DOJ Defends Constitutionality of False Claims Act’s Qui Tam Provisions in Fifth Circuit

The U.S. Department of Justice has mounted a vigorous defense of the constitutionality of qui tam provisions in the False Claims Act (FCA) during proceedings at the Fifth Circuit Court of Appeals, pushing back against challenges that have gained momentum following recent Supreme Court decisions.

In a comprehensive brief filed this week, DOJ attorneys argued that qui tam lawsuits – which allow private citizens to sue on behalf of the government and share in any recovery – remain a critical enforcement mechanism that has recovered billions of dollars for taxpayers since the modern version of the law was strengthened in 1986.

“The historical record clearly demonstrates that qui tam actions have deep roots in Anglo-American legal tradition dating back centuries,” the Justice Department stated in its filing. “These provisions have withstood constitutional scrutiny repeatedly because they properly enable the executive branch to maintain sufficient control over litigation affecting government interests.”

The DOJ’s defense comes as defendants in FCA cases across multiple circuits have increasingly challenged the qui tam provisions on constitutional grounds, citing the Supreme Court’s recent decisions that have questioned aspects of administrative law and government delegation. Critics argue that allowing private relators to pursue cases on behalf of the United States violates Article II appointment and removal powers as well as Article III standing requirements.

At the heart of the current Fifth Circuit case is a whistleblower lawsuit against a healthcare provider alleged to have submitted fraudulent Medicare claims. The defendant has argued that qui tam relators improperly exercise government authority without proper appointment and oversight by the executive branch.

Legal experts note that the outcome of this constitutional challenge could have far-reaching implications for government fraud enforcement. The False Claims Act has been responsible for recovering more than $70 billion since 1986, with whistleblowers initiating approximately 80 percent of those cases.

“If the courts were to find the qui tam provisions unconstitutional, it would dramatically undermine the government’s most effective tool for combating fraud against taxpayers,” said Amanda Martinez, a former federal prosecutor who specializes in healthcare fraud cases. “The government simply lacks the resources to identify and pursue all these cases without whistleblower assistance.”

The Justice Department’s brief emphasizes that existing safeguards ensure appropriate executive control over qui tam litigation. These include the government’s right to intervene in cases, settle over a relator’s objection, or move to dismiss cases it views as meritless or contrary to government interests.

“The executive branch maintains substantial oversight throughout the litigation process,” the brief states. “The historical record, combined with the significant control mechanisms built into the statute, ensures that qui tam provisions comply with constitutional separation of powers principles.”

The Fifth Circuit’s eventual ruling could create or deepen a circuit split on this issue, potentially forcing the Supreme Court to address the constitutionality of qui tam provisions directly. Several justices, including Clarence Thomas, have previously expressed skepticism about certain aspects of the FCA’s whistleblower provisions.

The healthcare industry and government contractors are closely monitoring these constitutional challenges, as they represent the potential for a significant shift in fraud enforcement. Defense contractors, pharmaceutical companies, and healthcare organizations – which face the majority of FCA actions – would benefit substantially if whistleblower suits were curtailed.

“Companies across regulated industries are watching this case closely,” said Robert Wilson, general counsel for a healthcare compliance consulting firm. “While most businesses want to root out actual fraud, many have criticized the FCA’s qui tam mechanism as creating incentives for opportunistic lawsuits that drive up compliance costs.”

The Justice Department’s staunch defense reflects the critical importance of whistleblower provisions to its anti-fraud efforts. Without qui tam relators, who often have insider knowledge and access to evidence not readily available to investigators, many complex fraud schemes might go undetected.

The Fifth Circuit is expected to hear oral arguments in the case later this year, with a decision likely to follow in early 2024. Whatever the outcome, legal observers expect the constitutional question to eventually reach the Supreme Court, where the future of this crucial fraud-fighting tool will ultimately be decided.