Fifth Circuit Concurrence Finds FCA’s Qui Tam Device Unconstitutional
The Fifth Circuit Court of Appeals recently vacated a $28.7 million verdict in a declined FCA qui tam because the district court improperly relied on the relators’ post-trial expert declarations to calculate damages. Writing separately in a concurrence, Judge Duncan also condemned the “constitutional flaws in the FCA’s qui tam device,” citing the logic of United States ex rel. Zafirov (discussed here), and adding to the number of judges voicing concerns over the constitutionality of the FCA’s qui tam provision. (more…)
Another District Court Finds FCA Civil Penalties Unconstitutionally Excessive
Last year, we reported on a rare district court decision from Minnesota finding application of the FCA’s civil penalties unconstitutionally excessive. Last week, a judge in the Northern District of Texas determined that even the minimum amount in FCA penalties, as applied, would have violated the Eighth Amendment’s Excessive Fines Clause. Based on the number of false claims for which the jury found the defendant liable, the minimum penalty mandated by the statute was nearly $300 million—around one hundred times the actual damages. The court instead imposed a reduced penalty of roughly $8 million, about three times the actual single damages, equating to a per-claim civil penalty of approximately $378.18.
Federal Judge Pauses Enforcement of DEI Executive Orders, But False Claims Act Risk Remains
On Friday, February 21, a federal district judge in Maryland issued a nationwide preliminary injunction prohibiting the U.S. Department of Justice (DOJ) and defendant federal agencies from enforcing portions of two presidential executive orders (EOs) targeting diversity, equity, and inclusion (DEI) programs at companies that do business with the federal government, including provisions tethering allegedly unlawful DEI programs to potential False Claims Act (FCA) liability. Despite the unusually sweeping breadth of this injunction, the Trump administration retains significant latitude to undertake actions targeting federal contractor DEI programs it believes are unlawful, and companies should carefully consider their response to the injunction.
AG Nominee Bondi Commits to Defending FCA Constitutionality
Today the Senate Judiciary Committee held a confirmation hearing for Pam Bondi, President-elect Donald Trump’s nominee for Attorney General. During the hearing, Senator Chuck Grassley, a long-time proponent of whistleblowers in general and the FCA in particular, sought and received assurances from Bondi that under her leadership, vigorous FCA enforcement, including through qui tam cases, would continue.
District Court Rules FCA Qui Tam Provision Unconstitutional
Yesterday evening Judge Kathryn Mizelle in the Middle District of Florida granted a defense motion for judgment on the pleadings and dismissed an FCA case after concluding that the FCA’s qui tam provision is unconstitutional. See U.S. ex rel. Zafirov v. Fla. Medical Assoc. LLC, No. 19-cv-1236 (M.D. Fla. Sept. 30, 2024).
Seventh Circuit Rejects Constitutional Challenge to FCA Judgment, Recognizes Circuit Split on Causation Requirement for AKS-Based Claims
In a recent decision, the Seventh Circuit acknowledged—but declined to pick sides in—a circuit split regarding the degree of causation required to establish FCA claims premised on AKS violations. In the same opinion, the Seventh Circuit rejected an Eighth Amendment challenge to the amount of an FCA judgment.