This transcript has been auto generated
00;00;00;00 - 00;00;22;25
Jonathan Porter
Welcome to another episode of Husch Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter. One of the most important aspects of the False Claims Act is how it invites whistleblowers to play a really big role in the process. We've talked in past episodes about that whistleblower process, why whistleblowers are incentivized to come forward. How all that whistleblower process works.
00;00;22;25 - 00;00;47;14
Jonathan Porter
We've talked about that before, and that's not totally unusual in the greater justice landscape. There are a lot of government programs to reward people coming forward and bringing information. For example, if you're aware of criminal interests violations, DOJ antitrust Division has a big whistleblower reward program where people can get up to 30% of the recovery if there's a criminal anti-trust conviction.
00;00;47;14 - 00;01;10;05
Jonathan Porter
There are several other programs just like that. But what is unusual in the False Claims Act is that the whistleblowers don't just share in whatever law enforcement recovers from the tip, they can also stand in the shoes of the government and litigate on behalf of the government. Even if the government wants nothing to do with the allegations the whistleblower is making.
00;01;10;07 - 00;01;34;11
Jonathan Porter
And in the grand scheme of things, that's unusual. And that's what we're talking about today on the podcast, qui tams and specifically declined qui tams. Whistleblower complaints the government does not want to be a part of it, but the whistleblowers continue to litigate specifically, whether that conveyance is a core article two power and whether that's okay under the US Constitution.
00;01;34;14 - 00;01;52;24
Jonathan Porter
We're doing this episode on the heels of a critically important oral argument, in an appeal that happened on December 12th in the Zafirov case. So today on the podcast, we're breaking down this issue. We're breaking down the appeal, and we're talking about where qui tams go from here. It's a big issue in the False Claims Act world.
00;01;52;24 - 00;02;17;23
Jonathan Porter
So buckle up. Joining me to talk about declined qui tams is my law partner Jody Rudman. Jody, this is your third time on the podcast now. So I'm sure our listeners know you very well. But briefly, for new listeners, Jody chairs Husch Blackwell's white collar group and manages the firm's Austin, Texas office. Jody is a former federal prosecutor and is super smart on all things False Claims Act and government investigations.
00;02;17;23 - 00;02;27;03
Jonathan Porter
And so I'm thrilled that we get the benefit of her wisdom today on the podcast. And so, Jody, thanks for joining and telling our listeners about this Zafirov appeal.
00;02;27;05 - 00;02;52;08
Jody Rudman
Well, thank you for having me. It's great to be a repeat visitor and it's great to be here, particularly today. As you pointed out, Zafirov was, and I apologize if I am mispronouncing it. I was actually at a conference with Miss Zafirov, lawyer and she told the whole audience how to pronounce Miss Zafirov last name, and I think we're all continuing to get it wrong.
00;02;52;13 - 00;03;25;29
Jody Rudman
So my apologies to Miss Zafirov and anyone who pronounces her name differently. But I'll stick to that just for my own comfort, since that's how I've been saying it all along. But anyway, this is a very important case. This case is, you know, was being argued, before the 11th Circuit Court of Appeals, which is located in Atlanta, and this case emanates out of the Middle District of Florida, which is one of the three states whose federal district court decisions travels up to the 11th Circuit Court of Appeals.
00;03;26;01 - 00;03;54;27
Jody Rudman
But we would be remiss, I think, Jonathan, if we pretended that this case is only important within the 11th Circuit because all eyes across the nation have been on this case and the 11th circuit today and in the lead up to today. And of course, there are other circuits who have expressed an interest in this issue and an interest in considering these same constitutional considerations.
00;03;54;27 - 00;03;58;26
Jody Rudman
So this is a big time and False Claims Act litigation.
00;03;58;26 - 00;04;16;13
Jonathan Porter
Yeah. Big time indeed. And so let's jump right in Jody, with some background, if you could, Jody, why don't you kick us off by reminding our listeners essentially what key terms are and what the core constitutional issue is here? What are we actually talking about when it comes to Zafirov or Zafirov or however we're supposed to pronounce it?
00;04;16;16 - 00;05;00;26
Jody Rudman
Yeah, you got it. So qui tams, of course, are those aspects of False Claims Act cases that are initiated by whistleblower or as the statute and the litigation principles call them, relators. And in those instances, the relator is just a private person without a particularized injury that he or she or it, in the case of an entity, may have suffered, but instead, as you pointed out in your intro comments, stands in the shoes of the government and says, I'm here because I'm aware of what I believe to have been fraudulent conduct by somebody committed against the government.
00;05;01;02 - 00;05;26;11
Jody Rudman
And I'm standing in the shoes of the government to redress this injury. When a relator whistleblower brings a False Claims Act case, a number of things happen. First of all, of course, the lawsuit was filed under seal, and there's a Seal period in which the government can decide whether it wants to intervene and actually kind of get in the driver's seat and drive this lawsuit.
00;05;26;14 - 00;06;18;27
Jody Rudman
And most of the time, that period of decision making about intervention involves investigating the entity that the relator has brought to the attention of the government. So it is a private person, enforced government investigate person of another entity. And that is an important concept, Jonathan, because we heard in the Zafirov oral arguments this morning in front of the 11th Circuit, that part of the concern of what's going on here is this kind of forced investigation that lands in the government's lap after the government makes an intervention decision, then a key part of what's at issue in this question about constitutionality is that if the government declines to intervene, the relator, the whistleblower, gets to
00;06;18;27 - 00;06;58;14
Jody Rudman
stay in the driver's seat and drive this lawsuit all the way through to whatever conclusion may ultimately happen. And the government is certainly there. It remains the government's case. The government remains the real party in interest. But the driver of the vehicle is the relator and his or her or its lawyer and so much of what is kind of under debate today is whether that meets that whole process, meets the provisions of article two of the United States Constitution.
00;06;58;14 - 00;07;37;09
Jody Rudman
Article two talks all about the executive, the power, the authority, the vesting, and the taking care that laws are faithfully executed all lie within the executive. So the question that's at issue is whether this whole process is violative of article two of the Constitution, and those powers that lie in the executive branch. The real debate, at least in the oral arguments today, were less about the vesting and the take care clauses of article two and more about the appointments clause, which I know we'll talk about here in our time together.
00;07;37;14 - 00;08;00;10
Jonathan Porter
Thanks, Jody. That's great background. And just so people understand the way government investigations work, if someone makes a report to law enforcement, law enforcement has no legal requirement to investigate that. And so if you go to the FBI and say, hey, my little brother stole my Walkman, Walkmans are a thing anymore, let's say you did that. The FBI can just as easily say, all right, I'm not going to do anything with that.
00;08;00;12 - 00;08;21;27
Jonathan Porter
The FCA is unique in that someone can bring a case to law enforcement, to the government, and they are legally required to investigate it. And so there's this theory that we did hear in the oral argument that it is unique that someone is able to initiate a core executive branch power, which is to start an investigation into someone else.
00;08;21;29 - 00;08;34;27
Jonathan Porter
And that is you and I do this for a living. And so we're sort of used to this. But if you take a step back and you think about how this works in the grand scheme of things, it's very, very different because there's a lot of things that get reported to law enforcement and they do nothing with it.
00;08;34;29 - 00;08;51;13
Jonathan Porter
And so, Jody, as you said, there was oral arguments in the fear of after off and the questions what a lot of different ways. It was a super interesting oral argument that a lot of us were paying close attention to. So, Jody, when you tell listeners, what did we learn from oral arguments in Zafirov what might the court do with this?
00;08;51;13 - 00;08;53;23
Jonathan Porter
Now that we've heard the benefit of some of the questions?
00;08;53;25 - 00;09;35;04
Jody Rudman
Yeah, that's such a great question. And I know people love to predict how they think the three judge panel that's ultimately going to rule when the arguments over, rather than try to make that prognostication. I think it's healthy to sort of look at what questions the judges were asking. And then kind of do a decision tree about, you know, based on this concern or based on this articulated line of questioning what might be the kind of the decisive point for this judge of the panel, that judge, just as a reminder to the listeners, there's a three judge panel, and of the three one was sitting by designation from the district court.
00;09;35;06 - 00;10;10;20
Jody Rudman
And I start with that particular judge, Jonathan, because this judge sees these false claims at cases probably day in, day out, his docket is probably fairly heavy with all manner of false claims act lawsuit. So at all stages of those litigation proceedings. And so he in particular was expressing some interest or, you know, the inquiry and questioning about exactly what you were just touching on, which is this period of almost forced investigation.
00;10;10;26 - 00;10;35;00
Jody Rudman
Right. Because the False Claims Act is unique in that reporting your concerns to law enforcement may or may not, in any other context, result in an investigation, but under the False Claims Act, they have to, because the government has this period of time, as I was talking about earlier, to make an intervention decision that seemed to be of some concern to this particular judge.
00;10;35;00 - 00;11;24;29
Jody Rudman
And depending on the how this judge ultimately feels about, you know, the larger and weightier question about the Appointments clause, this article two constitutional provision, I think that here's own comfort level may rise or fall on this notion of this kind of forced investigation idea that the False Claims Act puts in the hands of these private people. Most of the other questioning, however, came from the other two judges and one in particular, and those focused much more on this kind of really nuanced question about, hey, the Supreme Court kind of has given some writing about this over the last couple of years.
00;11;24;29 - 00;11;55;28
Jody Rudman
One dissent by Justice Thomas, in particular, in a Supreme Court case called Polanski that you and I spoke about on this podcast, really seems to trigger off of one question in particular. And that question really poses how much substantial power or how much substantial authority really lies in the hands of this private whistleblower that feels academic, Jonathan, that feels really nuanced, that feels bookish.
00;11;56;05 - 00;12;14;29
Jody Rudman
But it's actually, I think, critical. And I think it's critical to how this panel ultimately is going to decide this issue. I'll give the mic back to you in a second, because I think you and I are both of the mind that no matter what happens with this panel, there's likely to be further litigation here in the 11th Circuit and beyond.
00;12;14;29 - 00;12;17;01
Jody Rudman
So I'll let you kind of touch on that.
00;12;17;02 - 00;12;42;17
Jonathan Porter
Yeah. So great observations, Jody. And you're right about the district judge sitting by designation who is in the Southern District of Florida, where that is the hotbed of healthcare fraud that is far and away where a lot of health care fraud takes place. And so he's seen a bunch of this throughout his long career on the bench, and probably is not at all surprised that this is sort of percolating, but the other judges seem to hear part of it and push back on both sides.
00;12;42;17 - 00;13;02;13
Jonathan Porter
And so I don't really know. There's a all that clear of a path forward here, except that this is far from the end of this. It would not surprise me if we're heading towards something on bonk, or if this is going to go to the Supreme Court. I know that defense counsel or I guess happily counsel in the 11th Circuit said, I feel like we're heading towards the Supreme Court in this.
00;13;02;13 - 00;13;21;25
Jonathan Porter
And so maybe that's correct. Maybe it's not. But I think the one thing we know is this is not going to be the end all, be all. And look, even if this did come out, even if all three came out of the gates saying, oh no, we think this is unconstitutional, that's still three. That's three appellate judges. That's not a whole sitting of the 11th Circuit.
00;13;21;25 - 00;13;39;15
Jonathan Porter
That's not speaking for the Fifth Circuit or the Third Circuit or the Sixth Circuit. So there's a lot more here that could happen. And so this is gonna be a long, long road. So anyone sitting there under investigation who's listening, they're saying, is this my ticket out of this investigation? No, it's not, it's really not unless you're one of the named defendants in Zafirov.
00;13;39;16 - 00;14;03;14
Jonathan Porter
So there's a long way to go in this. But I think, Jody, you know, one of the things that's interesting is qui tams have been around for several decades now, and there have been some circuits that have opined on the constitutionality of qui tams. And this is just now starting to be an issue. And that's been an argument for a while from the relators bar, is that no one's really raised this before and when it has.
00;14;03;14 - 00;14;19;19
Jonathan Porter
The courts have said that the qui tams are are fine, and one of the judges came out of the gate and said, well, hold on a second. It's actually been quite a while since anyone has really opined on this. And so she wanted to make sure that the relator’s counsel on the government knew this is something that they think they can opine on.
00;14;19;21 - 00;14;41;10
Jonathan Porter
And I think, Jody, what we're ultimately getting at here is these qui tams. For a long time, I know when I was at DOJ, when we were investigating something and didn't take it over, relator's counsel, nine times out of ten, we'll just drop it. They wouldn't carry it forward. But now what you're seeing is relator's counsel wanting to take cases forward, even though the government doesn't like the theory.
00;14;41;17 - 00;15;00;10
Jonathan Porter
And I think that's the new part in this, is that relator's counsel is fine not having the government support, but standing in the shoes of the government anyway and carrying it forward. So this is a huge issue because a lot of the big judgments that we've seen lately have been declined qui tams. And that's why I think this is super important to a lot of people.
00;15;00;11 - 00;15;17;26
Jonathan Porter
This is a big deal of what we're talking about. So, Jody, let's talk about where we're going with this. What's the go forward? What's the takeaway from these oral arguments? What might be the practical impact if unconstitutionality is affirmed? And what should those who are under investigation think about when it comes to this issue.
00;15;17;28 - 00;15;48;26
Jody Rudman
So yeah, so many interesting things that you just were talking about this statute, but it's been around since the Civil War and it really sort of didn't have much of a presence or strength for a long time. And then in 1986 and then again in in some amendments since then, the False Claims Act has really sharpened its teeth, owing largely to the efforts of Senator Grassley, although not exclusively to those efforts.
00;15;49;01 - 00;16;18;13
Jody Rudman
But it's really the post 1986 view of an approach to the False Claims Act, where, you know, we've really started to see these issues become more important and start percolating again. And so on. And in the last couple of years, really, the Supreme Court in the Polanski dissent. And then, you know, since then, a couple of the justices have made some statements, and then we're seeing some statements out of the Fifth Circuit.
00;16;18;15 - 00;16;53;12
Jody Rudman
This question of constitutionality feels like it's percolating much more actively, Jonathan, than it ever really did. So your question is practical implications? Well, here's what I'll say. This panel will make its decision. And although I certainly don't speak for any member of the panel or of the 11th Circuit, I wouldn't be surprised if the entire 11th Circuit took up the question on bonk or as an entire court, if presented with that opportunity.
00;16;53;15 - 00;17;33;22
Jody Rudman
Again, I have no idea whether they would or wouldn't, but they may speak as a circuit about it. The question is already pending in some other circuits I anticipate over the next year, so we'll see decisions out of the Third Circuit, out of the Sixth Circuit. And then even though the entire Fifth Circuit on Bog made a decision on the constitutionality question in a case quite some time ago, some of the judges on the Fifth Circuit, which is, in Texas, Mississippi, Louisiana, have begun expressing in some of their own writings.
00;17;33;24 - 00;18;12;03
Jody Rudman
Hey, let's look at this again at the appropriate time. All that is a long way of saying, wherever you are, wherever you are false claims that case may be in investigation or in litigation and whatever side of the view may be on relator or defense, I think that these issues will be raised, perhaps should be raised, and that we're going to start seeing dotted across the landscape decisions on this question may be, you know, holding and waiting if you're within the Third circuit, for example, waiting until the third makes a decision on that.
00;18;12;11 - 00;18;36;26
Jody Rudman
But at a minimum, hey, look, I'm preserving this argument so that if the circuit reaches it, I can dusted off at a later date. But Jonathan, it would not surprise me to see the United States Supreme Court if the right petition for surgery is presented in maybe in the next term, after a number of these circuits have reached the merits, decisions to see the Supreme Court take it up.
00;18;36;26 - 00;18;37;20
Jody Rudman
What about you?
00;18;37;24 - 00;18;57;10
Jonathan Porter
Yeah, that's probably right. Look, any time a sitting Supreme Court justice lags in an order or I guess in a dissent, that this is of interest to him, I think that's something that the Supreme Court might address at some point. So I'm with you, Jodie. It wouldn't surprise me if it happens. But right now, there's not a circuit split.
00;18;57;10 - 00;19;11;28
Jonathan Porter
Right now, everyone's come down on the side of key terms being constitutional. And so I do think that if you're not Justice Thomas, if you're some of the other members of the Supreme Court, I don't know that I would grant cert if there's not a circuit split. So I think it depends on what the 11th Circuit's going to do.
00;19;12;00 - 00;19;28;17
Jonathan Porter
And I think there's a good chance that the 11th Circuit would want to rehear this on bomb, because this particular panel is a little bit different than the rest of the 11th Circuit. I think this particular panel has a little bit more of a libertarian bent than the rest of the 11th Circuit. And so this panel may not speak for the entire 11th Circuit.
00;19;28;17 - 00;19;45;09
Jonathan Porter
So there's a lot that could happen here. But Jody, I want to call out what you said, which is make sure if you're defending a qui tam, specifically a declined qui tam, you got to at least make the argument so you're preserving it. That's a big takeaway because you don't know what's what's going to happen. I don't think you lose anything by making the argument.
00;19;45;09 - 00;19;58;20
Jonathan Porter
So for those who do what we do, Jody, make sure that you're including this argument in your pleadings so that if something happens, you've raised it. So, Jody, it's been tremendously helpful job our listeners about it helpful. Any parting wisdom for our listeners on this issue?
00;19;58;27 - 00;20;41;08
Jody Rudman
You know, the one thing I want to point out is that there's just a lot of really incredible minds and brains on both sides of this question. People maybe don't enjoy sitting down and reading legal briefs as much as I might, or you might on issues that we find interesting. But if you just take a look at not only the briefs of the parties in the Zafirov 11 Circuit appeal, but any number of amicus or amicus, depending on your pronunciation of Latin, any number of amicus briefs that were filed on both sides, brilliant lawyers all around the country making really brilliant arguments.
00;20;41;08 - 00;21;11;28
Jody Rudman
But it's very clear, Jonathan, that there are a lot of stakeholders who care a lot about this issue. And so I think it can't be understated how important this is and how important the resolution of this question is. It'll be a while before there's really any clarity on it, but I invite anyone along for the ride, because this may be one of the more fascinating aspects of litigation in a while.
00;21;12;04 - 00;21;28;14
Jonathan Porter
Yeah, I totally agree with you there, Jody. This is a big deal. False Claims Act is a big deal to a lot of people, and so this is absolutely something to monitor. I know that our firm is committed to keep making sure that people are up to speed, both on this podcast and in our writings, and so make sure that you're paying attention to what is it we're doing.
00;21;28;14 - 00;21;45;12
Jonathan Porter
We're going to do our best to keep you up to speed, because this is a really big deal for a lot of people. So we're happy to help people stay on top of their all things Zafirov/Zafirov. To our listeners, thanks for joining us and we'll see you next time.