The Eleventh Circuit Court of Appeals has delivered a significant ruling, upholding the constitutionality of the False Claims Act’s (FCA) qui tam provisions. This decision aligns the Eleventh Circuit with a growing consensus among federal appellate courts that have considered similar challenges, effectively reversing a district court decision that had sent ripples of concern through the whistleblower advocacy community. While this legal battle is far from over, experts indicate that the record pace of qui tam filings shows no signs of slowing. This development necessitates careful consideration by compliance, risk, and governance leaders, prompting questions about the correct lessons to draw from a ruling that, while broadly affirming the FCA’s framework, remains narrowly decided on specific constitutional grounds.
The Zafirov Ruling and its Constitutional Context
In early September, the Eleventh Circuit issued its decision in United States ex rel. Zafirov v. Florida Medical Associates, LLC. The panel ruled that qui tam relators, the private individuals who initiate lawsuits under the FCA on behalf of the government, are not "officers of the United States" as defined by the Constitution’s Appointments Clause. This reversal of a 2024 Florida district court decision, which had declared the qui tam provisions unconstitutional, drew considerable attention from sectors heavily impacted by FCA litigation, including healthcare, defense contracting, and other industries frequently targeted by qui tam suits.
The Eleventh Circuit’s decision joins those of the Fifth, Sixth, Ninth, and Tenth Circuits in rejecting Appointments Clause challenges to qui tam relators. However, the Eleventh Circuit’s ruling was based on a single, narrow legal ground. Crucially, the court remanded two separate constitutional theories—those based on the Take Care Clause and the Vesting Clause of Article II—back to the district court for initial consideration. This means that while one avenue of constitutional attack has been definitively rebuffed by this panel, other significant constitutional questions remain open for adjudication.
The Escalating Stakes of Qui Tam Litigation
The implications of these legal developments for corporate compliance and legal functions cannot be overstated. The Department of Justice (DOJ) has reported record-breaking recoveries under the FCA. In fiscal year 2025, the DOJ recovered an unprecedented $6.8 billion, with the healthcare sector alone accounting for over $5.7 billion of that sum. This trend highlights the significant financial exposure companies face.
Furthermore, the volume of qui tam litigation continues to surge. Last year, relators filed 1,297 qui tam suits, marking a substantial 32% increase over the previous record. Projections suggest this number is on pace to be surpassed in 2026, indicating sustained aggressive enforcement and private citizen involvement. The DOJ has also actively broadened its encouragement of whistleblower filings beyond traditional healthcare fraud to encompass areas such as cybersecurity, customs and tariffs, and diversity, equity, and inclusion (DEI). This expansion signals a wider net of potential FCA exposure for an increasingly diverse range of businesses.
Expert Analysis: Navigating the Narrow Ruling
To understand the practical implications of the Eleventh Circuit’s decision, Corporate Compliance Insights (CCI) consulted with two leading legal experts who closely monitor this litigation: Noam Fischman, co-team leader of healthcare litigation and partner at Akerman, and Matthew Yelovich, partner at Cleary Gottlieb.
Both attorneys emphasized the narrowness of the Zafirov ruling. "The panel joined the 5th, 6th, 9th and 10th Circuits in rejecting Appointments Clause challenges to qui tam relators," stated Yelovich. "However, it decided the case on a single, narrow ground and remanded two separate constitutional theories, under the Take Care Clause and the Vesting Clause, for the district court to consider in the first instance."
Fischman echoed this sentiment, noting, "Zafirov is likely durable on the narrow ground the panel actually decided. But Zafirov is durable precisely because it is narrow. It does not resolve the broader Article II attack."
Practical Impact on Ongoing Litigation
When asked about the practical changes for companies defending qui tam suits, Fischman offered a concise assessment: "The short answer is that nothing material has changed for companies defending FCA qui tam cases, at least for now." He elaborated that the Eleventh Circuit’s rejection of the argument that relators are "officers of the United States" due to not holding a "continuing position established by law" does not end the broader Article II constitutional debate.
"The Eleventh Circuit addressed only the Appointments Clause issue and remanded for the district court to consider the defendants’ Take Care Clause and Vesting Clause arguments in the first instance," Fischman explained. "Those arguments seem to be the more viable paths to dismantling the abuse of the False Claims Act’s qui tam provisions and certainly remain worth preserving given the Supreme Court’s recent signals that at least some justices view the FCA’s qui tam structure as raising substantial Article II questions."
Yelovich concurred, advising that "Companies litigating these suits should continue to preserve constitutional arguments under the Appointments Clause, Vesting Clause and Take Care Clause, as this decision will not be the final word on those issues and is limited geographically in its effect."
Preserving Constitutional Arguments
The consensus among legal experts is that companies currently defending qui tam cases should continue to assert traditional defenses, such as those related to pleading standards (Rule 9(b)), public disclosure and original source limitations, materiality, scienter, causation, and damages. Simultaneously, it is crucial to expressly preserve any Article II objections in pleadings and motions practice.
"The goal is to build a record—both offensively (through discovery) and defensively (through pleadings)—concerning the government’s actual role in a particular matter," Fischman advised. "These attempts will invariably draw objections from the relator and the government, but those objections may themselves help frame the continuing Article II fight for later review."
The Durability of the Ruling and Future Watchpoints
Despite the Zafirov ruling aligning with other circuits on the Appointments Clause, the constitutional challenges to the FCA’s qui tam provisions are far from settled. The Eleventh Circuit’s decision to remand the Take Care Clause and Vesting Clause arguments means these potentially more impactful constitutional theories will be litigated further.
Justice Thomas, joined by Justice Kavanaugh, has previously expressed skepticism about the constitutionality of the FCA’s qui tam framework. Justice Barrett has also signaled an openness to reviewing these issues. The denial of certiorari in the Eli Lilly and Co. v. United States case in May 2026, while seemingly a setback for those challenging the FCA on constitutional grounds, is not necessarily the Supreme Court’s final word. Legal observers suggest that the denial might have been procedural, and future cases could reach the Court.
"Parties will continue to seek Supreme Court review of adverse qui tam judgments in light of several sitting justices’ writings indicating openness to scrutinizing the constitutionality of the FCA’s qui tam statutory provisions," Yelovich stated. He also pointed to ongoing developments in other circuits, such as the Third Circuit’s handling of the Janssen Products LP case and potential further skepticism in the Fifth Circuit, as areas to monitor.
"For now, the critical takeaway is that the FCA, as previously construed and litigated, remains firmly intact," Fischman emphasized. "It would be a mistake at this juncture to relax compliance, disclosure, investigation or remediation programs." He added, "Over the next few years, it will be particularly interesting to learn how the government intends to explain the level of control it exhibits over relators and whether, aside from pointing to history alone, that control independently meets constitutional requirements."
The Unchanging Fundamentals of Compliance Programs
A common observation among those who initiate qui tam suits is that they typically do so only after internal reporting mechanisms have failed, been ignored, or resulted in retaliation. This dynamic raises questions about whether the constitutional uncertainty surrounding qui tam provisions impacts the fundamental design of internal reporting, investigation, and non-retaliation programs.
Both Fischman and Yelovich agreed that the current developments should not alter the core principles of a robust compliance program. "The live Article II debate is about who may prosecute FCA claims on the government’s behalf, not whether companies must maintain effective controls in the first place," Fischman explained. "Practically speaking, the risk that internal reporting failures, ignored complaints or retaliation will turn an employment issue into an enforcement and litigation problem remains very real, even if the Supreme Court ultimately limits some aspect of the qui tam mechanism."
Yelovich added, "Companies should ideally be designed to encourage internal reporting, follow up promptly on credible reports of conduct that would potentially violate the FCA, and prohibit retaliation against those who report possible misconduct." He highlighted that retaliation is already unlawful under the FCA, and companies benefit from anonymous reporting avenues that trigger independent investigations.
Shifting Risk Calculus Across Sectors
While healthcare continues to dominate FCA recoveries, the DOJ’s explicit encouragement of whistleblower filings in cybersecurity, customs and tariffs, and DEI suggests a broadening scope of enforcement. Does the Zafirov ruling alter the risk calculus for specific sectors?
Experts suggest that, for now, the core risk remains consistent. "The status quo—that qui tam relators initiate over a thousand suits per year, with the DOJ actively encouraging more across a range of administration policy objectives—shows no sign of abating unless and until the Supreme Court grants review in a case squarely presenting the constitutional challenges," Yelovich stated.
This means that companies in high-priority sectors, such as defense contractors self-certifying under Cybersecurity Maturity Model Certification (CMMC), importers navigating tariff enforcement, or federal contractors making DEI-related attestations, should continue to prioritize risk mitigation and robust documentation of their compliance efforts. The Zafirov ruling does not offer a reprieve from these ongoing compliance imperatives.
Briefing the Board and Audit Committee: The Right Takeaway
Communicating the nuances of this legal development to a board of directors or audit committee requires careful framing. The headline "Eleventh Circuit Upholds Qui Tam" could lead to a dangerous misinterpretation.
"One wrong takeaway from the headline ‘Eleventh Circuit upholds qui tam‘ would be that the constitutional debate is over or that qui tam risk is now settled once and for all," warned Fischman. He stressed that the Supreme Court has not resolved the broader Article II questions, and the Zafirov decision expressly remanded key arguments. Furthermore, he cautioned against viewing constitutional uncertainty as an opportunity to reduce compliance investment. "The qui tam provisions remain in force, the government can still bring FCA claims directly, and FCA exposure still includes treble damages and civil penalties, among other civil and potential criminal penalties."
The correct takeaway, according to Fischman, is that this remains a procedural issue to monitor, not an invitation to alter a compliance structure. Boards and audit committees should continue to focus oversight on prevention, internal reporting, prompt investigation, documentation, remediation, non-retaliation, and the escalation of matters that could lead to FCA enforcement actions. The most effective protection, he argued, lies not in betting on the unconstitutionality of qui tam provisions, but in striving for a demonstrably effective compliance program that is well-designed, adequately resourced, empowered, and operational in practice, aligning with the DOJ’s core expectations.
Yelovich advised that boards and audit committees should maintain regular compliance briefings, paying particular attention to high-risk areas like DEI programs. When discussing challenges to the FCA, the briefing should emphasize three key points:
- Current Governing Law: Every circuit that has addressed these challenges has upheld the qui tam provisions’ constitutionality.
- Limited Nature of Zafirov: The Eleventh Circuit’s decision reversed on only one aspect of one of several constitutional challenges.
- Uncertainty of Future Developments: Only a minority of Supreme Court justices have indicated an openness to constitutional challenges, and the timing and nature of future developments remain uncertain.
Ultimately, while boards should stay informed of major legal developments and general counsel must ensure that litigation positions preserve available constitutional arguments, the Zafirov ruling should not be interpreted as a final answer on the FCA’s future or a justification for reducing compliance investment. The fundamental imperative for companies remains to operate with integrity and to build and maintain robust compliance programs that proactively prevent and detect potential misconduct.
