Insights

FY 2024 saw continued growth in False Claims Act enforcement, with a record year for new qui tam and government-initiated actions, and the highest total recovery in three years. Enforcement of pandemic-related fraud and cybersecurity noncompliance increased, and health care, procurement, and small business fraud violations were again priority areas. A groundbreaking opinion from the District Court for the Middle District of Florida may have teed up a potentially landscape-shifting decision about the viability of the qui tam mechanism in the not too distant future. And a landmark administrative law decision at the U.S. Supreme Court may impact many FCA cases to come. Significant decisions regarding retaliation, excessive fines, the first-to-file rule, and the public disclosure bar were also handed down by courts of appeals. Crowell attorneys discuss these highlights and others in a “Feature Comment” published in The Government Contractor.

Judge Kathryn Kimball Mizelle of the District Court for the Middle District of Florida recently declared the False Claims Act qui tam provisions unconstitutional in U.S. ex rel. Zafirov v. Fla. Med. Assocs., LLC, -- F.Supp.3d --, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024), turning up the heat on a simmering constitutional fight that is increasingly likely to reach the Supreme Court in the next few years. Judge Mizelle's decision was the first to strike down the FCA qui tam provisions, but not the first to consider the issue. Arguments challenging the constitutionality of the qui tam provisions proliferated after Justice Thomas indicated some doubt about the qui tam device in his dissent in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). But every other judge to consider the issue has upheld the constitutionality of the qui tam provisions.

In a novel False Claims Act (FCA) ruling, on September 30, 2024, Judge Kathryn Kimball Mizelle of the District Court for the Middle District of Florida upended decades of FCA jurisprudence in declaring the qui tam provisions of the FCA unconstitutional in U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024). This decision follows Justice Thomas’ dissent in the recent Supreme Court decision, U.S. ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), where he posited, “[t]here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.” While Justice Thomas’ implicit constitutional challenge was not entirely new to FCA practitioners, including it in his Polansky dissent, with Justices Kavanaugh and Barrett in a concurring opinion noting their agreement that the Court should consider the constitutional questions in an appropriate case, swung wide open a door of opportunity for defendants and their counsel to attempt to dismiss FCA qui tam suits on constitutional grounds. Judge Mizelle’s decision in Zafirov is the first of its kind to actually dismiss a qui tam suit on constitutional grounds, and will likely lead to an avalanche of similar motions in nearly every non-intervened lawsuit brought by a relator.