Labor & Employment Law Daily Wrap Up, WHISTLEBLOWERS—M.D. Ga.: Court rejects challenge that relator provision violates the Appointments Clause, (Apr 30, 2025)

By Jeffrey H. Brochin, J.D.

A qui tam relator’s position is not an “officer” within the meaning of the Appointments Clause of the Constitution.

A federal district court in Georgia has rejected the constitutionality challenge of UnitedHealthcare of Georgia, Inc. in a False Claims Act (FCA) lawsuit brought by a relator who claimed that UnitedHealthcare violated the FCA and the Anti-Kickback Statute (AKS) in the course of its marketing of Institutional Special Needs Plans (ISNPs) to full-time nursing home residents. The relator claimed that UnitedHealthcare tendered kickbacks to skilled nursing homes (SNFs) in exchange for obtaining resident lists as well as other HIPAA-protected information, thereby tainting UnitedHealthcare’s claims to CMS. Although the court rejected the notion that the qui tam provision of the FCA violated either the Appointments Clause or the Take Care Clause, it nevertheless found that the relator plausibly alleged the requisite elements for an FCA and AKS claim, and denied UnitedHealthcare’s motion to dismiss those claims (U.S. ex rel. Gonite v. UnitedHealthcare of Georgia, Inc., No. 5:19-cv-246 (MTT) (M.D. Ga. Apr. 23, 2025)).

ISNP marketing. The relator was employed by UnitedHealthcare from approximately June 2015 to August 2018, during which time he was responsible for executing new facility implementation plans to sell UnitedHealthcare’s ISNP in SNFs throughout Georgia. He alleged that from 2016, when he began reporting to the former director of sales, until his termination in August 2018, he personally witnessed and gained direct and independent knowledge of FCA and AKS violations which arose from UnitedHealthcare’s ISNP marketing. Specifically, he alleged that on November 9, 2017, he personally observed the former director instruct the personnel of an SNF to provide a list of current residents and their HIPAA-protected information. He further alleged that based on his first-hand knowledge, UnitedHealthcare used the information to improperly solicit nursing home patients and that at least 16 patients at that particular SNF enrolled.

Constitutionality. Before addressing UnitedHealthcare’s substantive contentions in their motion to dismiss, the court responded to its claims that the qui tam provision itself violated both the Appointments Clause and the Take Care Clause. As to the former, UnitedHealthcare argued that an FCA relator is an “Officer of the United States” because he or she (1) exercises significant authority due to the possession of “civil enforcement authority on behalf of the United States”; and (2) occupies a continuing position due to the relator’s “statutory duties, powers, and emoluments prescribed by the FCA.” In making this argument, UnitedHealthcare relied on an earlier Florida district court ruling that a relator had been “improperly appointed” an officer of the United States.

However, the court disagreed, finding that qui tam relators are not officers under the Appointments Clause, based on Supreme Court precedent that requires an “officer” to have “tenure, duration, emolument, and duties [that are] continuing and permanent, not occasional or temporary.” Here, the court found that the relator’s duties were temporary and not continuous, that his authorization to litigate under the FCA was not permanent and his position only existed for the duration of the lawsuit. Accordingly, they concluded that he was not an “officer” and that the qui tam provision did not violate the Appointments Clause.

FCA and AKS elements. UnitedHealthcare next argued that the relator failed to state a claim as to violation of the FCA or the AKS because he fails to plead with particularity: (1) presentment of a claim; (2) falsity; (3) materiality; and (4) scienter. It further argued that regarding the AKS-based claims, he failed to plead an AKS violation because he did not sufficiently allege (1) remuneration to induce referrals; (2) referrals; (3) claims that resulted from the alleged kickbacks; and (4) that UnitedHealthcare acted knowingly and willfully.

Enrollment as presentment. As to presentment, the court noted that the relator relied on his direct, first-hand knowledge of UnitedHealthcare’s submission of false claims gained through his employment, including his observation on November 9, 2017, where the director of sales allegedly instructed an SNF to provide a list of current residents and their HIPAA-protected information, which, the relator asserted, was used to improperly solicit nursing home patients resulting in at least 16 patients enrolling in UnitedHealthcare’s ISNP. Although in a typical health care FCA case the scheme involves a fraudulent service—for which a bill, or claim, is later presented—in a Medicare Part C scheme, once a patient is enrolled in a Medicare Part C plan and the MAO provider (such as UnitedHealthcare) certifies that the enrollee is validly enrolled, the government begins paying monthly capitated payments to the MAO for the enrolled beneficiary. Therefore, each enrollment triggers an automatic capitated payment from CMS such that enrollment alone constitutes presentment of a claim.

Falsity and marketing. The complaint identified a number of Medicare marketing and HIPAA rules that UnitedHealthcare allegedly violated, thereby rendering its CMS contract certifications false. For example, federal regulations prohibit the unauthorized use or disclosure of personal health information, and, in addition, federal regulations place limitations on SNFs’ marketing or enrollment activities on behalf of an MAO. The court noted that UnitedHealthcare did not identify any reason for the court to rule, as a matter of law, that illegal marketing practices cannot render enrollments invalid. In its contract with CMS, UnitedHealthcare was required to certify “valid” enrollment, yet UnitedHealthcare was now asking the court to ignore the “validly enrolled” component or translate it to read enrolled based on “accurate” enrollment data. However, on its face, the CMS provision plainly required UnitedHealthcare to certify that “each enrollee was validly enrolled.” Because the relator plausibly alleged the marketing violations thereby tainted compliance as to the “validly enrolled” requirement, the court found that the falsity element was satisfied.

Similarly, the court found that the relator plausibly alleged the remaining elements of an FCA and AKS claim based on his direct and independent knowledge, and it denied the motion to dismiss as to those claims. Only as to the “FCA conspiracy” claim did the court grant UnitedHealthcare’s motion to dismiss after finding that complaint alleged nothing about who conspired with who, and how the assertions constituted a conspiracy under the law.

The case is No. 5:19-cv-246 (MTT).

Judge: Treadwell, M.

Attorneys: Jason Marcus (Bracker & Marcus) for Brook Gonite. William H. Jordan (Alston & Bird) for UnitedHealthcare of Georgia Inc.

Companies: UnitedHealthcare of Georgia Inc.

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