One of the cornerstones of the False Claims Act is the qui tam, or “whistleblower” provision, which provides incentives for private individuals to bring lawsuits on behalf of the government in cases of fraud. However, if one corporate defendant in an FCA lawsuit has its way, the qui tam provision of the FCA could be declared unconstitutional – effectively gutting the entire 150-year-old statute.
The defendant, Intermountain Health Care Inc., employs a physician accused of submitting improper requests for reimbursements from Medicare for “unnecessary medical procedures.” Earlier this year, it petitioned the US Supreme Court to consider the constitutionality of the FCA's whistleblower provisions.
The case, originally filed in a Utah district court in January of 2017, is Intermountain Health Care, Inc., et al. v. U.S. ex rel. Polukoff et al. The whistleblower, or “relator,” alleged that a company physician entered into a conspiracy with two hospitals (one of which is the primary named defendant) to do heart surgeries that were medically unnecessary, then fraudulently certified the procedures so as to be able to bill the federal Medicare program. According to the relator, also a physician, the procedures that had been performed (known as patent foramen ovale closures) were indicated only in rare instances, such as a patient history of stroke. Allegedly, this was not the case for the two patients; nor had either hospital received a National Coverage Determination from Medicare for the surgeries in question.
In presenting his case, the relator cited American Heart Association guidelines and attempted to introduce testimony from other doctors on when a PFO closure should be performed. The defendants claimed that the relator's evidence failed to prove that the defendants had submitted “objectively false” claims and moved for dismissal of the case. The lower court agreed, and the case went to the Tenth Circuit Court of Appeals.
During the appeal, the defendants argued that the qui tam provisions of the FCA were in violation of the Appointments Clause of Article II of the US Constitution, which states 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 by Law vest the appointment of…inferior officers…in the President alone, in the Courts of Law, or in the Heads of Departments.”
In other words, the relator, in this case, was neither nominated by the President nor confirmed by Congress. The defense supported its argument by noting that under qui tam law, the relator receives compensation from the government – in the form of a percentage of the money recovered – thus making the whistleblower, in essence, an un-appointed officer of the federal government.
In the past, courts have rejected this argument. Lower courts have not considered whistleblowers “agents” or officers of the US government simply because they are entitled to a portion of any recovery. That reward is simply compensation for voluntarily doing a public service – a service that involves a great deal of time and work. Even if the SCOTUS were to rule that relators have no standing under the Appointments Clause, it has noted that in Vermont Agency of Natural Resources v. United States ex rel. Stevens, the Court ruled that relators do have standing under Article III, Section 2 (the “Controversy Clause”). Specifically, the fact that the whistleblower gets a reward in the form of a percentage of any recovery means that he or she has a personal stake in the lawsuit – making such an action a “private suit brought by [a] private party.”
The SCOTUS has also found that whistleblowers do not meet the legal definition (“the practical indicia”) of a federal official.
Qui tam law has a very long history, dating back to Roman times. The term is short for a Latin phrase translating as “He who sues in the matter for the king as well as for himself.” These laws were first codified by the English parliament in the early 14th Century, and have been part of American jurisprudence since 1778. Since the American Civil War, the qui tam provisions of the False Claims Act have been instrumental in holding contractors and individuals accountable for attempting to defraud American taxpayers and the recovery of public money. Numerous attempts to strike down the law have been unsuccessful – and this one is likely to be no exception.