Qui Tam Lawsuits Introduce Uncertainty Over Public Authority

The Bottom Line

• A ruling that the False Claims Act’s qui tam provisions don’t violate the US Constitution marks the latest chapter in a series of challenges to the mechanism’s constitutionality.
• Qui tam lawsuits have soared in recent decades leading to big recoveries of taxpayer funds, but vastly more unsuccessful and protracted cases.
• Qui tam introduces uncertainty around oversight, incentives, and limits of public authority.

For decades, the False Claims Act has been celebrated as one of the federal government’s most effective fraud-fighting tools, helping to recover billions in taxpayer funds. But this mechanism has recently come under scrutiny, with critics questioning whether allowing private individuals to litigate on behalf of the US violates the Constitution.

In an October 2025 ruling in United States ex rel. Heath v. Wisconsin Bell, Judge Lynn Adelman of the US District Court for the Eastern District of Wisconsin reaffirmed the constitutionality of the provision following an earlier opposing ruling from the district court.

This case is just one of several in the last decade exploring the fundamental question of whether the qui tam mechanism is constitutional? In recent years, several courts and justices have suggested the FCA’s qui tam structure may violate Article II of the Constitution, which vests executive power in the president. This is but one of the ways courts today are contemplating how far executive power can be delegated.

FCA Debate’s Origin

The term qui tam comes from a Latin phrase meaning “he who sues on behalf of the King as well as himself.” That dual role—acting both for the government and for personal gain—captures the core tension at the heart of this debate.

Passed during the Civil War, the FCA was meant to stop contractors from defrauding the Union Army by charging for supplies that were either never delivered or were of poor quality. It didn’t just allow the government to seek penalties—it also let private citizens sue on the government’s behalf and rewarded them with half of the recoveries. That incentive quickly led to abuse, prompting Congress in 1943 to vastly reduce relators’ powers and eliminate guaranteed payouts.

After the change, qui tam suits nearly disappeared. Then, in the 1970s and 1980s, a string of defense contracting scandals, and flashy headlines about $640 toilet seats and $436 hammers, reignited concerns about government fraud and brought renewed attention to the FCA.

Congress responded with the 1986 amendments, which essentially shaped the law as we know it today and turned it into one of the most effective fraud-fighting tools the federal government has in its arsenal, giving relators—the whistleblowers bringing the suits—15% to 30% of any recovery and authorizing treble damages against violators.

This reform revived qui tam suits on a massive scale, and its reach has only expanded since as recoveries have soared. Today, most FCA actions focus on health care and contracting fraud (rather than hammers and toilet seats). In 2024 alone, the FCA generated roughly $3 billion for the Department of Justice’s Civil Division, with about $2.4 billion coming from qui tam suits.

The qui tam process itself is straightforward. A relator files a case, the DOJ investigates, and then the agency decides whether to intervene.

According to data covering January 2009 through June 2020, when the DOJ steps in, roughly 90% of cases result in a settlement. When it declines, however, and the relator continues alone, only around 10% of cases result in settlement. Yet the DOJ intervenes in only around 25% of cases, leaving the remaining 75% to move forward without meaningful government backing. This imbalance has fueled criticism that most cases advance with little to no input from the very agency they claim to represent.

Concerns about wasted time and resources eventually led to the leaked 2018 “Granston Memo,” which urged DOJ attorneys to proactively dismiss weak qui tam cases—a practice the US Supreme Court later affirmed in 2023, when it ruled the DOJ can dismiss cases even after initially declining to intervene.

While these efforts aim to streamline enforcement, the reality is that qui tam litigation, like most whistleblower policies, will always invite a mix of strong and weak claims. The best cases yield enormous recoveries, but most unfold with little oversight, leaving private citizens to act as stand-ins for federal prosecutors.

Testing Limits

In 2023, these doubts gained traction in United States ex rel. Polansky v. Executive Health Resources, when the Supreme Court upheld the DOJ’s authority to dismiss qui tam cases even after initially declining to intervene. While the court’s 8–1 decision resolved a procedural question, Justice Clarence Thomas’s dissent went further, questioning the constitutionality of the qui tam provisions.

Justices Brett Kavanaugh and Amy Coney Barrett separately noted that there are “substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.”

Lower courts have since started to test those arguments. In September 2024, Judge Kathryn Mizelle of the US District Court for the Middle District of Florida ruled in United States ex rel. Zafirov v. Florida Medical Associates that qui tam violates Article II, reasoning that when the DOJ declines to intervene, relators effectively make prosecutorial decisions without presidential oversight.

The DOJ chose not to intervene in that case, which involved allegations of Medicare fraud. After the ruling was appealed, the US Court of Appeals for the Eleventh Circuit heard oral argument on Dec. 12, 2025, where the judges asked the question at the heart of the Article II challenge: who is actually in control once DOJ declines. They asked whether relators are effectively in the “driver’s seat,” or whether DOJ’s continuing authority to step in, limit participation, or dismiss the case is enough to satisfy constitutional supervision.

Similar concerns surfaced in United States ex rel. Gentry v. Encompass Health, where the US Court of Appeals for the Fifth Circuit affirmed the dismissal of a whistleblower retaliation claim. In a concurring opinion, Judge James Ho questioned the constitutionality of qui tam, writing that relators “presume to represent the United States government in federal court” even though “they are neither appointed by, nor accountable to, the President.” Although the Fifth Circuit rejected similar arguments in a 2001 decision, Judge Ho urged the court to revisit the issue in a future case—signaling that this debate is far from over.

Against this backdrop, the Wisconsin Bell case stands out as a clear example of the courts reaffirming the legitimacy of qui tam provisions. The case began in 2008, when school district auditor Todd Heath—who reviewed telecom bills for public institutions—accused AT&T Inc.’s Wisconsin Bell subsidiary of overcharging schools and libraries under the FCC’s “lowest corresponding price” rule, part of the federal E-Rate program that subsidizes internet access for public institutions.

The DOJ initially declined to intervene, and Adelman dismissed the case in 2011. The Seventh Circuit revived it in 2014, dismissed it again in 2022, and revived it once more in 2024.

The case then reached the Supreme Court in February 2025, which confirmed that E-Rate subsidies count as government funds under the FCA. While the court’s ruling upheld the subsidies as valid claims, in their concurring opinion, Kavanaugh and Thomas flagged potential Article II concerns, suggesting that the constitutionality of the qui tam mechanism itself could be challenged in the right case.

Following the Supreme Court’s decision, Wisconsin Bell returned to the district court with a new strategy, arguing that the FCA’s qui tam provisions violate the Appointments Clause because relators act as unappointed federal officers. Adelman rejected that claim, finding that “relators lack the necessary authority to be deemed ‘Officers of the United States.’” Instead, their authority depends entirely on government oversight: the DOJ can intervene, limit their participation, or dismiss claims altogether.

Most recently, as the case moves toward trial, Adelman has emphasized that the Supreme Court’s ruling didn’t end the inquiry—it just cleared a threshold issue. In a Dec. 19, 2025 order, he noted that Heath still has not shown that the alleged pricing-rule violations were material to the government’s decision to pay, and that materiality remains an issue for trial. The case is now set for a Jan. 20 trial, with materiality likely to be the central fight.

Looking Ahead

By design, the FCA recognizes that relators pursue both public and private interests. In many ways, this structure is precisely what makes qui tam indispensable. Operating outside traditional bureaucratic constraints, whistleblowers uncover fraud that federal agencies might never detect. Since 1986, relators have helped recover more than $50 billion for taxpayers, allowing the DOJ to extend its enforcement reach far beyond its own staffing limits.

At the same time, the statute also raises real questions about where public enforcement ends and private profit begins. Today, many qui tam cases proceed without government intervention. There is also a growing network of for-profit litigation firms that treat the statute as a revenue stream, chasing payouts more aggressively than serving the public interest.

From my perspective, this administration’s focus on “fraud, waste, and abuse” has caused qui tam to be a bigger part of corporate life than ever before. For companies, the practical takeaway is that FCA exposure often starts outside the DOJ—most likely with a disgruntled or profit-minded employee. That reality makes early decisions matter: effective internal reporting channels, credible internal investigations, and careful documentation can be the difference between a contained issue and years of costly litigation.

Though Adelman’s decision leaves qui tam intact for now, the broader constitutional question remains unresolved. By empowering individuals to act as quasi-prosecutors, the statute formalizes what is, in effect, an outsourcing of federal enforcement—extending the government’s reach while introducing uncertainties around oversight, incentives, and the limits of public authority.

With qui tam cases surging and courts increasingly examining whether the statute aligns with the Constitution, the Supreme Court may soon be forced to decide whether this unique mechanism can survive.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Martin Weinstein is partner in Cadwalader’s global litigation group where he leads global compliance, investigations, and enforcement.

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