This transcript has been auto generated
00;00;00;10 - 00;00;24;09
Jonathan Porter
Welcome to another episode of Hush Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter, and we've got a breaking news episode today. The false Claims Act is around 160 years old, so you may not expect a law of that old to have breaking constitutionality news, but we do. On September 30th, a federal judge in Florida threw out a qui tam in which the government had declined to intervene.
00;00;25;10 - 00;00;51;00
Jonathan Porter
She said that the whistleblower could not proceed with the decline, keep him on the grounds that the key to the provision of the False Claims Act violates Article two of the U.S. Constitution. This is a big deal in the False Claims Act world. It could have major ramifications for federal law enforcement because as we talked about in our very first episode of this podcast, whistleblowers largely drive DOJ's agenda when it comes to False Claims Act enforcement.
00;00;51;13 - 00;01;14;15
Jonathan Porter
In fact, two years ago, 89% of False Claims Act settlement dollars stemmed from investigations started by whistleblowers. And so if qui tams are unconstitutional, get ready for significant upheaval in the False Claims Act enforcement space. But are we really about to see that upheaval? Is this just an outlier one off case that won't gain traction at the Court of Appeals level?
00;01;14;28 - 00;01;36;10
Jonathan Porter
And while we figure out the appeals of this Florida federal court ruling, what should those under federal investigation do? How does this ruling change things right now? So we're convening this podcast to answer those questions. And lucky for you listeners, you don't have to rely on me for those answers. You get answers from two of the best, two of my favorites in the False Claims Act world.
00;01;36;19 - 00;02;02;24
Jonathan Porter
Jody Rudman and Lorinda Holloway. So long time listeners will recognize them both from our from past episodes. Jody from our very first episode where we talked about whistleblowers and Lorinda from our episode about FCA settlement mechanics and strategies. And so Jody and Lorinda, both from our Austin, Texas office, about veteran government investigations, lawyers and FCA litigators and know this issue really, really well.
00;02;02;24 - 00;02;14;29
Jonathan Porter
And I'm excited that you get to hear about this new case from them. So Jody and Lorinda, thanks for coming on the podcast and telling our listeners about this new court ruling that declared qui tams unconstitutional.
00;02;16;00 - 00;02;36;29
Jody Rudman
Jonathan, thank you so much for having us. It's a pleasure to be back. I'm Jody and I'll chime in here in just a few minutes. But I want to give the floor first to Lorinda to take on kind of what happened in Florida, as we're all trying to parse through this exciting and really interesting issue. Thank you.
Lorinda Holloway
Yeah, this is Lorinda. And Jonathan,
00;02;36;29 - 00;02;59;21
Lorinda Holloway
Jody, delighted to be joining both of you on today's podcast. So, Jonathan, like you said, this is kind of a breaking news moment in the False Claims Act world because Judge Mizelle out of the Middle District of Florida, declared that the qui tam provision of the False Claims Act is unconstitutional under the appointments clause. Now, as you said, this is a ruling.
00;02;59;21 - 00;03;22;20
Lorinda Holloway
It's the first of its kind, but it's definitely not the first time that this issue has come up and has been battled, so to speak. Now we're going to get into, I think, some really fascinating, like back stories of the justices and judges that have been talking about this constitutionality issue for some time. But let's just real quick what the audience know, what this case was really about.
00;03;22;20 - 00;03;49;01
Lorinda Holloway
It was filed by Dr. Clarissa Zafirov, and she was employed by a health care provider that she says was submitting false diagnosis data in order to trump up the payments they were owed by treating Medicare Advantage or Parsi beneficiaries. The government investigated, as they're required to do under the False Claims Act, but they declined to intervene in the case, and that's not unusual, as you said.
00;03;49;02 - 00;04;20;11
Lorinda Holloway
Most false claims that cases are relator driven, right? So that wasn't unusual. The relator went forward on her own. The case had been going for on for about five years, and the relator had even moved to Canada at that point. Not sure what the precise trigger was, but the defendant filed a motion for judgment on the pleadings, saying the key provision that the provisions that allow a private citizen to file a claim under the False Claims Act is unconstitutional.
00;04;20;11 - 00;04;45;04
Lorinda Holloway
And the defense actually threw out like kind of several options to the judge. They said we think it's unconstitutional under the take care clause of Article II, under the vesting clause and under the appointments clause of giving Judge Mizelle a number of options, if you will. And Judge Mizelle picked up and leaned hard into the idea that the key provision is unconstitutional under the appointments clause.
00;04;45;14 - 00;05;13;20
Lorinda Holloway
So when Judge Mizelle, in making her decision, you know, she found the key provision is unconstitutional under the appointments clause. Just to remind everybody, even those of us who went to law schools probably haven't reread the Constitution recently. Or maybe you have. But the appointments clause in Article two is what gives the executive branch the power and duty to appoint agency heads, senior government official, federal judges and the like.
00;05;13;20 - 00;05;42;17
Lorinda Holloway
And then there's sort of a cascade of lower level officers, if you will, that can also be appointed through those other higher up government officials. Right. So Judge Mizelle concluded that Arroyo later acts as, quote, an officer, much like a special prosecutor, but her conclusion was essentially a relator is self-appointed, a self-appointed officer of the government and not one properly appointed.
00;05;42;26 - 00;05;51;06
Lorinda Holloway
So in other words, she thought the case can't go forward because you've got somebody acting in a role that they were not appointed for.
00;05;51;20 - 00;06;22;07
Jonathan Porter
Yeah, thanks to the end of that background. That's really helpful. You're absolutely right. So the rough math when I was at DOJ was that DOJ only intervened in about one in five qui tams. So you're absolutely right. Nothing unusual about the government declining. So that's totally normal. I'm curious, though, even in when I was at DOJ, the key times where we had declined, I took seriously my job to monitor the key items and to jump in and speak up on behalf of the United States when there was something interesting going on that I thought was wrong.
00;06;22;08 - 00;06;27;26
Jonathan Porter
So I'm curious. And Jody, I'll throw this to you first. What are the government have to say about this issue, if anything?
00;06;28;10 - 00;06;56;25
Jody Rudman
Yeah, that's a great question. And indeed you're right, even in non intervening cases, the Department of Justice generally does monitor the litigation and has the right to step in on important issues, even to intervene at a late date and even to move to dismiss down the road in a non intervened case. And that was a decision that the Supreme Court took up just a couple of terms ago in the Polanski case, which we will talk about.
00;06;57;08 - 00;07;36;18
Jody Rudman
But in this particular case, when when the constitutional issues were teed up on the defendant's motion for judgment, on the pleadings, the United States filed a 20 page statement of interest arguing these constitutional issues. And they they had a very well-written and scholarly and historically driven 20 page piece. And they are entitled to do that, not only in their monitoring obligations within the structure of the False Claims Act and the custom device, but also under statute in general.
00;07;36;28 - 00;08;11;19
Jody Rudman
And so they jumped in and took a very strong position that, hey, look, this issue, this constitutionality of the key provisions of the False Claims Act issue is already been decided, already been looked at, already been adjudicated in a number of other circuit courts. Those are the appellate courts that sit over the the trial courts in the federal system and indeed by sister trial courts to Judge Mizelle's Middle District of Florida bench.
00;08;12;02 - 00;08;44;05
Jody Rudman
And my understanding, Jonathan, is that in addition to filing that statement of interest in getting involved in the briefing, there was a four hour hearing before Judge Mizelle made the decision and issued her opinion in the Zafirov case and that the United States, the Department of Justice, was involved in that four hour hearing as well. So they were quite actively, as you would have done, I'm sure, your days of the Department of Justice and as you would expect, involved in litigating these issues and the position that they took.
00;08;44;05 - 00;09;06;02
Jody Rudman
And I'll I'll leave some of this discussion to Lorinda as well. But the position that they took was what you would have expected with an examination of what other courts had already said about these issues, because this court in the middle district of Florida, any appeal that comes from it will go to the 11th Circuit Court of Appeals.
00;09;06;16 - 00;09;32;00
Jody Rudman
But other circuit courts, namely the fifth, the sixth, the 10th, the ninth had themselves already considered in some form or fashion the Article II challenge to the key provisions of the False Claims Act. The 11th had not, and so the United States position was largely driven, as one might be expected by the opinions that had been issued in those other circuit courts.
00;09;32;01 - 00;09;50;01
Jody Rudman
But let me let Lorinda to talk about that in a little more depth as well.
Lorinda Holloway
Yeah, I think the government, in filing their statement of interest, as Jody said, made it clear, like, whoa, time out. The bunch of these circuit courts have already looked at this issue. The fifth, the sixth, ninth, 10th, like kind of like a this is not a real deal.
00;09;50;01 - 00;10;13;00
Lorinda Holloway
Right. But they also argued some additional points that I thought were strong and certainly seem solid, like, hey, the relator is literally not the government nor its agent. And they cited Supreme Court authority for that. They said, plus the executive branch, meaning the president, actually has considerable control over the relator. So we're not infringing on any constitutional limits here.
00;10;13;18 - 00;10;35;08
Lorinda Holloway
The government also pointed to the fact that the relator is literally not, quote, an officer appointed by the president. So the appointments clause is just not an issue, almost like a a pretty simple, straightforward argument which a number of other courts have relied on. And so the federal government made their position very clear. They made it pretty concisely.
00;10;35;16 - 00;10;42;09
Lorinda Holloway
It was thorough, but nothing, I guess, creative or different than had been argued before yet.
00;10;42;09 - 00;11;09;29
Jonathan Porter
So to me, qui tams are so unique because there are so many more parties that are interested in qui tams than in normal litigation. Relators and the government are on the same side of the sea. They don't always have the same agenda or interests and so it is really interesting. Sometimes you see DOJ get on actually be opposite to the relator where they they join the defense say, look, we don't think this is something that should go forward.
00;11;09;29 - 00;11;27;12
Jonathan Porter
Affirmative dismissals are a big thing right now in the false claims world. But it's interesting here that DOJ chimed in and said, no, no, we like temps. We want these kids to continue to be a thing. But what's interesting to me and Jody, I'll throw this to you. You know, keep tabs. They've been around for a long time.
00;11;27;12 - 00;11;35;03
Jonathan Porter
Right? Why exactly is this happening now? This seems like something that that could have been adjudicated a while ago. So what's going on? Why is this happening now?
00;11;35;25 - 00;12;09;18
Jody Rudman
What a great question. There is some really interesting historical seedlings. And I think what leads to this current opinion and you're right, the False Claims Act has been around since the Civil War in the mid eighties. There were some amendments that really started to amp up. Relator involved in in False Claims Act litigation that listeners may or may not know that Relator's stand to receive a share of the of the bounty in a false claims that case.
00;12;09;18 - 00;12;39;13
Jody Rudman
And so there are some financial incentives that can sometimes drive Relators in pursuing and in sort of staying in there for the long haul, the why now, I think, Jonathan, largely driven by some fascinating footnotes and concurrences and whispers that have been heard and seen and felt in more recent litigation. And for that, let me take you back.
00;12;39;26 - 00;13;16;19
Jody Rudman
Just over two decades in the year 2000, I think it was, the Supreme Court issued an opinion in a case called Stevens, which addressed whether Relators had standing to pursue false claims act litigation on their own and in standing. You've heard us talk in this podcast a few minutes ago that the issue that we're talking about today in this particular, ah, Middle District of Florida decision was an issue that was decided under Article II of the United States Constitution.
00;13;16;25 - 00;13;49;29
Jody Rudman
The standing issue was actually an Article three issue. And in the Stevens case in the year 2000, this Article three issue was pretty handily put to bed. It is now the law, at least as articulated by the Supreme Court in the year 2000, that Relators do indeed have Article three standing. But there is a tiny seed that was planted in the Stevens case by Justice Scalia on the United States Supreme Court at that time.
00;13;50;10 - 00;14;41;17
Jody Rudman
And Justice Scalia made clear that he and that the court were basically essentially leaving open or sidestep being or very gingerly not opining on the article two issues, not opining on the constitutionality of the content provisions under the Article two take care clause and in appointments clauses, that little seed was then sown about two decades later. We talked a moment ago about the Polanski decision, which is a case in 2023, in which the United States Supreme Court visited the issue of the government's power and ability to come in and dismiss a key case when they had not already intervened.
00;14;42;04 - 00;15;18;11
Jody Rudman
Well, in the Polanski decision, Justice Thomas himself dissented from the Polanski majority. And in his dissenting opinion, Justice Thomas wrote about whether there might, in fact be room and availability for an Article two Constitutionality Challenge in the right case of the teaching provisions of the False Claims Act. So, in other words, he was sowing the seed that Justice Scalia had planted almost two decades earlier in the Stevens case.
00;15;18;11 - 00;15;49;02
Jody Rudman
And Justice Thomas was not alone in expressing that sentiment to other justices on the U.S. Supreme Court in 2023 who are still on the court now. And that's Justice Kavanaugh. And Justice Barrett concurred with that part of Justice Thomas's dissenting opinion. In other words, they expressed their agreement that in the appropriate case, the United States Supreme Court should really take up and consider this Article two constitutionality challenge.
00;15;49;20 - 00;16;10;23
Jody Rudman
Well, it so happens that Judge Mizelle, the author of the Middle District of Florida Decision, had been a law clerk for Justice Thomas. Not at the time that he wrote Polanski, as she was already on the on the middle district of Florida bench of that time. But she's obviously quite a brilliant jurist and had the opportunity to clerked for Justice Thomas.
00;16;11;07 - 00;16;39;18
Jody Rudman
And so it's interesting to see that thread or that seed to continue the analogy kind of now being harvested by none other than Justice. Thomas's former law clerk is now on the bench. So you start with Sylvia in the year 2000, you continue with Justice Thomas concurred with by Barrett and Kavanaugh in 2023. And now you see Judge Mizelle harvesting that seed or taking up that mantel.
00;16;39;29 - 00;17;09;14
Jody Rudman
So I think now, Jonathan, now is the time, the composition in of many of the courts that have already decided these issues have themselves changed. The Supreme Court has indicated in the last term that at least three justices are welcoming to at least considering this position. And then you have, of course, judgments out of Justice Thomas, former law clerk, now on the bench, who is, you know, taking up this mantle.
00;17;09;19 - 00;17;34;10
Jody Rudman
I think that's why we're seeing this. Right. One of the courts that kind of foreclose closed this argument in the past was the Fifth Circuit. We mentioned that a little bit earlier. And I think there might be some room even for the Fifth Circuit to reconsider its own decision that was issued many years ago. And I think there may be room there for for the entire Fifth Circuit to reconsider that.
00;17;34;15 - 00;17;51;12
Jody Rudman
Now that it's been almost well over two decades and the composition of the circuit has changed as well. So my point to you is this is a great opportunity for the dynamic fluctuate ation of this aspect of the law to really come under reconsideration.
00;17;51;28 - 00;18;13;18
Jonathan Porter
Got it. Jody, thank you. Yeah, I think that history makes sense. The thing that some people don't realize is that constitutional arguments sometimes take a long time. These are not things that usually happen overnight. I know above the law, which is a legal practice website that I find very entertaining for others. So they sort of bashed this opinion saying this has been around 160 years.
00;18;13;18 - 00;18;32;04
Jonathan Porter
I mean, how dare you, Judge, come in and say that 160 years worth of other judges were wrong? But the key provision actually isn't that old. I think it was added in the eighties. And sometimes these things take time for people to say, wait a second, there's an article to argument that no one's really thought about before. So these things do take time.
00;18;32;04 - 00;18;51;06
Jonathan Porter
I don't think this is and it makes sense. Jody, the way you framed it, where it's been brewing for a while and it's just people are making the argument there are more receptive judges now. So, Lorinda, now I'm curious. Tell our listeners a little bit about what happens next. This judge in Florida doesn't control the entire United States.
00;18;51;09 - 00;19;12;16
Jonathan Porter
She just controls her one case. So what happens from here is you think there'll be an appeal? And Jodie was just telling us about the three justices at the Supreme Court. How might this case reach those three justices in the Supreme Court? And obviously, they need more than those three. So, Lorinda, prognosticate for us what what happens next with this case in this issue?
00;19;13;02 - 00;19;39;02
Lorinda Holloway
Sure. I think if we're looking at the sort of crystal ball, chances are that the relator in this new decision will appeal. As Judy said to the 11th Circuit, Florida sits in the 11th Circuit, along with Georgia and Alabama, the 11th Circuit. Right now. I think if you're looking just at the the judges on that bench and which administrations they were appointed within, and if you use just that as a barometer, it's the slightly conservative court.
00;19;40;00 - 00;20;01;27
Lorinda Holloway
You know, it's always possible that the court would reverse Judge Mizelle's decision and say, no, no, no, no, look, this has been visited and we think it's still constitutional, but that's possible. I'm looking at that crystal ball. I'm going to say, you they might affirm. Right. And if they affirm, then you've got to just kind of continue the seed and the planting analogy.
00;20;02;01 - 00;20;26;00
Lorinda Holloway
Suppose you've got like a full crop over here of decisions the 10th, the ninth, the fifth, the sixth circuits already having visited this issue and saying, no, no, the key provision is constitutional under the appointments clause versus this one plant that now Judge Mizelle has put out in the sunlight and put out there, that if the 11th Circuit affirms here, then you've got a real circuit split.
00;20;26;09 - 00;20;57;27
Lorinda Holloway
And that would make things right for the Supreme Court to pluck, for take up the issue. And as Jody already said, we already know because of Justice Thomas's dissent and the Polansky decision and Kavanaugh and Barrett concurring with the majority, but specifically calling out, hey, we agree with Justice Thomas that it seems like we ought to really look at this article to appointments clause constitutional question in the right case, we ought to really take a look at that.
00;20;58;05 - 00;21;23;16
Lorinda Holloway
That already tells you you've got three lined up that are open to supporting what Judge Mizelle has written. Right. So then we need another justice, and I'll call upon the two of you to look further into your crystal balls and say, you know, what other justice might that be? How much traction might this get at the Supreme Court?
00;21;23;22 - 00;21;43;09
Jonathan Porter
Thanks, Lorinda. And yes, so I think it's really interesting. First of all, I think the relator's bar, they're very well-organized. I'm sure they're working out an appeal right now and they're putting their smartest people on it, and they've got really smart people on their side, too. So I'm positive they're working on an appeal right now. You know, the 11th Circuit in it's my home circuit.
00;21;43;09 - 00;22;12;00
Jonathan Porter
I know the 11th Circuit pretty well. I'm going to be curious to see what they do with this, because while in general, the 11th Circuit does have more of a conservative lead, it's not necessarily a libertarian lane. You've got a a number of conservative judges on the 11th Circuit that are more law and order than libertarian minded. And so I'm going to be really because I don't know that this is something that a law like a traditional law and order judge is going to really grab on to.
00;22;12;08 - 00;22;28;28
Jonathan Porter
So I'm going to be really interested to see what the 11th Circuit does. I think this could be a lot more divisive than people think. So me personally, I'm really excited to see what the 11th Circuit does with this. But I also think this is going to take a little bit of time before we get there. You know, the appellate process takes forever.
00;22;29;14 - 00;22;51;24
Jonathan Porter
And so people who are hoping for some sort of immediate relief in these cases, you got to understand, it's going to take the 11th Circuit some time to hear arguments here, make their decision, see whether the Supreme Court grants cert, and then what happens from there. To me, there's a lot of uncertainty. So, Jody, while I'd love to hear your your thoughts on, you know, what the Supreme Court might do with this when it gets there.
00;22;51;24 - 00;23;00;08
Jonathan Porter
But also, Jody, tell our listeners, given this ruling and the time that it takes to go through appeals, what should those defending qui tams do right now?
00;23;00;25 - 00;23;37;14
Jody Rudman
Right. Such a great question. And, you know, we can offer, obviously, you know, legal advice here on the podcast, but I think it is absolutely critical to keep an eye on this issue. Yes, it will take a while to percolate, but percolating it is doing even as we speak. And whether litigants are in ongoing qui tam cases or, you know, at the moment dealing with investigations where there is at least knowledge or a suspicion that there may be a relator.
00;23;37;22 - 00;24;08;25
Jody Rudman
It is very smart to be consulting with experienced, knowledgeable source claims act lawyers who can assist in preserving the issues and guiding the arguments so that they are litigated at the right time and with the right procedural devices. In the Zafirov case, the one we're talking about, the procedural posture of the case was a motion for judgment on the pleadings that may or may not be is the way to do this.
00;24;08;25 - 00;24;33;21
Jody Rudman
Right. There may be other procedural devices that are available even earlier than that. As Loretta mentioned, this was five years hence when when these defendants were finally in a position to make these arguments. But I think it's really smart to be on top of this issue from the get go and always be considering when or if it's appropriate to lay down this issue and get a ruling on it, get it preserved.
00;24;34;01 - 00;24;52;16
Jonathan Porter
Yeah, that's absolutely right, Jody. You know, part of the reason why I enjoy practicing at Hush Blackwell is because I've got you to help me with these big issues so that we can make sure that our clients are in a good spot so that we're bringing these arguments when they need to be brought. And so, Jody and Lorinda, this case is huge.
00;24;52;16 - 00;25;08;10
Jonathan Porter
This is going to continue to play out. So I'm grateful that you both were willing to come on the podcast, tell our listeners about this case and what they can do. So thank you both for coming on the podcast. I would invite our listeners continue to listen to us. This issue is not going away. We're going to continue to cover it.
00;25;08;10 - 00;25;26;09
Jonathan Porter
So however you're listening to this podcast now is probably got a little subscribed button wherever you're listening to it. So go ahead and hit that now so that you can continue to hear new episodes of false claims that insights as they come out. We're going to continue to cover this and other big new issues in the False Claims Act.
00;25;26;09 - 00;25;39;00
Jonathan Porter
And so please subscribe like tell your friends about us so that you can continue to stay up to speed on this really interesting area of the law. But I want to thank everyone for listening today and we will see you next time.
00;25;39;14 - 00;25;48;04
Lorinda Holloway and Jody Rudman
Thanks so much, Jonathan.
Thank you so much for having us.