Blowing the Whistle on the False Claims Act Qui Tam Provisions: Dissent and Concurrence in Polansky Invite Constitutional Challenge to the Predominant Source of FCA Litigation

Do the qui tam provisions of the False Claims Act (FCA), see 31 U.S.C. § 3730(b)(1), violate the Executive Branch’s exclusive grant of authority under Article II of the United States Constitution? This long-dormant question has been revived in a surprising context. In its recent decision in United States ex rel. Polansky v. Exec. Health Resources, No. 21-1052 (S. Ct. June. 16, 2023), the Supreme Court affirmed the government’s authority to intervene to dismiss a whistleblower action, even after initially declining to intervene in the case. Knowledgeable FCA practitioners expected this result. Less expected was Justice Thomas’s dissent, which argued that the case should have been remanded to allow the parties to brief and argue whether Article II forbids allowing private citizens to maintain FCA claims on behalf of the government. A concurrence by Justice Kavanagh (joined by Justice Barrett), while rejecting Justice Thomas’s call for a remand, nonetheless stated that “the Court should consider the competing arguments on the Article II issue in an appropriate case.” With three justices expressing interest in this question—and only four justices being required to grant certiorari—health care enforcement defense attorneys should now consider whether to raise the constitutionality of the FCA’s qui tam provisions when relators move forward to litigate cases that the government declines to pursue.

This is not a new issue. In 1989, just three years after Congress amended the FCA to encourage qui tam litigation, then-Assistant Attorney General William P. Barr submitted a memorandum (Barr Memorandum) to the Attorney General arguing that the FCA’s qui tam provisions are unconstitutional. The Barr Memorandum contends that privately litigated qui tam lawsuits violate the Appointments Clause of the Constitution, Art. II, § 2, cl. 2, which vests executive power exclusively in the President and the Executive Branch, and that allowing private litigants to pursue declined cases violates the stricture that the President “shall take Care that the Laws be faithfully executed.” The Barr Memorandum also argues that qui tam relators lack Article III standing to maintain lawsuits on behalf of the government because they have not themselves suffered the injuries giving rise to their FCA claims.

The Department of Justice (DOJ) did not adhere to this Article II analysis. Citing with approval federal court decisions rejecting Article II challenges to qui tam lawsuits under the FCA, DOJ officially “disapproved” of the position stated in the Barr Memorandum. No Supreme Court decision has ever addressed the constitutionality of the FCA’s qui tam provisions under Article II, though the Court did find that relators do have Article III standing.

None of the parties or amici in Polansky argued that Article II forbids relator-controlled FCA litigation. The defendant/respondent did argue that the relator’s construction of the FCA to forbid government dismissal of a declined case would violate Article II by entirely divesting the government of any control over the case. Writing for the Court, Justice Kagan decided the case based solely on the text of the FCA, and did not analyze (or even mention) Article II.

For Justice Thomas, however, his differing reading of the FCA necessitated reexamining the Article II issue. He construed the FCA to forbid categorically government dismissal of a declined FCA case, thus making it necessary to address Article II. He reasoned that allowing private relators to represent the interest of the United State in litigation violates the Appointments Clause of Article II because it usurps “an ‘executive function[n]’ that ‘may be discharged only by persons who are ‘Officers of the United States’ under the Appointments Clause[.]” However, neither his dissent nor the concurrence of Justices Kavanagh and Barrett turned on whether the FCA permits the government to dismiss a declined case. All three of these justices deemed this question worthy of further examination by the Supreme Court.

While long neglected, the arguments why the FCA’s qui tam provisions violate Article II are weighty and, as yet, not definitively resolved by the Supreme Court. Absent controlling authority to the contrary in the jurisdiction where an action is brought, such arguments are sufficiently merit worthy to be pleaded in defense of any DOJ-declined FCA case, particularly now that three Supreme Court justices have indicated that they warrant being presented to the Court. Whether the facts of a particular case or the venue where it is litigated would make it advisable to move to dismiss on this basis will require context-specific judgments. But where precedent does not foreclose an Article II defense, a defendant litigating a declined FCA case should, at a minimum, plead constitutionality as an affirmative defense, and then take care to seasonably present the issue to the trial court in order to timely resolve the issue before judgment and, if necessary, preserve it for appeal.

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