The motivating force behind the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”) is its provision for qui tam enforcement, which authorizes private parties (aka relators) to initiate FCA cases on behalf of the United States. Id. § 3730(b)(1). Immediately after re-invigoration of the FCA in 1986, scholars and litigants questioned the constitutional validity of statutory authorization for relators to sue on behalf of the U.S. government. After 15 years of litigation, this debate withered, but has been recently re-invigorated.

This post summarizes four principal challenges to the constitutionality of qui tam enforcement, and then discusses two recent events in which these challenges have reappeared: the confirmation hearings for Attorney General nominee William Barr and a cert petition that asks the Supreme Court to rule on qui tam constitutionality.

Attacks on Qui Tam Constitutionality

(1) Standing. The Supreme Court settled the question of whether relators have Article III standing in the affirmative in Vermont Agency of Natural Resources v. U.S. ex rel. Stevens, 529 U.S. 765 (1999). At issue was whether a relator has suffered the requisite “injury in fact” to satisfy Article III’s case-or-controversy requirement. The Court held that “[t]he FCA can reasonably be regarded as effecting a partial assignment of the Government’s damages claim,” and accordingly determined that a relator has standing based upon “the United States’ injury in fact.” Id. at 773–74.

But the Court’s opinion only whet litigants’ appetite for other constitutional challenges to qui tam. In concluding that a relator has Article III standing, Justice Scalia added in an enigmatic footnote, “we express no view on the question whether qui tam suits violate Article II, in particular the Appointments Clause of § 2 and the ‘take Care’ Clause of § 3.” Id. at 778 n.8.

(2) Appointments Clause. The Appointments Clause, Article II, § 2, cl. 2, provides that the President “shall nominate, and by and with the advice and consent of the Senate, shall appoint,” “officers of the United States,” and that Congress may vest appointment of “inferior officers” “in the President alone, in the courts of law, or in the heads of departments.” Relators arguably serve as “officers” or “inferior officers” of the United States when they file qui tam actions and prosecute them on behalf of the United States. The constitutional question is whether they may do so without specific appointment in accordance with the Appointments Clause.

(3) Separation of Powers. The Executive Vesting Clause, U.S. Const. art. II, § 1, cl. 1, and Take Care Clause, U.S. Const. art. II, § 3, provide that “[t]he executive Power shall be vested in a President of the United States of America” and that the President “shall take Care that the Laws be faithfully executed.” The constitutional question (as framed 30 years ago by Attorney General nominee Barr) is whether the qui tam provisions impermissibly infringe upon the executive branch’s “discretion to decide whether to prosecute a claim, and [its] control of litigation brought to enforce the government’s interests.” Constitutionality of the Qui Tam Provisions of the False Claims Act, 13 Op. O.L.C. 207, 229 (1989) (William P. Barr).

(4) Due Process. The final constitutional question arises out of the Fifth Amendment’s Due Process Clause, under which prosecutors must “be guided solely by their sense of public responsibility for the attainment of justice” and therefore must not be self-interested. Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 814 (1987). If relators are acting as citizen-prosecutors, the question is whether their financial stake in the outcome of the suit impermissibly distorts their prosecutorial incentives in violation of the Fifth Amendment.

Views of AG Nominee William Barr

The constitutionality of qui tam under the theories above arose recently in the Senate confirmation hearing for Attorney General nominee William Barr. In 1989 while Assistant Attorney General in the Office of Legal Counsel, Barr famously authored a memorandum opinion setting forth most of the above theories. See 13 Op. O.L.C. 207. His opinion was routinely cited in litigation throughout the 1990s questioning the constitutionality of qui tam. Thus it was hardly surprising when Sen. Charles Grassley (R-Iowa), one of the authors of the modern FCA, asked Barr for his current views on the question. Referring to Stevens, which resolved only the standing question, Barr responded that the FCA has “been upheld by the Supreme Court.” However, Barr’s current views on the Appointments Clause or separation of powers questions reserved by the Court remain unknown.

Intermountain Health Care Petition for Writ of Certiorari

At nearly the same time, a litigant sought certiorari asking the Supreme Court to decide whether qui tam “violate[s] the Appointments Clause of Article II of the Constitution.” Petition for Writ of Certiorari at i, Intermountain Health Care, Inc. v. United States, ex rel. Gerald Polukoff, No. 18-911 (Jan. 14, 2019). The petition argues that because relators (1) “occupy a ‘continuing’ position established by law,” and (2) “exercis[e] significant authority pursuant to the laws of the United States,” they are officers whose appointment is subject to the procedures established in the Appointments Clause. Petition at 28–29 (citing Lucia v. SEC, 138 S. Ct. 2044 (2018)). The petition relies on Morrison v. Olson, 487 U.S. 654 (1988) for the proposition that a position which is limited in tenure and for which the holder is restricted to performing only limited duties (in that case, the independent counsel) can nonetheless be considered a continuing position established by law. Id. at 29–33.

Though Intermountain expressly raises only the Appointments Clause question and disclaims review of the separation of powers question, id. at 23 n.5, its petition emphasizes the separation of powers aspects of the Appointments Clause throughout, framing the Clause as a “significant structural safeguard[]” and “a key constitutional means vested in the President” “to resist encroachment of the other[]” branches, id. at 25 (citing Edmond v. United States, 520 U.S. 651, 659 (1997); Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 501 (2010)). “In short,” Intermountain states, “the Appointments Clause allows the President to fulfill his obligation to ‘take Care that the Laws be faithfully executed.’ ” Id. at 25–26 (citing U.S. Const. art. II, § 3).

Intermountain’s alternative position—that “even if relators are not officers, the FCA violates the Appointments Clause by vesting a core officer function in relators,” id. at 34—also invokes separation of powers principles. “Whatever other officer functions Congress might delegate to nonofficers in other contexts,” Intermountain argues, “the Appointments Clause is stretched beyond its limits by Congress’s delegation of core sovereign functions of civil law enforcement to nonofficers.” Id. at 35 (emphasis added). As William Barr argued three decades earlier, qui tam presents the structural danger that “Congress effectively could ‘privatize’ all civil law enforcement.” 13 Op. O.L.C. at 208.

Why now?

Twenty years after the Stevens decision, why this moment for renewed debate?

The answer may be that in the last few years DOJ has increasingly struggled to keep the ever-expanding qui tam docket under control. As qui tam actions have become big business, professional relators have emerged, represented by bigger and better-financed mainstream law firms. Relators in non-intervened cases routinely take aggressive positions that do not represent the views of the DOJ, and have even proceeded to trial in matters that are directly contrary to the Government’s interests—most notoriously in the Trinity matter, where the relator’s position was directly contradicted by the regulatory agency allegedly defrauded. (The Supreme Court recently denied relator’s cert petition in the case.) Most tellingly, a year ago the DOJ felt impelled to issue the so-called “Granston Memorandum” (now in the DOJ Justice Manual) setting forth the factors that will lead the DOJ to dismiss non-intervened actions, in a transparent effort to wrestle control back from unruly relators and their counsel.

Given the recent overreaches by relators and difficulties that DOJ has faced in controlling non-intervened cases, it is unsurprising that defendants are again raising the obvious constitutional concerns over statutory empowerment of third parties to represent the interests of the United States.

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Photo of Peter B. Hutt II Peter B. Hutt II

Peter Hutt represents government contractors in a range of complex investigation, litigation, and compliance matters, including False Claims Act and fraud investigations and litigation, compliance with accounting, cost, and pricing requirements, and contract claims and disputes.

Peter has litigated more than 25 qui…

Peter Hutt represents government contractors in a range of complex investigation, litigation, and compliance matters, including False Claims Act and fraud investigations and litigation, compliance with accounting, cost, and pricing requirements, and contract claims and disputes.

Peter has litigated more than 25 qui tam matters brought under the False Claims Act, including matters alleging cost mischarging, CAS violations, quality assurance deficiencies, substandard products, defective pricing, Iraqi procurement fraud, health care fraud, and inadequate subcontractor oversight. He has testified before Congress concerning proposed amendments to the False Claims Act.

Peter has also conducted numerous internal investigations and frequently advises clients on whether to make disclosures of potential wrongdoing.

Peter also represents clients in a wide range of accounting, cost, and pricing matters, as well as other contract and grant matters. He is experienced in addressing issues concerning pensions and post-retirement benefits, contract formation, TINA and defective pricing, claims and terminations, contract financing, price reduction clauses, subcontracting and supply chain compliance, specialty metals compliance, and small business and DBE compliance. He has litigated significant cost, accounting, and contract breach matters in the Court of Federal Claims and the Armed Services Board of Contract Appeals.

Peter is recognized for his work both in government contracts and in False Claims Act disputes by Chambers USA, which notes that he is “whip-sharp, wicked smart and will advocate to the hilt for his clients.” Chambers also notes that “Peter brings a lot of thoughtfulness and creativity to cases. He is extremely clear in his communications and very responsive.”