Published Thursday, February 27, 2025
On February 21, 2025, the US Supreme Court issued a unanimous decision in Wisconsin Bell, Inc. v. United States ex rel. Heath, holding that telecommunications providers participating in the federal Education Rate (E-Rate) program, which supports school and library connectivity, can be held liable under the FCA for excess payouts. Notably, Justice Kavanaugh's concurrence reiterated that the FCA’s qui tam provisions present "substantial constitutional questions under Article II." While these issues were not directly before the Court in this case, Justice Kavanaugh emphasized that "in an appropriate case, the Court should consider the competing arguments on the Article II issue."
This is not the first time these constitutional concerns have been raised. In 2023, Justices Thomas, Kavanaugh, and Barrett questioned the constitutionality of the FCA’s qui tam provision in United States ex rel. Polansky v. Executive Health Resources, Inc. In that case, Justice Thomas suggested that allowing private whistleblowers to wield executive authority on behalf of the United States might infringe on the President's exclusive constitutional powers under Article II.
Takeaways for FCA Defendants Justice Kavanaugh’s concurrence in Wisconsin Bell highlights a growing possibility that the Supreme Court may eventually declare the qui tam provision of the FCA unconstitutional. Below are key strategic considerations for FCA defendants:
Preserving Constitutional Challenges: Defendants in qui tam actions should consider challenging—or at least preserving—arguments against the constitutionality of the FCA’s qui tam provision, particularly when the government declines to intervene. In 2024, qui tam actions significantly outnumbered government-initiated FCA cases (979 to 423), setting a new record.
Recent Developments: In October 2024, Judge Kathryn Kimball Mizelle of the Middle District of Florida issued a groundbreaking decision in United States ex rel. Zafirov v. Florida Medical Associates LLC, dismissing a declined qui tam action on constitutional grounds. This decision is currently under appeal at the Eleventh Circuit. If upheld, it could create a circuit split and pave the way for Supreme Court review.
Circuit Disparities: While several circuits (e.g., Fifth, Sixth, Ninth, and Tenth) have rejected Article II challenges to the FCA’s qui tam provision, others (e.g., First, Second, Third, Fourth, Seventh, Eighth, Eleventh, and D.C.) have yet to address this issue. Defendants should preserve constitutional arguments regardless of jurisdiction.
Timing of Challenges: Defendants should carefully consider when to raise constitutional challenges. For example, in Zafirov, defendants successfully raised their challenge during a motion for judgment on the pleadings while discovery was ongoing. However, some courts have ruled that such challenges must be raised earlier as affirmative defenses to avoid forfeiture.
Government's Stance: The US Department of Justice appears committed to defending the constitutionality of the FCA’s qui tam provision. During her confirmation hearing, Attorney General Pam Bondi affirmed her intention to uphold whistleblower protections under the FCA and emphasized its importance for recovering funds for taxpayers.
This article is published by Hill & Barlow as a news reporting service for clients and other interested parties. The information contained herein should not be construed as legal advice. For further analysis or explanation of this subject matter, please contact your regular Hill & Barlow attorney or advisor.
