United States ex rel. Zafirov v. Fla. Med. Assocs., LLC

• Court: U.S. District Court — Middle District of Florida
• Writing for the Court: Kathryn Kimball Mizelle, United States District Judge
• Citation: United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F.Supp.3d 1293 (M.D. Fla. 2024)
• Docket Number: Case No: 8:19-cv-01236-KKM-SPF
• Decision Date: 30 September 2024
• Parties: UNITED STATES of America EX REL. Clarissa ZAFIROV, Relator/Plaintiff, v. FLORIDA MEDICAL ASSOCIATES, LLC, et al., Defendants.
• topic: Administrative Law,Constitutional Law,Civil Procedure

751 F.Supp.3d 1293

UNITED STATES of America EX REL. Clarissa ZAFIROV, Relator/Plaintiff, v. FLORIDA MEDICAL ASSOCIATES, LLC, et al., Defendants.

Case No: 8:19-cv-01236-KKM-SPF

United States District Court, M.D. Florida, Tampa Division

Signed September 30, 2024

Frederick M. Morgan Jr., Pro Hac Vice, Jillian Levy Estes, Morgan Verkamp, LLC, Blue Ash, OH, Kenneth J. Nolan, Marcella Auerbach, Nolan & Auerbach, PA, Fort Lauderdale, FL, Adam T. Rabin, Havan M. Clark, Rabin Kammerer Johnson, P.A., West Palm Beach, FL, Anne Hayes Hartman, Chandra Napora, Pro Hac Vice, Jennifer M. Verkamp, Pro Hac Vice, Jonathan M. Lischak, Pro Hac Vice, Morgan Verkamp LLC, Cincinnati, OH, for Relator/Plaintiff.

Arthur Lee Bentley, III, Giovanni P. Giarratana, Kyle Robisch, Bradley Arant Boult Cummings LLP, Tampa, FL, Jason Paul Mehta, Joseph Warren Swanson, Lauren Lisette Valiente, Michael P. Matthews, Natalie Adams, Samantha Marie Gerencir, Foley & Lardner LLP, Tampa, FL, Latour Rey Lafferty, Gunster, Yoakley & Stewart, P.A., Tampa, FL, Jessica Elizabeth Joseph, Foley & Lardner, LLP, Boston, MA, Matthew D. Krueger, Foley & Lardner LLP, Milwaukee, WI, Parth Y. Patel, Pro Hac Vice, Benesch, Friedlander, Coplan & Aronoff LLP, Cleveland, OH, Priyanka Ghosh-Murthy, Jacksonville, FL, for Defendant Florida Medical Associates, LLC.

Arthur Lee Bentley III, Giovanni P. Giarratana, Kyle Robisch, Bradley Arant Boult Cummings LLP, Tampa, FL, Jason Paul Mehta, Joseph Warren Swanson, Lauren Lisette Valiente, Michael P. Matthews, Natalie Adams, Samantha Marie Gerencir, Foley & Lardner LLP, Tampa, FL, Jessica Elizabeth Joseph, Foley & Lardner, LLP, Boston, MA, Matthew D. Krueger, Foley & Lardner LLP, Milwaukee, WI, Parth Y. Patel, Pro Hac Vice, Benesch, Friedlander, Coplan & Aronoff LLP, Cleveland, OH, Priyanka Ghosh-Murthy, Jacksonville, FL, for Defendants Physician Partners, LLC, Anion Technologies, LLC.

Benjamin D. Singer, Pro Hac Vice, Amanda M. Santella, Pro Hac Vice, Kelly A. McDonnell, Pro Hac Vice, William T. Buffaloe, Pro Hac Vice, O'Melveny & Myers LLP, Washington, DC, David M. Deaton, Pro Hac Vice, O'Melveny & Myers LLP, Newport Beach, CA, Elizabeth M. Bock, Pro Hac Vice, Elizabeth A. Arias, O'Melveny & Myers, LP, Los Angeles, CA, Ginger Barry Boyd, Nelson Mullins Riley & Scarborough LLP, Tallahassee, FL, Scott P. Drake, Pro Hac Vice, O'Melveny & Myers LLP, Dallas, TX, Catherine Nagle, Pro Hac Vice, O'Melveny & Myers LLP, New York, NY, for Defendant Freedom Health, Inc.

Benjamin D. Singer, Pro Hac Vice, Amanda M. Santella, Pro Hac Vice, Kelly A. McDonnell, Pro Hac Vice, O'Melveny & Myers LLP, Washington, DC, David M. Deaton, Pro Hac Vice, O'Melveny & Myers LLP, Newport Beach, CA, Elizabeth M. Bock, Pro Hac Vice, Elizabeth A. Arias, O'Melveny & Myers LLP, Los Angeles, CA, Ginger Barry Boyd, Nelson Mullins Riley & Scarborough LLP, Tallahassee, FL, Scott P. Drake, Pro Hac Vice, O'Melveny & Myers LLP, Dallas, TX, Catherine Nagle, Pro Hac Vice, O'Melveny & Myers LLP, New York, NY, for Defendant Optimum Healthcare, Inc.

Jonathan Kroner, Jonathan Kroner Law Office, Hollywood, FL, Steven F. Grover, Steven F. Grover PA, Fort Lauderdale, FL, Jacklyn DeMar, The Anti-Fraud Coalition, Washington, DC, Tejinder Singh, Pro Hac Vice, Sparacino PLLC, Washington, DC, for Amicus Anti-Fraud Coalition.

ORDER

Kathryn Kimball Mizelle, United States District Judge

For five years, Clarissa Zafirov has prosecuted various corporate entities on behalf of the United States, pursuing treble damages and other daunting monetary penalties for alleged harms to the public fisc. Zafirov has determined which defendants to sue, which theories to raise, which motions to file, and which evidence to obtain. If the action proceeds to an appeal, Zafirov will decide which arguments to preserve, further binding the federal government. Yet no one—not the President, not a department head, and not a court of law—appointed Zafirov to the office of relator. Instead, relying on an idiosyncratic provision of the False Claims Act, Zafirov appointed herself. This she may not do.

"Under our Constitution, the 'executive Power'—all of it—is 'vested in a President.' " Seila Law LLC v. CFPB, 591 U.S. 197, 203, 140 S.Ct. 2183, 207 L.Ed.2d 494 (2020) (quoting U.S. CONST. art. II, § 1, cl. 1). Central to that power is the "exclusive authority and absolute discretion" to determine who to investigate and which charges to prosecute. United States v. Nixon, 418 U.S. 683, 693, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974). Likewise, "the power to seek daunting monetary penalties against private parties on behalf of the United States in federal court" is "a quintessentially executive power." Seila Law, 591 U.S. at 219, 140 S.Ct. 2183.

"[T]he Framers expected that the President would rely on subordinate officers for assistance" in discharging his duties. Id. at 203-04, 140 S.Ct. 2183. Under Supreme Court precedent, anyone who "exercise[s] significant authority pursuant to the laws of the United States" and who occupies a "continuing position established by law" qualifies as an officer. Lucia v. SEC, 585 U.S. 237, 245, 138 S.Ct. 2044, 201 L.Ed.2d 464 (2018) (quotations omitted). To ensure accountability in the Executive Branch, the Constitution requires "Officers of the United States" to be appointed by "the President alone, in the Courts of Law, or in the Heads of Departments." U.S. CONST. art. II, § 2, cl.2.

The defendants correctly argue that Zafirov exercises significant authority, indeed core executive power, under the continuing position of relator but lacks proper appointment under the Constitution. As a result, the case must be dismissed.

I. BACKGROUND

A. The False Claims Act

The False Claims Act (FCA) proscribes fraudulent claims for payment from the United States and the withholding of payments owed to the United States. 31 U.S.C. § 3729(a)(1)(A)-(G), (b)(2)(A)(ii), (b)(3). Those prohibitions sweep broadly. For example, a recipient of federal funds is liable whenever it knowingly misrepresents compliance with a "statutory, regulatory, or contractual requirement" when the representation is "material to the Government's payment decision." Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 192, 136 S.Ct. 1989, 195 L.Ed.2d 348 (2016). A physician is liable when he knowingly certifies to the government, in an attempt to obtain reimbursement, that a procedure is 'reasonable and necessary' " if "the procedure was not reasonable and necessary under the government's definition of the phrase." United States ex rel. Polukoff v. St. Mark's Hosp., 895 F.3d 730, 742-43 (10th Cir. 2018). And a manufacturer is liable who "knowingly supplies nonconforming goods to the government, based on a belief that the nonconforming goods are just as good as the goods specified in the contract." United States ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296, 304 (6th Cir. 1998).

The complexity of the regulations and contractual requirements in the fields where FCA litigation often occurs—such as healthcare, defense spending, or government contracting—frequently render the legal obligations of defendants "subject to multiple interpretations." United States v. AseraCare, Inc., 938 F.3d 1278, 1299 (11th Cir. 2019). Of course, FCA litigation generates considerable factual disputes about the materiality of representations and actual damages suffered by the government. See, e.g., United States ex rel. Heath v. Wis. Bell, Inc., 92 F.4th 654, 664-65 (7th Cir. 2024) (concluding that a genuine issue of fact existed as to whether the "alleged falsity of the [defendant's] claims was material to the government's payment decisions"). When found liable, defendants face "significant penalties" for FCA violations: treble damages plus fines up to almost $28,000 for each infraction. Universal Health Servs., 579 U.S. at 180, 136 S.Ct. 1989; 31 U.S.C. § 3729(a)(1); 28 C.F.R. § 85.5(a), (d) (2024).

As one would expect, the FCA empowers the United States to prosecute offenders. See 31 U.S.C. § 3730(a). More unusually, the statute also entitles any "person" (however broadly that term extends, presumably including a foreign national or any natural person) to enforce the statute by filing a lawsuit in the federal government's name. Id. § 3730(b)(1). If that person, known as a "relator," prevails, she may collect an "award" of up to thirty percent of the proceeds of the action. Id. § 3730(d). This procedural device, known as a qui tam provision, encourages litigation—so much so that private relators bring the majority of FCA actions. See U.S. Dep't of Just., Fiscal Year 2023 False Claims Act Statistics (2023 FCA Stats) at 2 (Feb. 22, 2024) (showing 712 new FCA qui tam matters in fiscal year 2023, compared to 500 outside the qui tam process), https://perma.cc/D2HN-SYE8.

The FCA allows a relator not only to direct litigation, but also to bind the federal government without direct accountability to anyone in the Executive Branch. A relator need not consult with the federal government before filing suit, nor does she receive a commission or swear an oath of loyalty to the United States. Instead, a relator enjoys unfettered discretion to decide whom to investigate, whom to charge in the complaint, which claims to pursue, and which legal theories to employ.

Nor does a relator's discretion stop at final judgment. A relator determines whether to appeal and which arguments to preserve, thereby shaping the broader legal landscape for the federal government. In that way, a relator acts with greater independence than a Senate-confirmed United States Attorney or Assistant Attorney General, who must obtain the approval of the Solicitor General to appeal. See U.S. Dep't of Just., Just. Manual § 2-2.121 (2024) ("All appeals to the lower appellate courts in cases handled by divisions of the Department and United States Attorneys and all petitions for certiorari and direct appeals to the Supreme Court must be authorized by the Solicitor General."),...