A federal judge has struck down the whistleblower provisions of the False Claims Act, with broad implications for hospice and other health care enforcement actions.

The ruling centers on the law’s qui tam clauses, which the court found unconstitutional. In a qui tam action, a whistleblower, called a “relator” by the courts, files a False Claims Act suit on behalf of the government and possibly receives a portion of any funds recovered by the government via the lawsuit, typically ranging from 15% to 25%.

The overwhelming majority of False Claims Act cases involve qui tam whistleblowers. In Fiscal Year 2023, for example, these cases recovered $2.3 billion of the total $2.68 billion recouped by the government in FCA settlements and judgements, according to a report from the law firm Polsinelli. 

“The court concluded that a relator’s power to institute and prosecute a suit on behalf of the federal government qualified as exercising ‘significant authority’ under federal law,” the Polsinelli report indicated. “In so concluding, the court focused on a relator’s ability to file an FCA case without prior oversight by the federal government that seeks ‘daunting, substantial or punitive’ penalties — a characterization with which FCA defendants facing prosecution would likely agree.”

The court ruled that the relator’s standing to bring forth federal enforcement actions essentially makes them an officer of the executive branch without an appointment by the President of the United States or other authority. 

FCA cases have been rampant in the hospice space during the last several years. Many of the major cases and settlements that have occurred during that time have been qui tam actions, including two major actions this year.

Recently, the Dallas-based home health and hospice provider Intrepid USA paid a $3.85 million settlement to the U.S. Justice Department to resolve alleged violations of the False Claims Act following two qui tam lawsuits. The settlement addressed allegations only and no determination of liability has occurred, according to the Justice Department.

The hospice company Gentiva this year also agreed to pay $19.4 million to resolve False Claims Act complaints that predate the company’s acquisition of Kindred at Home. Gentiva’s parent company, the private equity firm Clayton, Dublier and Rice, acquired a 60% stake Kindred at Home’s hospice assets in 2022 for $2.8 million, with previous owner Humana Inc. (NYSE: HUM) retaining the remaining 40%.