Washington, D.C. — A federal appeals court is sitting on a decision that could shake the foundation of how Medicare and Medicaid fraud gets prosecuted in nursing homes across the country. And according to legal experts in the post-acute care space, whatever that court decides, the case is almost certainly heading to the Supreme Court.
At the center of the debate is the False Claims Act — the 160-year-old law that allows private citizens, known as whistleblowers or “qui tam” relators, to sue on behalf of the federal government when they suspect fraud against Medicare or Medicaid. It’s been one of the government’s most powerful tools for recovering billions of dollars from bad actors in healthcare, including skilled nursing operators. The government highlighted two skilled nursing False Claims cases in its fraud takedown last year alone — one of them driven entirely by a whistleblower and resulting in a $4.5 million settlement.
But the whole qui tam structure — the part that lets private individuals act as de facto prosecutors — is now under serious constitutional challenge.
The Case That Started It
In September 2024, a federal district judge in Florida made history. In U.S. ex rel. Zafirov v. Florida Medical Associates, Judge Kathryn Kimball Mizelle became the first federal judge to rule that the FCA’s qui tam provisions violate the Constitution’s Appointments Clause. Her reasoning: whistleblowers who file fraud suits on behalf of the government are exercising “significant executive authority” without being properly appointed by the President. That, she said, is unconstitutional.
The Eleventh Circuit Court of Appeals heard oral argument in December 2025. Its decision is expected any day — and legal experts across the post-acute care industry say it will almost certainly trigger an appeal that lands the question directly before the U.S. Supreme Court.
Why Nursing Homes Have a Stake in This
Skilled nursing facilities are among the most frequently targeted sectors under the False Claims Act. Whistleblower cases — often brought by nurses, billing staff, or former employees — have driven some of the largest healthcare fraud settlements in recent memory. If courts ultimately rule that qui tam relators can’t bring these cases without a presidential appointment, it would strip away a major enforcement mechanism the government relies on to police nursing home billing.
That doesn’t mean operators are off the hook. The DOJ can still bring fraud cases directly. But without the insider tip that a whistleblower suit provides, many investigations would never get started. The qui tam structure essentially deputizes insiders to surface fraud that federal investigators often can’t detect on their own.
At the same time, some in the industry argue the law has been wielded aggressively — and sometimes speculatively — against facilities for billing practices that fall into gray areas. A ruling limiting qui tam suits could offer some relief from what the industry describes as a wave of whistleblower-driven litigation. Operators are already managing the kind of compliance risk from enforcement actions that has intensified in recent years, and any shift in how fraud cases originate would reshape that calculus significantly.
More Courts Weighing In
The Eleventh Circuit isn’t the only court wrestling with this. On March 18, the Third Circuit heard oral argument in a separate case — U.S. ex rel. Penelow — raising the same constitutional question. The Sixth Circuit, meanwhile, reaffirmed earlier this year that the qui tam structure remains valid under its own binding precedent, at least for now.
Three Supreme Court justices — Thomas, Kavanaugh, and Barrett — have already signaled publicly that the qui tam provisions raise “substantial” constitutional questions. If the Eleventh Circuit’s ruling conflicts with other circuits, that’s typically the kind of clean split the Supreme Court needs to take a case.
For nursing home operators, compliance officers, and their legal teams, this one is worth watching closely. The outcome won’t just change how fraud gets prosecuted — it could reshape the entire whistleblower risk picture in long-term care for years to come.
