The False Claims Act (FCA) has long been the federal government’s most potent weapon against healthcare fraud. Its qui tam provisions, which empower private individuals known as “relators” to bring suit on behalf of the United States, have been the source of billions of dollars in judgments and settlements against healthcare providers, pharmaceutical manufacturers, and other industry participants. Now, for the first time in decades, the constitutionality of the FCA’s qui tam mechanism is being once again tested in federal appellate courts in a potentially meaningful way. While the FCA remains firmly in place for now, these developments raise important questions that healthcare providers should not ignore – as well as potentially potent defenses for those facing FCA liability.
The Current Landscape: Penelow v. Janssen and the Third Circuit
The question is presently before the United States Court of Appeals for the Third Circuit in United States ex rel. Penelow v. Janssen Products, L.P., No. 25-1818, a case stemming from a $1.64 billion judgment (one of the largest in FCA history) entered against the pharmaceutical company Janssen for alleged off-label marketing of HIV medications Prezista and Intelence.
Notably, the government declined to intervene, leaving private relators to prosecute the case. The resulting judgment included $120 million in compensatory damages (trebled to $360 million) and an additional $1.276 billion in civil penalties. Janssen has raised multiple grounds for reversal, including, critically, a facial challenge to the constitutionality of the FCA’s qui tam provisions under Article II of the Constitution.
The Constitutional Arguments Against the Qui Tam Provisions
The constitutional attack proceeds along two principal axes, both rooted in Article II’s structural protections:
- The Appointments Clause. Article II, Section 2 provides that “Officers of the United States” must be appointed by the President, courts of law, or heads of departments. Challengers argue that FCA relators function as de facto officers because they “exercise significant authority pursuant to the laws of the United States” and occupy a “continuing position established by law.” Under the Supreme Court’s framework in Lucia v. SEC, 585 U.S. 237 (2018), those two features are the hallmarks of an “officer.” Because relators are self-appointed, private individuals who are arguably not accountable to the Executive Branch, challengers contend that the qui tam framework violates the Appointments Clause.
- The Vesting and Take Care Clauses. Article II, Section 1 vests “all executive Power” in the President, and Section 3 directs the President to “take Care that the Laws be faithfully executed.” The argument here is that litigation on behalf of the United States is a core executive function. When the government declines to intervene, as it did in Penelow, the relator alone controls the litigation, including decisions that can bind the United States upon entry of final judgment, yet remains subject to no meaningful presidential oversight or control. As amici argued before the Third Circuit, Congress was explicit when it revived the qui tam device in 1986 that it was doing so because it did not trust the Executive Branch to enforce the law—a motivation that, challengers contend, is a textbook Article II violation.
The Zafirov Decision: A Lone District Court Breaks Ranks
The sole federal court to have accepted such arguments to date is the United States District Court for the Middle District of Florida in United States ex rel. Zafirov v. Florida Medical Associates, LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024), a decision Frier Levitt analyzed at the time it was issued. The Zafirov court held that relators are improperly appointed “officers” under Article II, emphasizing that relators exercise “significant authority” because, absent government intervention, the FCA “allows a relator not only to direct litigation, but also to bind the federal government without direct accountability to anyone in the Executive Branch,” affording relators “greater independence than a Senate-confirmed United States Attorney or Assistant Attorney General.” The Zafirov decision is currently on appeal before the Eleventh Circuit (Nos. 24-13581, -13583), and numerous district courts have criticized it as unpersuasive.
The Arguments in Defense of the Qui Tam Provisions
The United States has intervened in Penelow specifically to defend the constitutionality of the qui tam mechanism, and its arguments are substantial.
- Relators are not “officers.” The government contends that relators lack the fundamental indicia of officeholders. Their roles are limited in time and scope, confined to a particular case, and fundamentally personal in nature. Unlike an independent counsel or a bank receiver—officials whose duties “continue, though the person be changed”—a relator’s pursuit of a qui tam action is personal and cannot be transferred from one relator to another. The Supreme Court itself, in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000), expressly rejected the notion that relators serve as agents of the United States, holding instead that the FCA effects a “partial assignment” of the government’s damages claim.
- Historical precedent. The government’s most formidable argument is historical. Qui tam provisions have existed “for hundreds of years in England, and in this country ever since the foundation of our Government.” The First Congress enacted numerous qui tam statutes, and their constitutionality was accepted by all three branches of the early republic. As the government argued at oral argument, the modern FCA is, if anything, a fortiori constitutional because it includes extensive mechanisms of government control (including the seal period, the power to intervene and dismiss, and the ability to settle or veto a relator’s proposed settlement) that were absent from founding-era qui tam statutes.
- Unanimous circuit court agreement. Every federal circuit court of appeals to have addressed the issue has upheld the constitutionality of the qui tam provisions, and only a single district court (the Zafirov court) has held otherwise.
The Third Circuit Is Unlikely to Break New Ground
Based on the weight of appellate authority, the government’s strong historical arguments, and the posture of the briefing, it appears reasonably unlikely that the Third Circuit will be the court to break from the uniform consensus and hold the FCA’s qui tam provisions unconstitutional. The Third Circuit itself has previously assumed, without deciding, that the provisions are constitutional, see Com. of Pa., Dep’t of Pub. Welfare v. U.S. Dep’t of Health & Human Services, 80 F.3d 796, 806 (3d Cir. 1996), and nothing in the oral argument suggests the panel is inclined to overturn decades of settled appellate precedent.
Penelow and Zafirov’s Theories Could Find Footing with the Supreme Court
Healthcare providers and their counsel should not mistake the likely outcome in the Third Circuit for the end of this debate. The constitutional challenge to the FCA’s qui tam provisions has legitimate momentum in the highest Court.
Three sitting Supreme Court Justices have signaled that the issue deserves serious consideration. Justice Kavanaugh, joined by Justice Barrett, wrote in concurrence in United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419, 442 (2023), that “there 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.” Justice Thomas went further in his Polansky dissent, stating that “there is good reason to suspect that Article II does not permit private relators to represent the United States’ interests in FCA suits.” And most recently, in Wisconsin Bell, Inc. v. United States ex rel. Health, 145 S. Ct. 498, 515 (2025), Justice Kavanaugh, joined by Justice Thomas, wrote that “[t]he Act’s qui tam provisions raise substantial constitutional questions under Article II.”
Justice Thomas’s interest is particularly noteworthy. Long recognized as the Court’s most committed originalist and structural constitutionalist, Justice Thomas has made clear for years that he views the delegation of executive enforcement authority to private, unaccountable relators as fundamentally incompatible with Article II’s design. His willingness to state openly that Article II may not permit private relators to represent the United States’ interests suggests he is prepared to vote to strike down the qui tam mechanism in the right case.
With Zafirov now pending before the Eleventh Circuit and constitutional challenges being raised in multiple other cases, it is only a matter of time before the Supreme Court has the vehicle it needs to take up the question. And when it does, the healthcare industry may find that at least three Justices are already sympathetic to the argument, needing only two more to change the landscape of FCA enforcement forever.
What This Means for Healthcare Providers
For now, the FCA’s qui tam provisions remain the law of the land, and providers must continue to maintain rigorous compliance programs. But the constitutional challenge is real and could gather force. Providers facing qui tam litigation, particularly in cases where the government has declined to intervene, should ensure that their counsel preserves the constitutional arguments asserted in these cases at every stage of the proceedings. What may be a losing argument today could be a winning one at the Supreme Court tomorrow.
How Frier Levitt Can Help
Frier Levitt is a nationally recognized healthcare law firm with deep experience representing providers, physician groups, pharmacies, laboratories, and other healthcare organizations in regulatory enforcement matters, including False Claims Act investigations and qui tam litigation.
Our attorneys regularly defend clients against whistleblower-initiated actions at every stage—from pre-intervention investigations through trial and appeal—and are well-versed in the evolving constitutional landscape surrounding the FCA’s qui tam provisions.
Whether you are facing an active qui tam suit, responding to a government subpoena or civil investigative demand, or seeking to strengthen your compliance infrastructure to reduce enforcement risk, Frier Levitt has the experience and strategic judgment to protect your interests. To learn more about how we can assist your organization, contact us today.
Senior Associate
Senior Associate
