The False Claims Act: Evolving Enforcement & Constitutional Scrutiny

The False Claims Act is a centerpiece of the Federal Government’s anti-fraud efforts, accounting for nearly $3 billion in judgments and settlements in fiscal year 2024 alone. Now, two developments could reshape enforcement.  First, the Department of Justice and Department of Health & Human Services recently formed an FCA working group to coordinate government enforcement actions, particularly in top priority areas.  Second, several judges have questioned the constitutionality of the FCA’s qui tam mechanism, which last year generated nearly 70% of new FCA claims.  These developments are worth monitoring for their potentially significant impact on companies in the pharmaceutical and healthcare sectors and on other companies doing business with the government.

Background 

The FCA is used to fight fraud and abuse in federal programs and to restore funds to healthcare programs such as Medicare, Medicaid, and TRICARE.  It provides that a person who knowingly submits, or causes another person to submit, false claims to the government is liable for treble damages plus a penalty linked to inflation.  The FCA also includes a provision allowing private persons to initiate civil actions on the government’s behalf.  31 U.S.C. § 3730(b).  These private persons are called qui tam relators, and they are often insiders with personal knowledge of the alleged fraud perpetrated by the defendant.  If the government does not intervene in an FCA proceeding brought by a qui tam relator, the relator has the right to conduct the action.  Id. Successful relators receive between 15% and 30% of any judgment or settlement.  Relators brought a record 979 FCA actions during the last fiscal year, accounting for $2.4 billion of the $2.9 billion recovered by the government in FCA actions.        

False Claims Act Working Group

In July 2025, DOJ and HHS established a dedicated False Claims Act Working Group, signaling a commitment to coordinating and increasing enforcement of FCA violations. The Working Group is also intended to facilitate enforcement actions in specified priority areas:

• Medicare Advantage;
• Drug, device or biologics pricing, including arrangements for discounts, rebates, service fees, and formulary placement and price reporting;
• Barriers to patient access to care, including violations of network adequacy requirements;
• Kickback arrangements involving pharmaceuticals, medical devices, durable medical equipment, and other federally reimbursed healthcare products;
• Materially defective medical devices that impact patient safety; and
• Manipulation of Electronic Health Records systems to drive inappropriate utilization of Medicare covered products and services.[1] 

The Working Group has also encouraged whistleblowers to report violations of the FCA, particularly in these primary enforcement areas.[2]  Reporting a potential FCA violation to the HHS is not, however, the same as initiating qui tam litigation, and one purpose of the Working Group is to discuss when the DOJ should dismiss a qui tam complaint under 31 U.S.C. § 3730(c)(2)(A) rather than simply electing not to intervene.  Potential grounds on which the DOJ might seek dismissal are set forth in Section 4-4.111 of the DOJ’s Justice Manual and include the merit of the potential claims, “[p]reventing interference with an agency’s policies or the administration of its programs,” and “[c]ontrolling litigation brought on behalf of the United States, in order to protect the Department’s litigation prerogatives.”  U.S. Dep’t of Just., Just. Manual § 4-4.111 (2018).  

The formation of the Working Group and its public statements to date suggest [1] there will be more FCA enforcement actions in the priority areas the Working Group identified, initiated both by the DOJ and by putative qui tam relators; but [2] the DOJ will critically evaluate qui tam FCA actions and move to dismiss those that appear unmeritorious or are inconsistent with the government’s priorities. Companies whose business with the government relates to one or more of the Working Group’s priorities—including pharmaceutical companies—can therefore expect an increase in FCA investigations and litigation and may wish to monitor related processes closely.

Constitutional Challenges to Qui Tam 

Qui tam relators initiate most FCA litigation, but several recent decisions question the constitutionality of the FCA’s qui tam provisions.

Justice Thomas, writing in dissent in U.S. ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419 (2023), observed that the “FCA’s qui tam provisions have long inhabited something of a constitutional twilight zone.”  Id. at 449.  Justice Thomas noted “substantial arguments that the qui tam device is inconsistent with Article II” and that “Congress cannot authorize a private relator to wield executive authority to represent the United States’ interests in civil litigation.”  Id. Justice Kavanaugh, joined by Justice Barrett, encouraged the Supreme Court to “consider the competing arguments on the Article II issue in an appropriate case.”  Id. at 442.

Following Polansky, one district court found that the FCA’s qui tam provisions violate Article II’s Appointments Clause, which requires that “Officers of the United States” be appointed by the President, U.S. CONST. art. II, § 2, cl. 2.  U.S. ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293, (M.D. Fla. 2024), which is currently on appeal to the Eleventh Circuit, holds that an FCA qui tam relator is an officer of the United States who has not been appointed by the President as Article II requires. And this year, two Fifth Circuit Judges concurring in separate cases reached similar conclusions.  First, in U.S. ex rel. Montcrief v. Peripheral Vascular Assocs., P.A., 133 F.4th 395 (5th Cir. 2025), Judge Duncan wrote that the FCA’s qui tam provisions violate both the Appointments Clause and the Take Care Clause, which provides that the President, not a relator or other private person, “shall take Care that the Laws be faithfully executed.”  U.S. CONST. art. II, § 3.  Second, in U. S. of Am. ex rel. Gentry v. Encompass Health Rehab. Hosp. of Pearland, L.L.C., 157 F.4th 758 (5th Cir. 2025), Judge Ho’s concurrence called on the Fifth Circuit to “revisit whether there are serious constitutional problems with the qui tam provisions of the False Claims Act.” Id. at 766.  Specifically, qui tam relators “presume to represent the United States government in federal court, and to defend the interests of the United States Treasury against fraud . . . [but] they are neither appointed by, not accountable to, the President.”  Id. 

These opinions appear to invite defendants in relator-initiated FCA actions to challenge the constitutionality of the FCA’s qui tam provisions, but most courts to consider this issue post-Polansky have held the qui tam provisions are constitutional.  See, e.g., U.S. ex rel. Fiorisce, LLC v. Colo. Tech. Univ., Inc., 130 F.4th 811, 821-822 (10th Cir. 2025); U.S. ex rel. Heath v. Wis. Bell, Inc., 2025 WL 3033792 at *11-13 (E.D. Wis., 2025); U.S. v. Chattanooga Hamilton Cnty., 2024 WL 4784372 at *2-3 (E.D. Tenn. 2024); U.S. v. Reditus Laboratories, LLC, 2024 WL 4351862 at *7-8 (C.D. Ill., 2024); Wallace v. Exactech, Inc., 703 F.Supp.3d 1356, 1365-1366 (N.D. Ala. 2023).  Whether Article II arguments are a viable defense to a qui tam action varies by jurisdiction, but this area of law may change and change quickly, so defendants should consider monitoring developments nationwide to avoid waiving viable defenses.   

Conclusion

The FCA enforcement landscape is evolving.  The Working Group’s priorities are likely to guide government-led FCA cases, as well as near-term, relator-initiated litigation, and companies may wish to review relevant internal processes and compliance programs.  In parallel, the constitutionality of the FCA’s qui tam regime is likely to be litigated in courts around the country, with potentially significant effects on defendants in relator-initiated FCA cases and on government enforcement efforts.  Freshfields will continue to monitor related developments.