Chevron ' s Impact
The most obvious example of this trend is the recent overturning of Chevron deference by the Supreme Court this summer .[ 13 ] Now , instead of deferring to agency interpretations of ambiguous statutes , courts must now hear the interpretation brought by each party .[ 14 ]
This decision strips executive agencies of their ability to legislate in areas in which they are the clear experts , thus depriving them of much of their authority and opening challenges to established agency law .
Also , last year , in U . S . ex rel . Polansky v . Executive Health Resources Inc ., three justices suggested that the qui tam provisions may be inconsistent with Article II , with Justice Clarence Thomas , for whom Judge Mizelle served as a law clerk , stating that "[ t ] here are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation ."[ 15 ]
In a case that likely will predict the fiscal impact of the Zafirov decision , the Supreme Court stripped the SEC of its ability to order disgorgement as a deterrent to defendants and to protect the investing public .[ 16 ]
This decision also brought the SEC ' s ability to obtain disgorgement at all into question . Perhaps more importantly , this decision reportedly cost the SEC $ 1.1 billion in recoveries as of 2019 .
The Zafirov decision will likely see an even larger financial impact , as in 2023 , where $ 2.3 billion of the total $ 2.6 billion of FCA recoveries came from relator qui tam lawsuits .
With a billion-dollar industry at risk by this case , the Zafirov decision is sure to be appealed . This decision will almost certainly be appealed to the U . S . Court of Appeals for the Eleventh Circuit and may end up before the Supreme Court .
Here , the continued constitutionality of qui tam provisions would undergo further rigorous examination under the cloud of numerous recent Supreme Court decisions favorable to the holding in Zafirov .
The Takeaways
This ruling on whistleblower rights carries significant implications . For whistleblowers , the decision potentially undermines their authority to initiate lawsuits on behalf of the government .
If upheld , Zafirov will significantly limit the capability to expose and rectify wrongdoings in a timely and effective manner . Furthermore , it poses a direct threat to whistleblower protection as it questions the constitutional viability of appointing relators .
As for companies , the changes could influence FCA litigation processes . A potential reduction in the number of claims pursued against them could be seen if relators lose capacity to initiate qui tam actions . The business community must strategically assess the evolving judicial landscape to understand its potential impact on compliance and internal reporting structures .
Companies may need to reinforce their internal whistleblower policies and encourage a culture of transparency to preemptively address possible violations . This would not only mitigate the risk of litigation but also uphold ethical business practices .