Appeals Court Upholds Whistleblower Provision in US False Claims Act

A US appeals court on Tuesday overturned a ruling that had threatened a whistleblower provision in the federal False Claims Act, a law that has been used to recover billions of dollars from fraud committed against the government.

 

In a unanimous three-judge ruling, the Atlanta-based 11th US Circuit Court of Appeals said it disagreed with a Florida federal judge’s 2024 decision that the provision improperly allows private citizens to exercise executive branch authority by suing on behalf of the government.

 

The appeals court panel — Circuit Judges Elizabeth Branch and Robert Luck, sitting with District Judge Federico Moreno — said the Civil War-era law’s whistleblower mechanism does not violate the US Constitution because whistleblowers are not federal officers who must be appointed by the President.

 

The judges said their ruling brings the 11th Circuit into line with other appeals courts that have considered similar challenges to the False Claims Act. The case now returns to the trial court for further proceedings.

 

Tejinder Singh, the lawyer who represented the whistleblower in the lawsuit and defended the False Claims Act, declined to comment.

 

Kannon Shanmugam, who represented Florida healthcare providers accused of defrauding the US government and challenged the provision, said the ruling addressed only one part of the defendants’ constitutional challenge. “We’re assessing our options in light of today’s ruling,” he said.

 

The underlying case arose from a lawsuit filed by whistleblower Clarissa Zafirov, who accused the healthcare providers of improperly billing Medicare.

 

The False Claims Act allows private individuals to bring fraud claims on behalf of the United States and share in any recovery, even when the government declines to intervene in a case. The law has helped the government recover billions of dollars from companies accused of fraud.

 

Whistleblowers are entitled to receive between 15% and 25% of the proceeds when the government intervenes in a False Claims Act case and helps to litigate it. When the government does not intervene, the share rises to between 25% and 30%.

 

The appeals court’s ruling vacated a lower court decision by US District Judge Kathryn Mizelle, an appointee of President Donald Trump. Mizelle had ruled that the whistleblower law improperly elevates private individuals who provide information to the status of US government officers.

 

Trump also appointed 11th Circuit judges Branch and Luck. Former President George H.W. Bush appointed Moreno.

 

The US Justice Department had urged the appeals court to uphold the provision, arguing that federal officials retain sufficient control over litigation brought by whistleblowers.

 

The appeal was closely watched by business groups and the plaintiffs’ bar. The US Chamber of Commerce participated in the hearing in support of the medical organisations.

 

The case is Zafirov v. Florida Medical Associates LLC, 11th US Circuit Court of Appeals, No. 24-13581.

 

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