As 2024 drew to a close, significant legal developments reshaped the landscape of whistleblower protections and False Claims Act (“FCA”) litigation. Courts issued pivotal rulings, agencies pursued major settlements, and new constitutional challenges emerged that could alter the future of qui tam enforcement. For whistleblower attorneys and those engaged in FCA cases, these events signal potential shifts in legal strategy and enforcement trends. Below, we highlight the most important whistleblower-related legal updates from the fourth quarter of 2024.
A Landmark FCA Ruling Challenges the Constitutionality of Qui Tam Lawsuits
One of the most, if not the most, consequential decisions came from the District Court for the Middle District of Florida in Zafirov v. Florida Medical Associates LLC. Judge Kathryn Kimball Mizelle ruled that the FCA’s qui tam provision violates the Constitution’s Appointments Clause, arguing that whistleblower relators act as “officers of the United States” without proper appointment. This unprecedented ruling contradicts decades of precedent affirming the constitutionality of qui tam actions and could create a circuit split, setting the stage for Supreme Court review.
Critics of the decision argue that it disregards established FCA jurisprudence and the essential role of whistleblowers in exposing fraud. The ruling has already sparked concern within the whistleblower bar, as qui tam actions account for the majority of FCA recoveries each year. The case is going to the Eleventh Circuit Court of Appeals, where it may be overturned, but the debate over the FCA’s structure will undoubtedly continue in 2025.
Supreme Court Declines to Weigh In on Kickback Statute Willfulness
In another major legal development, the Supreme Court declined to review United States ex rel. Hart v. McKesson Corp., a case concerning the level of intent required under the Anti-Kickback Statute (“AKS”). The Second Circuit had ruled that a defendant must act with “willful” knowledge of illegality to violate the AKS. By letting this decision stand, the Court left intact a growing divide among circuits over what prosecutors must prove in kickback-related FCA cases.
This decision raises uncertainty for whistleblower attorneys and federal prosecutors, as different courts may apply varying standards for AKS violations, potentially influencing case outcomes across jurisdictions.
$450 Million Teva Settlement Highlights Anti-Kickback Enforcement
Pharmaceutical giant Teva Pharmaceuticals agreed to pay $450 million to settle allegations that it violated the FCA by engaging in illegal kickback schemes. The settlement resolved claims that Teva inflated drug prices and funneled payments through charitable organizations to cover Medicare patients’ copays, thereby violating the AKS
The Teva settlement underscores the continued focus of federal authorities on healthcare fraud and kickback violations. For whistleblowers considering FCA claims, this case highlights the importance of exposing fraudulent financial arrangements in the pharmaceutical industry.
Government Defends FCA’s Reach in E-Rate Program Case
The Supreme Court is considering whether fraud in the E-Rate program, which provides telecommunications subsidies to schools and libraries, falls under the FCA’s jurisdiction. In Wisconsin Bell v. Heath, the government argued that the program is federally funded and therefore subject to FCA enforcement, countering claims that it operates as an independent entity.
This case could have broad implications for FCA enforcement in government-subsidized programs. A ruling limiting FCA coverage could reduce whistleblower protections in similar areas, while an expansive ruling would reaffirm the government’s ability to recover fraudulently obtained funds.
Eleventh Circuit Reinstates DOJ’s FCA Kickback Case
The Eleventh Circuit reversed a lower court ruling that had dismissed a $400 million kickback case under the FCA. The case involved allegations that a major healthcare provider engaged in fraudulent referral practices that improperly influenced Medicare reimbursements
This decision reflects the judiciary’s ongoing scrutiny of financial arrangements in the healthcare sector and affirms that courts remain open to aggressive FCA enforcement, even when initial rulings favor defendants.
Some Thoughts on 2025
In 2025, several key issues should be resolved. The Zafirov decision and its impact on qui tam litigation will be closely watched, particularly as it moves through appeal. The Supreme Court’s consideration of FCA jurisdiction in Wisconsin Bell could reshape the reach of whistleblower protections in government-funded programs. Meanwhile, the SEC and DOJ’s whistleblower programs continue to evolve, providing new incentives for reporting corporate misconduct. We will, of course, keep tabs on all of these developments.
