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Fifth Circuit Judge Renews Scrutiny Of FCA’s Qui Tam Constitutionality
11/11/2025On November 3, 2025, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal with prejudice of an action under the False Claims Act (“FCA”) against an inpatient-rehabilitation facility. See United States v. Encompass Health Rehab. Hosp. of Pearland, No. 25-20093 (5th Cir. 2025). Plaintiff, on behalf of the United States, alleged that defendant violated the FCA when its physicians rubberstamped patient admissions based on the non-clinical judgment of sales representatives, a violation of the regulatory requirement that clinicians exercise independent medical judgment in this regard. The Fifth Circuit affirmed, holding that plaintiff failed to plead fraud with plausibility under Rule 8(a) and particularity under Rule 9(b) because she did not allege specific facts showing falsity or tie defendant’s practices to the submission of any false Medicare claims.
In a concurring opinion, Judge James Ho urged the full court to revisit its 2001 decision in Riley v. St. Luke’s Episcopal Hosp. (5th Cir. 2001), arguing that allowing private-party whistleblowers—relators—to pursue actions for fraudulent claims on behalf of the Government raises “serious constitutional problems” because qui tam provisions violate the Appointments Clause, which empowers the President to appoint all principal Officers of the United States (i.e., those who occupy a “continuing” position and exercise “significant authority”). For Judge Ho, these provisions further violate the Take Care Clause, which provides that the President “shall take Care that the Laws be faithfully executed.” Relators are prohibited from wielding Executive power without Executive oversight.
The concurrence echoes a similar opinion by Judge Stuart Kyle Duncan in United States v. Peripheral Vascular Assocs., P.A., No. 24-50176 (5th Cir. 2025). Judge Duncan questioned whether the Constitution permits “this outsourcing of prosecutorial power to a private person,” concluding that qui tam relators impermissibly exercise “core executive power” without supervision when the Government declines to intervene in a qui tam case. Judge Duncan and Judge Ho join a growing chorus of jurists, including Justice Thomas, who described the FCA’s qui tam system as operating in a “constitutional twilight zone” inUnited States v. Exec. Health Res., No. 21-1052 (2023), and Justices Kavanaugh and Barrett, who concurred in the same opinion and signaled that the Supreme Court should reexamine the issue in an “appropriate case.”
Such a case may soon find its way to the Supreme Court. The Third Circuit is poised to address the issue in United States v. Janssen Prods., L.P., No. 25-1818 (3d Cir. 2025) (appeal of a $1.6 billion FCA judgment). There, defendant argues that deputizing private relators usurps executive power, echoing the Fifth Circuit concurrences. The Eleventh Circuit may also confront the issue in short order. See United States v. Florida Med. Assocs., LLC, Nos. 24-13581, -13583 (11th Cir. 2024).
The FCA’s qui tam provisions are a longstanding component of the U.S. corporate enforcement regime, and claims initiated by private relators accounted for almost $3 billion in recoveries in FY 2024. If courts ultimately curtail or invalidate the qui tam mechanism, it would mark a sea change in the FCA enforcement. For now, FCA defendants should monitor developments in the Third Circuit’s Janssen appeal and in other circuits.
