A groundbreaking decision from the U.S. District Court for the Middle District of Florida has sent shockwaves through the False Claims Act (FCA) landscape, potentially revolutionizing how whistleblower cases are handled. With qui tam cases accounting for over $52 billion in recoveries since 1986, this development demands immediate attention from corporate leaders and in-house counsel who manage federal funding compliance and litigation risk.

Key Takeaways:

  • Constitutional Challenge: The Zafirov decision declares FCA qui tam provisions unconstitutional, questioning private individuals’ authority to pursue cases on behalf of the government.
  • Executive Power Doctrine: The court ruled that prosecuting these cases requires Presidential appointment under the Constitution’s Appointments Clause, potentially invalidating private whistleblower actions.
  • Procedural Complexity: Timing of constitutional challenges has become crucial, with courts actively debating whether such defenses must be raised in initial pleadings.
  • Government’s Position: After appealing the decision, the Department of Justice filed its opening brief on January 6, 2025, asking the 11th Circuit to reverse. The United States argues that qui tam actions are constitutional because the Government retains significant amount of control over the litigation and because the weight of historical evidence and tradition supports the qui tam statutes’ constitutionality. Three justices of the Supreme Court have recently expressed that the qui tam provisions of the FCA may be unconstitutional. If the 11th Circuit upholds the decision on appeal, the Supreme Court is likely to review the split between the federal circuit courts to provide a final answer.
  • Response to Government’s Position: The Defendants in the Zafirov case filed their response to the Government’s opening brief on March 10, 2025. They argue that because FCA relators sue to enforce only the government’s injuries, they, therefore, exercise the government’s power, and in doings so violate the Appointments Clause, as well as the Vesting and Take Care Clauses of the Constitution.
  • Financial Implications: With qui tam cases representing approximately 70% of FCA recoveries ($52 billion of $75 billion), businesses face significant strategic decisions in ongoing and future litigation.

The constitutional challenge in Zafirov v. Florida Medical Associates represents a potential paradigm shift in FCA litigation. Judge Mizelle’s ruling that qui tam provisions violate the Appointments Clause (Art. II, § 2, cl.2) could provide defendants with a powerful new defense strategy. However, the timing of raising such constitutional challenges is critical – as demonstrated in Zafirov, where the court rejected arguments that defendants had waived their right by not including it in their initial responsive pleading. This creates a complex strategic decision point for corporate defendants: when and how to deploy constitutional challenges in existing or anticipated FCA cases.

The landscape of FCA whistleblower litigation stands at a crossroads, with potentially transformative implications for corporate risk management and compliance strategies. As courts continue to grapple with these constitutional questions, businesses need proactive legal guidance to navigate this evolving terrain. For strategic advice on positioning your organization in light of these developments or to discuss specific FCA matters, contact Fluet’s Litigation + Investigations team.