Understanding the False Claims Act and Why The Federal Courts Have Unanimously Held it Constitutional

September 29, 2023

The False Claims Act, a 160-year-old law that penalizes those who knowingly submit false or fraudulent claims to the government, is “one of the most important tools for ensuring that public funds are spent properly and advance the public interest.” One of the critical features of the False Claims Act, or FCA, is the law’s qui tam provision, which allows whistleblowers to file a lawsuit in federal court alleging fraud against the government. The whistleblower files the lawsuit under seal, meaning non-publicly, and the federal government has an exclusive chance to investigate the whistleblower’s allegations and decide whether to intervene, or take over the suit. If the government intervenes, it assumes the primary role for prosecuting the case; if the government declines to intervene, the whistleblower usually can decide whether to take the case forward on behalf of the government. As an incentive to root out and stop fraud, whistleblowers who bring successful qui tam cases are entitled to between 15 and 30 percent of the recoveries in the case.

In a recent dissent Justice Clarence Thomas, writing only for himself, raised questions about whether the False Claims Act’s qui tam provisions are consistent with Article II of the Constitution. He questioned whether the ability of whistleblowers to file lawsuits on behalf of the government somehow impermissibly encroaches on Executive power.

Defendants have already started latching on to Justice Thomas’s skepticism, reviving decades-old challenges to the False Claims Act under the Take Care and Appointments Clauses. The gist of the Take Care arguments is that the Constitution tasks the Executive Branch with ensuring that the laws are faithfully executed, and allowing a whistleblower to files lawsuits and decide how to prosecute declined cases on behalf of the United States takes power away from the President. Meanwhile, the Appointments Clause arguments contend that whistleblowers cannot file lawsuits on behalf of the government because that is a purely executive function that can only be performed by officers of the United States appointed by the President.

But as a recent amicus brief from The Anti-Fraud Coalition pointed out*, these arguments were first raised decades ago, around the turn of the 21st century, and consistently shot down by the courts. In fact, every Federal appellate court to consider those challenges concluded that the qui tam provisions are constitutional. Defendants lobbed similar challenges in district courts throughout the country; those courts unanimously reached the same conclusion. And for good historical and structural reasons. Historically, qui tam statutes have been around for centuries; they pre-date the United States, were passed by the First Congress, and have been in near continuous existence throughout the nation’s history. The False Claims Act is simply the most successful and popular of these statutes. In fact, in 2000, the Supreme Court looked at this historical record and unanimously deemed it “well nigh conclusive” of the Act’s Constitutionality under Article III, and there is no good reason why this conclusive historical record should be any different under Article II.

The structural arguments in favor of Constitutionality are just as strong. Congress included substantial guardrails in the False Claims Act that give the Executive Branch substantial oversight and control of whistleblower matters, even in declined cases, preserving the President’s authority to enforce the laws. Moreover, the limited, narrow ability of whistleblowers to file qui tam lawsuits does not make them officers under the Constitution.

Simply put, by nearly any accepted form of Constitutional analysis, the False Claims Act is an appropriate means of protecting government funds from fraudsters. Whistleblowers have helped recover more than $50 billion for the government, with billions more returning to the federal Treasury every year. There’s no good Constitutional reason to take away this key anti-fraud tool.

* Outten & Golden Whistleblower & Retaliation Practice Group attorney Dave Jochnowitz assisted with this briefing.

(*Prior results do not guarantee a similar outcome.)