ByJOHN COUNCIL
Texas Lawyer
Sept. 21, 2000

The 5th U.S. Circuit Court of Appeals reconsidered one of its hottest opinions of 1999 Thursday when the full court heard arguments in a case that overturned the qui tam provision of the False Claims Act.

That Nov. 15 decision turned more than 100 years of jurisprudence on its head by finding that the provision allowing whistleblowers to pursue civil actions when they expose fraud actions committed against the federal government was unconstitutional.

In that 2-1 decision in Joyce Riley v. St. Luke’s Episcopal Hospital, et al., a panel of the court ruled that qui tam actions where the federal government does not intervene unconstitutionally infringe on the executive branch’s power to litigate on behalf of the United States.

On Thursday, plaintiffs attorneys and a U.S. Department of Justice lawyer defending the law came armed with a May 2000 U.S. Supreme Court decision that gave an individual plaintiff standing to sue on the government's behalf. That opinion -- Vermont Agency of Natural Resources v. Stevens -- went into exhaustive detail into the history behind the 100-year-old law allowing individuals to sue on the government's behalf even when government lawyers decline to prosecute. Yet several of the 5th Circuit justices did not seem to be impressed.

"With respect to the take care clause, does the statute interfere with the exeucutive branch?" asked Judge E. Grady Jolly of the plaintiff. "Why isn't the argument in this case based on the statute ... rather than what seems like a rabbit trail? Why aren't we talking about the statute instead of the history of qui tam actions?"

Other judges seemed to be concerned that the government has no control over cases filed on its behalf.

"What troubled me is the relators can pursue these qui tam actions. ... They go on for years and years and years," said Judge Edith Jones. "And the government couldn't get them to stop."

Defense attorneys said they were encouraged by the judges' lines of questions, believing some members of the court might stick by the orginal panel's decision.

"I think Judge Jolly's focus indicates the court's concern with the specific statute," says William Boyce, a Fulbright & Jaworski partner who represents the defendants. "He is less impressed with the historical take than the other courts have been."

Plaintiffs attorney Jim Perdue Jr. says he hopes the 5th Circuit will take to heart the recent Supreme Court decision on qui tam. "The Supreme Court can provide hints, but it can't make them follow the law," Perdue says. "I hope that they will read Stevens and find that nine members of the Supreme Court have found that there is not a problem with the statute."

Writing for the majority of the three-judge panel in November, Judge Jerry Smith said the qui tam provision violates the separation of powers doctrine and the take-care clause of Article II of the Constitution.

In the Stevens ruling, the court found that "a private individual has standing to bring suit in federal court on behalf of the United States under the FCA," although it held that the individual could not bring a suit against a "state agency."

Perdue, the lawyer who represents the plaintiff in Riley, says the subsequent high court ruling puts the law on his side on the question of constitutionality.

"Period. End of story. It was answered by the Supreme Court," Perdue says.

But  Boyce, who represents the defendants, says the standing question answered in Stevens does not clear up the question of whether an individual can sue on behalf of the government.