Constitutionality of the Qui Tarn Provisions of the False Claims Act, 89-26

Decision Date18 July 1989
Docket Number89-26
CourtOpinions of the Office of Legal Counsel of the Department of Justice
PartiesConstitutionality of the Qui Tarn Provisions of the False Claims Act
WILLIAM P. BARR Assistant Attorney General Office of Legal Counsel
Constitutionality of the Qui Tarn Provisions of the False Claims Act

Qui tam suits brought by private parties to enforce the claims of the United States violate the Appointments Clause of the Constitution because qui tam relators are "Officers of the Umted States" but are not appointed in accordance with the requirements of the Appointments Clause.

Private qui tam actions violate the doctrine of Article III standing because the relator has suffered no personal "injury in fact."

The qui tam provisions of the False Claims Act violate the separation of powers doctrine because they impermissibly infringe on two aspects of the President's authority to execute the laws the discretion whether to prosecute a claim and the authority to control the conduct of litigation brought to enforce the Government's interests.

Given qui tarn's clear conflict with constitutional principles any argument to sustain the qui tam provisions based upon historical practice must fail.

A. The Issue

The issue presented here is whether the so-called "qui tam" provisions of the False Claims Act, 31 U.S.C. §§ 3729-3733 ("Act"), are constitutional. This may well be the most important separation of powers question you will have to address as Attorney General.

In these qui tam provisions, Congress purports to authorize any person to prosecute — on behalf of the United States and in the name of the United States — a civil fraud for treble damages and penalties against any person who allegedly makes a false claim to the U.S. government. Unlike normal citizen suits, the qui tam plaintiff — or so-called "relator" — is [ 208] empowered to sue, on the government's behalf, even if he has not sustained any personal injury as a result of the wrongdoer's alleged misconduct. As a bounty for prosecuting the fraud, the relator receives up to thirty percent of any damages and penalties recovered, with the balance paid into the U.S. Treasury. The relator is empowered to prosecute the government's claim even when the Attorney General has determined that there is no valid claim or that pursuing the suit is not in the interests of the United States.

Through qui tarn, Congress has attempted to create universal standing to prosecute purely public offenses. These qui tarn suits pose a devastating threat to the Executive's constitutional authority and to the doctrine of separation of powers. If qui tarn suits are upheld, it would mean Congress will have carte blanche to divest the executive branch of its constitutional authority to enforce the laws and vest that authority in its own corps of private bounty hunters. Simply by attaching a penalty to the violation of any law and by offering a bounty to any person who sues, Congress effectively could "privatize" all civil law enforcement. Indeed, through this device, Congress has authorized each of its own members (as any "person") to enforce the laws directly.

In several qui tarn suits currently pending in federal district court, defendant contractors have moved to dismiss, contending that the qui tarn mechanism is unconstitutional. Several courts have asked the Department of Justice to express a position. The Office of Legal Counsel, the Civil Division, and the former Office of Legal Policy all agree that the qui tarn provisions in the False Claims Act are unconstitutional. We believe they violate the Appointments Clause, infringe on the President's core Article II authority to execute the law, and violate Article III standing doctrine. The Civil Division would like to enter an appropriate case and, either as amicus or by intervention, present the executive branch's arguments against the constitutionality of qui tarn. The Solicitor General argues that we should intervene in district court to support the constitutionality of qui tarn.

B. Background

The use of qui tarn suits arose in fourteenth century England as an aid to government's primitive law enforcement capabilities. These statutes authorized private "informers" to bring criminal prosecutions for violation of certain penal laws. Upon conviction of the wrongdoer, the private prosecutor was given a share of the penalty as a reward. While some statutes permitted prosecution only by a person who had suffered injury, other statutes authorized "any person, " regardless of injury, to prosecute a wrongdoer in the name of the sovereign for violation of a penal law. Initially, these informer actions were brought by criminal indictment or information, but eventually informers could opt to bring their suits as [ 209] either a criminal or civil action. This experiment with private law enforcement had an unhappy history of abuse. Qui tarn suits fell into disfavor and, from the sixteenth century forward, their use was progressively curtailed.

In the United States, during the emergency of the Civil War, Congress resorted to this archaic device in response to widespread contractor fraud. The False Claims Act of 1863, 12 Stat. 696, authorized any person to prosecute, in the name of the United States, a civil action against a contractor for alleged fraud against the United States. As a reward, the relator received a share of any recovery. After the Civil War, this qui tarn statute fell into relative desuetude. By 1986, except for a flurry of activity during World War II, it had become an anachronism.

In 1986, Congress, dissatisfied with the way the executive branch was enforcing government procurement laws, sought to breathe new life into this dormant device. To stimulate private enforcement suits, Congress amended the False Claims Act to provide for treble damages and penalties of up to $10, 000 for each false claim, and to provide for a bounty to the relator of up to thirty percent of any recovery (the "1986 Amendments")- The congressional proponents of these amendments made no pretense about the fact that they distrusted the executive's willingness or ability to enforce the law properly, and they stated that their purpose was to "deputize" private citizens to ensure effective law enforcement.

In the two years since enactment of the 1986 Amendments, there has been a massive upsurge in qui tarn actions — over 150 suits have been filed. These actions have disrupted the civil and criminal enforcement activities of the Department. See Memorandum for the Solicitor General, from Stuart E. Schiffer, Acting Assistant Attorney General, Civil Division (June 15, 1989). They have also undermined the executive's ability to administer complex procurement contracts and, in some cases, have caused serious national security concerns. The 1986 Amendments have also spawned the formation of full-time "bounty hunting" groups — ersatz departments of justice — that go about prosecuting civil fraud actions in the name of the United States.

C. Qui Tarn's Unconstitutionality

The Office of Legal Counsel believes that the qui tarn provisions of the False Claims Act are patently unconstitutional. In our view, this is not even a close question. Our conclusion rests on three grounds.

First, we believe that private qui tarn actions violate the Appointments Clause of the Constitution. Art. II, § 2, cl. 2. The Supreme Court has repeatedly held that conducting litigation on behalf of the United States to enforce the rights of the United States must be carried out by an executive branch official or other properly appointed government officer. The Constitution thus does not permit Congress to vest governmental law [ 210] enforcement authority in self-selected private parties, who have not been injured and who act from mercenary motives, without commitment to the United States' interests and without accountability.

Second, we believe qui tarn suits violate Article III standing doctrine. The Supreme Court has repeatedly held that under Article III, a plaintiff is ineligible to invoke federal judicial power unless he can demonstrate that he has suffered "injury in fact" as a result of the defendant's allegedly illegal conduct. Qui tarn relators suffer no injury in fact and thus fail to meet this bedrock constitutional requirement. Because Congress may not abrogate this requirement, the False Claims Act's grant of universal standing to any person violates Article III.

Third, we believe that qui tarn actions violate the doctrine of separation of powers. The Supreme Court has consistently ruled that the authority to enforce the laws is a core power vested in the Executive. The False Claims Act effectively strips this power away from the Executive and vests it in private individuals, depriving the Executive of sufficient supervision and control over the exercise of these sovereign powers. The Act thus impermissibly infringes on the President's authority to ensure faithful execution of the laws.

Until now, no federal court has ever considered or addressed the constitutionality of qui tarn actions. Nor, to our knowledge, has any Attorney General ever conceded the constitutionality of the device. Indeed, in 1943, Attorney General Biddle called for its repeal. He contended that it was the duty of the Department of Justice to enforce the laws and that qui tarn suits interfered with that responsibility. During these debates in 1943, a leading Senate proponent of qui tarn complained:

[T]he Congress enacted that statute in 1863. I ask any Senator to name one case, from 1863 until 1942, in which the Attorney General of the United States tried to enforce the statute. From the day the statute went on the statute books to the

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