CONSTITUTIONAL ASPECTS OF QUI TAM ACTIONS: BACKGROUND AND ANALYSIS OF ISSUES IN VERMONT AGENCY OF NATURAL RESOURCES V. UNITED STATES EX REL. STEVENS (CRS Report for Congress)
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| Release Date |
March 8, 2000 |
| Report Number |
RL30463 |
| Report Type |
Report |
| Authors |
T.J. Halstead, American Law Division |
| Source Agency |
Congressional Research Service |
Summary:
The False Claims Act (FCA), originally enacted in 1863, serves as an important mechanism by
which fraud against the federal government is combated. The Act authorizes both the Attorney
General and private persons to bring civil actions for its enforcement. Under the terms of the Act,
a private individual, known as a relator, may bring such an action on behalf of him or herself, and
for the United States Government. These actions are known as qui tam suits, and their use dates back
to the Thirteenth Century in England as well as the earliest days of the United States.
The vast majority of these suits are brought against private entities who are alleged to have
committed acts of fraud upon the federal government through the submission of false claims, and
their validity has been well established. However, qui tam suits have also been brought against states,
raising significant constitutional and statutory questions regarding the proper scope of the Act.
Specifically, it has been argued that such actions are impermissible, as states do not constitute
"persons" who may be sued under the Act. More substantively, it has also been asserted that suits
by private relators against a state violate the Eleventh Amendment. The Court of Appeals for the
Second Circuit addressed these issues in United States ex rel. Stevens v. Vermont Agency of
Natural
Resources , holding that states are indeed within the ambit of the False Claims Act, and that
the
United States is the "real party in interest" in a qui tam action, alleviating any Eleventh Amendment
concerns.
Given the significance of these questions as they relate to state qui tam liability, the Supreme
Court granted certiorari in Stevens . While the Second Circuit's decision is based on
widely accepted
principles supporting the historical role of qui tam actions, it is possible that the Supreme Court will
reverse the decision of the Second Circuit. Depending on the factors found persuasive by the Court,
a reversal could have substantial implications for qui tam litigation in general. Specifically, a ruling
by the Court that states are not persons under the Act would bar any such action against a state that
has committed fraud, irrespective of whether it is brought by the federal government or a private
relator. A reversal on the Eleventh Amendment issue, however, would only proscribe suits brought
by relators where the government chooses not to intervene. Further complicating matters, the
Supreme Court, ten days prior to oral argument in Stevens , issued an order indicating
that it would
also consider whether qui tam suits violate the standing requirements of Article III of the
Constitution.
While the questions being addressed by the Court have the potential to greatly impact the False
Claims Act, it is unclear whether any change will occur. Indeed, in light of the centuries long history
of qui tam actions and the extensive lower court precedent in its favor, it is questionable whether the
Court will radically alter the qui tam landscape.
