Courts Should Finally Rule That The False Claims Act Qui Tam Provisions Are Unconstitutional

• Published date: 20 March 2024
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Criminal Law, Constitutional & Administrative Law, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Mr Robert S. Salcido and Emily I. Gerry

Key Points:

• Notwithstanding that qui tam relators seek to maximize their own interests, rather than the public interest, Congress sought to expand their power to enforce the FCA to supplement the government's law enforcement powers.
• Courts initially ruled that Congress's delegation of law enforcement power to private citizens to enforce federal law was permissible because Congress may shift executive power to third parties to achieve important public policy goals and DOJ maintains residual power to petition courts to limit the private party's authority to enforce the law.
• However, in more recent Supreme Court precedent, the Court has ruled that the executive branch must have complete control over investigation and prosecution of violation of federal law.
• In light of this more recent precedent, courts should rule that relator's actions under the FCA are unconstitutional.

Last term, in U.S. ex rel. Polansky v. Exec. Health Res., Inc., three Justices noted that there are "substantial arguments" that the False Claims Act's (FCA) qui tam provisions do not conform with Article II of the Constitution and suggested that the Court should consider their constitutionality in an appropriate case.¹ From roughly 1993 to 2004, multiple circuit courts ruled that the qui tam provisions are constitutional under Article II.² But given case law developments and the fact that Congress has, in qui tam actions, dispersed power from the executive branch to private persons acting not in the public interest but rather in their own self-interest, now is the time for the Court to consider this issue and to rule that the FCA's qui tam provisions are unconstitutional.

FCA: Legislative Background and Early Court Decisions on FCA Constitutionality

The FCA arms law enforcement officials with the ability to impose treble damages and civil penalties'an essentially penal remedy'on those who knowingly or fraudulently present false claims to the government.³ It also empowers private citizens (known as relators) to file suits on behalf of the government (known as qui tam actions). The Department of Justice (DOJ) may intervene in a qui tam action or decline to pursue it.⁴ If DOJ intervenes, relator can fully participate as a party prosecuting the action unless DOJ moves the court to limit relator's participation because it interferes with or delays DOJ's prosecution of the action.⁵ If DOJ declines to intervene, the private person may prosecute the lawsuit on the government's behalf and obtain a substantial bounty.⁶ In the event that DOJ initially declines to intervene, it may later intervene in an action brought on its behalf upon a showing of "good cause."⁷DOJ may move to dismiss or settle the lawsuit over relator's objections, but dismissal or settlement is subject to judicial review after a statutorily required hearing.⁸

Throughout its history, Congress and courts have understood that relators generally seek to advance their own interest, rather than the public interest. Congress first enacted the FCA, with its qui tam provisions, during the Civil War.⁹ In establishing a bounty for relators to sue on the government's behalf, Congress was under no illusion that relators would selflessly pursue the public interest. Instead, as a Senate Sponsor pointed out at the time, the qui tam provisions were based "upon the old-fashioned idea of holding out a temptation, and 'setting a rogue to catch a rogue,' which is the safest and most expeditious way ... of bringing rogues to justice."¹⁰ Similarly, the Supreme Court, in Hughes Aircraft Co. v. United States ex rel. Schumer, recognized that "[a]s a class of plaintiffs, qui tam relators are different in kind than the Government. They are motivated primarily by prospects of monetary reward rather than the public good."¹¹

Notwithstanding relators'...