Eleventh Circuit Rejects Appointments Clause Challenge to Qui Tam Mechanism

In a landmark decision in Zafirov, the Eleventh Circuit yesterday rejected the argument that the FCA’s qui tam mechanism violates the Constitution’s Appointments Clause.  Encouraged by concurring and dissenting opinions in which three Supreme Court Justices have recently questioned qui tams’ constitutionality—opinions on which we reported here—FCA defendants are pressing challenges under the Appointments Clause, Take Care Clause, and Vesting Clause.  The district court in Zafirov, on which we previously reported here, held that FCA qui tams violate Article II’s Appointments Clause because relators supposedly qualify as “Officers of the United States” and thus must be (but are not) presidentially appointed.  The Eleventh Circuit disagreed. Aligning itself instead with all the other Circuits to address FCA constitutionality, the Eleventh Circuit ruled that relators are not “Officers of the United States” because they do not occupy a continuing position established by law.

The Appointments Clause generally requires that the President appoint, with the Senate’s advice and consent, “Officers of the United States.”  Following Supreme Court precedent, the Eleventh Circuit explained that a person is an “Officer of the United States” if she (1) occupies a “‘continuing’” position established by law; and (2) “‘exercise[s] significant authority pursuant to the laws of the United States.’”  As to the “continuing position” element, the court continued, the Supreme Court has considered the following factors.

• Whether the person holds “permanent tenure” with “duration as to time” 

Explaining that the Supreme Court has evaluated tenure and duration using essentially the same test, the Eleventh Circuit examined two aged Supreme Court precedents.  In 1879, the Germaine Court determined that a surgeon did not have permanent tenure because his role was intermittent—he could perform one exam in a year or none—and he was not required to keep a place of business.  And in 1890, the Auffmordt Court determined that a merchant appraiser did not have permanent tenure because he had “‘no general functions’” and acted only in emergencies when his expertise was requested.  Applying these cases, the Eleventh Circuit found that a relator’s tenure is not permanent because (1) it lasts the length of only one case; (2) a relator can bring many cases or none in a year; and (3) a relator need not keep a place of business.

• Whether the person receives a “continuing emolument”

“To the extent that a relator’s entitlement to a portion of the judgment in a successful FCA case can be considered an ‘emolument,’ . . . it certainly is not “‘continuing.’”  Paralleling the surgeon in Germaine, the Eleventh Circuit continued, a relator (1) receives a one-time award contingent on the success of her case; (2) does not receive compensation through any regular appropriation; (3) works intermittently (only when pursuing a claim in active litigation); and (4) faces no penalty for refusing to perform (except losing an opportunity to earn an award).

• Whether the person’s duties continue even if the person changes

“A relator occupies a personal role, not one where his ‘duties continue, though the person be changed.’”  A relator’s role, the court explained, “cannot be assumed by anybody else (except for the Attorney General when the government intervenes).”

The court briskly rejected the defendants’ counterarguments.  Relators are not like the Morrison independent counsel, whom the Supreme Court deemed an “Officer of the United States.”  The independent counsel did not have personal duties like relators.  Instead, if he resigned or was removed, his replacement immediately assumed his role.  And the FCA did not create an “office of the relator” that is continuous merely because various private parties can become relators and occupy the office at any time.  No precedent, the Eleventh Circuit observed, has ever viewed the Appointments Clause inquiry that way.

The Eleventh Circuit remanded for the district court to consider two related constitutional questions that the district court did not reach—whether qui tams violate the Take Care Clause and Vesting Clause.  We will continue to monitor the case.

A copy of the opinion in available here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.