Under federal law, a private citizen (denominated a “Relator”) can bring a False Claim Act (“FCA”) lawsuit in the name of the United States Government against healthcare providers, based on allegations of healthcare/Medicare fraud. These lawsuits are becoming increasingly common, and at times are financed by third-party litigation funding companies, hoping for a share of astronomical damages awards.
In late September 2024, a federal district court judge in Florida held that qui tam lawsuits under the FCA are unconstitutional, reasoning that the private citizen Relator suing in the name of the Government is an “improperly appointed officer” of the Executive Branch which violates Article II of the federal Constitution. U.S. ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 8:19-CV-01236-KKM-SPF, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024).
This decision reflects a major blow to the cottage industry of private qui tam actions, and their litigation financing companies, and most certainly will be appealed to the Eleventh Circuit Court of Appeals. As this District Court decision is inconsistent with decisions from several other Circuit Courts of Appeals, there is also a real possibility the case could find its way to the Supreme Court, where several Justices have already indicated a view that the qui tam provisions may be unconstitutional.
While we await subsequent rulings in the Zafirov case, the practical lesson from this and similar cases is the critical importance of having a meaningful compliance plan in place for all healthcare providers, to help avoid being targeted by a qui tam litigation in the first place.
Weiss Zarett Brofman Sonnenklar & Levy, P.C., is a boutique sized law firm on Long Island, New York, that practices heavily in the area of healthcare law, and assists clients in addressing healthcare regulatory compliance concerns.
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