Whistleblower Law Strike-Down Would Force Allies to Get Creative

False Claims Act attorneys are considering a worst-case scenario for whistleblowers as they track a case that will decide if the anti-fraud law’s qui tam rules violate the US Constitution.

The US Court of Appeals for the Eleventh Circuit is reviewing whether the FCA’s provisions allowing whistleblowers to fight fraud on the government’s behalf violate the appointments clause in Article II.

Many FCA attorneys believe a trip to the US Supreme Court is inevitable, as Justice Brett Kavanaugh signaled a desire to revisit constitutionality questions regarding the qui tam provisions in a separate ruling Feb. 21; he and Justice Clarence Thomas made similar comments concerning Article II in a 2023 decision.

The US government could lose a huge share of the FCA revenue it recovers annually if the Supreme Court strikes down the whistleblower provisions. More than 80% of 2024 FCA recoveries—$2.4 billion of $2.9 billion—came from whistleblower-filed suits.

If the Supreme Court invalidates the provisions, potential government interventions could include developing a new whistleblower program, attempting to re-characterize the status of whistleblowers or their attorneys so their suits satisfy the Constitution, or amending the FCA, attorneys said.

Scheme Under Scrutiny

The “unique self-appointment scheme” upon which whistleblowers rely is unconstitutional, defendants told the Eleventh Circuit in a March 10 brief. Whistleblower and physician Clarissa Zafirov contended in her Jan. 8 brief that “a wall of persuasive precedent” supports the law’s constitutionality.

Zafirov alleged in May 2019 that Florida Medical Associates LLC—doing business as VIPcare—and others violated the FCA by improperly billing Medicare. She pursued the suit on her own after the government declined to intervene in February 2020.

Judge Kathryn Kimball Mizelle on Sept. 30 dismissed the suit as unconstitutional under the appointments clause in a ruling for the US District Court for the Middle District of Florida. FCA whistleblowers improperly “self-appoint as special prosecutors” to initiate enforcement actions, said Mizelle—whose husband, Chad Mizelle, is now the DOJ’s chief of staff. The DOJ and Zafirov then appealed.

“In the over 160-year history” of the law, said FCA supporter Senator Chuck Grassley (R-Iowa)'s spokesperson, “federal courts have consistently upheld its constitutionality.”

The DOJ didn’t respond to a request for comment.

Pilot Program

If the provisions are stricken, the DOJ could adopt a program similar to the Corporate Whistleblower Awards Pilot Program announced last year, said Michael S. Lowe, representing FCA defendants with Troutman Pepper Locke LLP.

Under that program, a whistleblower who submits information resulting in the DOJ’s successful criminal prosecution for corporate crimes may be eligible for an award at the DOJ’s sole discretion—after the government recovers a forfeiture and the whistleblower makes an award claim.

The corporate program offers a less clear-cut path to an award; a successful qui tam whistleblower can receive between 15 and 25% of the government’s recovery when the government intervenes, and up to 30% if the government doesn’t intervene.

While the government only intervenes in about 20% of FCA suits, it receives most of any recovery from a suit, Zafirov’s brief said.

Without concrete recovery percentages provided by the FCA, would-be whistleblowers may be disincentivized to expose fraud.

Special Attorneys

“An argument could be made,” Lowe said, that the attorney general has the authority under 28 U.S.C. § 543, regarding “Special attorneys,” to turn FCA whistleblowers’ counsel into “inferior officers” to satisfy Article II.

The president must appoint principal officers, with the advice and consent of the Senate, while “inferior officers may be appointed by the President alone, the head of an executive department, or a court,” the Supreme Court said in a 2021 opinion.

Section 543 says the attorney general “may appoint attorneys to assist United States attorneys when the public interest” requires doing so.

But, such appointments could raise questions as to the scope of whistleblowers’ and their counsels’ authority; whether their conduct inside and outside the courtroom could be attributed to the government; and whether they would constitute DOJ employees, Lowe said.

Without new legislation, Lowe said, the existing authority to appoint special assistants under the DOJ isn’t a realistic solution. And the Trump administration “is aggressively looking to downsize the federal government, not expand it.”

Randy Beck, Justice Thomas O. Marshall Chair of Constitutional Law at the University of Georgia’s School of Law, filed an amicus brief to the 11th Circuit in support of Zafirov. The defendants’ brief also cited an FCA article Beck wrote in 2000.

A private attorney representing the executive branch and a private relator might create a conflict of interest, Beck said, also pointing to a possible implication under 18 U.S.C. § 208, which makes it illegal for someone appointed under the executive branch to work on a matter if he or she has a financial interest in the outcome.

Retooling Whistleblowing

“The most logical legislation would amend the FCA,” said Jeremy P. Burnette, representing FCA defendants with Akerman LLP.

Only whistleblowers—likely not their attorneys—would need the inferior officer appointment, Burnette said, because inferior officers can choose outside counsel within their agency’s legal parameters, “and such outside counsel are generally not considered inferior officers because of that representation.”

Congress could grant the president the power to appoint FCA whistleblowers as inferior officers, Burnette said, but because of case volume, a more practical provision would give judges, the attorney general, and/or the secretary of Health and Human Services the power to appoint them as inferior officers.

This option could depend on the outcome of New Mexico v. Musk, said Raquel Ramirez Jefferson, representing FCA defendants with Phelps Dunbar LLP.

The state attorneys general say Elon Musk’s DOGE is unconstitutional because he’s making government expenditure decisions without confirmation from Congress or a nomination by the president.

The case may guide the DOJ “on the limits of that authority and whether and how it can revive the FCA’s qui tam provision if found unconstitutional,” Jefferson said.