they have stopped short of finding the laws unconstitutional in light of the Executive’s ability to exercise control over the litigation through a robust dismissal power.25  Polansky reaffirmed that dismissal power.  Even still, we see a few possible scenarios in which the Article II arguments could be presented when the Executive has lost any ability to try to control the litigation.  They are:

  1. The government has been involuntarily dismissed from the case as a party plaintiff for failing to abide by the procedural requirements of intervention.26 Although this may be rare, in such a case, the Executive will have lost its ability to control the lawsuit and, with it, all authority to “Take Care that the laws be faithfully executed.”
  2. The government has been denied the opportunity to intervene as a party plaintiff in the case because it has not satisfied the Rule 41(a) standards for voluntary dismissal.27 Here too, the Executive will have been forced to the sidelines without recourse.  (As a practical matter, however, a decision in such a case may center on the threshold requirements for intervention in a qui tam lawsuit, rather than the constitutional question.)
  3. A relator’s lawsuit and conduct is particularly parasitic, opportunistic, or egregious. The more that a relator’s case rests on expansive or novel theories of liability, for example, the more that defendants can argue that the relator has strayed much too far from being a conscientious steward of the government’s case.

Whatever the circumstances of the underlying case are, FCA defendants can—and should—be raising arguments about the qui tam provision’s constitutionality, and they have already started to do so.  As these cases percolate through the courts of appeals, they promise to generate additional thinking and decisions from appellate judges, further priming the pump for Supreme Court review.  The issue is profoundly important, and the stakes are enormous.  The sooner that FCA defendants can bring an “appropriate case” to the Justices, the better.

Notes:

  1. U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419, 430 (2023).
  2. Id. at 442 (Kavanaugh, J., concurring) (citing id. at 448-49 (Thomas, J., dissenting)).
  3. 31 U.S.C. § 3729.
  4. Polansky, 599 U.S. at 423.
  5. 31 U.S.C. § 3730(a).
  6. Id. § 3730(b)(1).
  7. Id.
  8. Vt. Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 771 (2000).
  9. 31 U.S.C. § 3730(d).
  10. Hughes Aircraft Co. v. U.S. ex rel. Schumer, 520 U.S. 939, 949 (1997).
  11. H.R. Rep. No. 2, 37th Cong., 2d Sess., pt. 2, pt. II, at 99 (1861).
  12. Schumer, 520 U.S. at 950.
  13. Mistretta v. United States, 488 U.S. 361, 380 (1989); Metro. Wash. Airports Auth. v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252, 272 (1991).
  14. Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2191 (2020) (cleaned up).
  15. Alexander Hamilton, The Federalist No. 70 at 429 (Bantam ed. 2003).
  16. U.S. Const. art. II, § 3.
  17. William P. Barr, Constitutionality of the Qui Tam Provisions of the False Claims Act, 13 Op. OLC 207, 228–29 (1989).
  18. Morrison v. Olson, 487 U.S. 654, 696 (1988); Seila Law, 140 S. Ct. at 2197.
  19. Polansky, 599 U.S. at 449-50 (Thomas, J., dissenting).
  20. Id. (Thomas, J., dissenting).
  21. Vt. Agency of Nat. Res., 529 U.S. at 778 n.8.
  22. See, e.g., Seila Law LLC v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020) (holding that the director of the CFBP’s removal protections are unconstitutional).
  23. See ECF No. 234, U.S. ex rel. Wallace v. Exactech Inc., No. 18-cv-1010 (N.D. Ala. Aug. 15, 2023).
  24. See ECF No. 248, U.S. ex rel. Wallace v. Exactech Inc., No. 18-cv-1010 (N.D. Ala. Sep. 12, 2023).
  25. E.g., Yates v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1312 (11th Cir. 2021); U.S. ex rel. Kelly v. Boeing Co., 9 F.3d 743, 750 (9th Cir. 1993); Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753 (5th Cir. 2001) (en banc); Ridenour v. Kaiser-Hill Co., 397 F.3d 925, 934 (10th Cir. 2005).
  26. 31 U.S.C. § 3730(b).
  27. 31 U.S.C. § 3730(c)(3); Polansky, 599 U.S. at 423-24.