by Joshua Drew, Ian Herbert, Bradley Markano, and Connor Farrell
Left to proper: Joshua Drew, Ian Herbert, Bradley Markano, and Connor Farrell (photographs courtesy of Miller & Chevalier)
On July 14, 2025, Janssen filed an attraction to the Third Circuit difficult what it characterised in its transient because the “largest ever” judgment beneath the federal False Claims Act (FCA): roughly $1.6 billion, together with over $1.2 billion in civil penalties and $360 million in treble damages. The scope of legal responsibility imposed on the healthcare firm, together with distinctive info underlying the case, current a number of essential constitutional points, together with Article II-based challenges that the FCA’s qui tam provisions improperly delegate to relators the manager authority to pursue punitive quasi-criminal penalties, in addition to whether or not the penalties imposed violate the Fifth Modification’s Due Course of Clause or Eighth Modification’s Extreme Fines Clause.
In 2012, two qui tam relators — workers of Janssen — introduced swimsuit within the U.S. District Courtroom for the District of New Jersey, alleging 56 claims beneath the federal FCA, the federal Anti-Kickback Statute, and varied state false claims acts. The relators’ claims centered round an alleged scheme by Janssen for off-label promotion of two HIV/AIDS medication, Prezista and Intelence. The federal authorities declined to intervene within the district courtroom case.[1]
After a six-week trial in 2024, the jury discovered Janssen liable beneath the federal FCA for unlawfully selling the off-label use of Prezista or Intelence. DNJ Order at 2. The jury decided that Janssen had submitted 159,574 false claims in violation of the FCA and awarded $120 million in damages. Id.
On Janssen’s movement for judgment as a matter of legislation and relators’ movement for entry of judgment, the district courtroom upheld the jury verdict with respect to violations of the federal FCA, awarding the federal government roughly $360 million in treble damages. Id. at 31. The courtroom additionally awarded civil penalties of $8,000 per declare, “close to the center of the statutory vary”— amounting to $1.63 billion complete. Id. at 33. In figuring out the right penalty throughout the statutory vary, the courtroom thought of Janssen’s “deliberate and calculated” illegal advertising and marketing conduct that spanned a number of years, and the shortage of proof of precise affected person hurt. Id. at 33-34. The courtroom additionally discovered that the penalty, although massive, was “not so grossly disproportionate to the jury’s discovering of precise damages that it could represent extreme punishment or a breach of due course of beneath the U.S. Structure,” noting that penalties “falling under the utmost statutory fines for a given offense…obtain a powerful presumption of constitutionality.” Id. at 34 (quoting Yates v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1314 (eleventh Cir. 2021)).
In awarding fines exceeding $1 billion, the District of New Jersey deviated from quite a few courts which have not too long ago refused to award comparable damages, citing grave considerations in regards to the threat of extreme fines. These embrace a July 7, 2025, case from the Southern District of New York in United States ex rel. Bassan v. Omnicare, Inc., which refused to use the FCA’s civil penalties “to the letter” when doing so would end in an award of practically $26 billion. No. 15 CIV. 4179 (CM), (S.D.N.Y. July 7, 2025). Equally, in U.S. ex rel. Taylor v. Healthcare Associates of Tex. (N.D. Tex. Feb. 26, 2025), the jury discovered defendants liable beneath the FCA for $2.7 million in damages for the submission of practically 22,000 false claims. The courtroom held that even the imposition of minimal statutory penalties would end in a $300 million complete, and 100 instances the damages—an extreme quantity in violation of the Eighth Modification. The courtroom finally imposed an $8 million penalty, representing lower than three p.c of the statutory minimal. And in February of final 12 months, the District of Minnesota in United States of America ex rel. Fesenmaier v. Cameron-Ehlen Group, Inc. et al. agreed with the defendants {that a} $487 million judgment, comprised of $352 million in penalties, was in battle with the Extreme Fines Clause, decreasing the entire award to $217 million.
The district courtroom in Janssen additionally made quick shrift of the corporate’s argument that the qui tam provisions of the FCA are unconstitutional as a result of they symbolize an “impermissible delegation of govt energy to a personal occasion.” DNJ Order at 24. The courtroom rejected as unpersuasive Janssen’s reliance on the latest Florida district courtroom choice in United States ex rel. Zafirov v. Florida Medical Associates, LLC, Civ. No. 19-1236, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024), declining to observe a single “non-precedential and out-of-circuit courtroom choice” when each federal circuit courtroom of appeals that has addressed the difficulty has held the provisions are constitutional. Id.
Jansen’s transient on attraction to the Third Circuit was filed on July 14, 2025. The attraction raises two noteworthy constitutional arguments which have vital implications for future FCA litigants.
Janssen’s attraction argues that the qui tam provisions are unconstitutional. Noting that the Third Circuit has in a roundabout way addressed the query, Janssen argues that qui tam relators perform as “officers” of america as a result of they “train vital authority pursuant to the legislation of america” and occupy a “persevering with place established by legislation” however usually are not appointed by nor accountable to the President in violation of Article II. Janssen Transient at 49-50.
Janssen once more factors to the holding in Zafirov, which acknowledged that the FCA “permits a relator not solely to direct litigation, but in addition to bind the federal authorities with out direct accountability to anybody within the Govt Department,” independence higher than that afforded to a “Senate-confirmed United States Lawyer.” Id. at 51. Janssen argues that the scope of this vital authority is powerfully illustrated by the damages within the prompt case, during which the relators had been allowed to wield “sweeping and unchecked govt authority” to pursue a authorized principle — that off-label advertising and marketing mechanically renders reimbursement claims false — that DOJ disagrees with and that conflicts with the federal authorities’s “liberal reimbursement coverage for HIV remedy.” Id. at 51-52.
Janssen’s transient additionally argues that the award of greater than $1 billion in civil penalties beneath the FCA was “grossly extreme” in violation of the Fifth Modification’s Due Course of Clause and Eight Modification’s Extreme Fines Clause. See Janssen Transient at 52. Beneath each clauses, Janssen argues that the courtroom did not correctly weigh three elements required by caselaw: (1) the diploma of reprehensibility of the defendant’s misconduct; (2) the disparity between the punitive damages award and the precise or potential hurt suffered; and (3) the distinction between the punitive damages awarded and the civil penalties approved or imposed in comparable instances. Id. at 53.
Arguing that the district courtroom failed to contemplate these elements, Janssen asserts that the $1.2 billion in penalties was grossly disproportionate beneath all three guideposts. Id. at 53-54. The corporate emphasizes that there was no proof of affected person hurt because of its alleged improper advertising and marketing scheme — sufferers had been merely prescribed its medication in lieu of alternate options — and there was no proof that Prezista and Intelence had been much less efficient or extra expensive than the alternate options. Id. at 54. Additional, Janssen asserts that the ten:1 ratio of penalties to compensatory damages ($1.2 billion in penalties to $120 million in damages) exceeded smaller ratios that varied courts had beforehand held constituted the higher restrict of constitutionality, and offered exemplary FCA instances that concerned extra egregious defendant conduct, however resulted in judgments with lesser penalty to damages ratios. Id. at 56-57.
Amici the U.S. Chamber of Commerce and the American Tort Reform Affiliation additionally take concern with the district courtroom’s “mechanical” software of the FCA’s civil penalty provisions, contending that the imposition of a ten-figure punishment was grossly disproportionate to Janssen’s conduct—particularly in gentle of the truth that no sufferers had been really harmed. Chamber Transient at 27. The amici additionally clarify that the penalties within the case completely illustrate the underlying constitutional points with the FCA’s qui tam provisions, the place profit-driven relators who usually are not accountable to the manager or the general public and who usually are not “charged with exercising judgment within the enforcement of the legal guidelines” (as Article II mandates), search to “exploit[] the FCA’s per-claim penalties to extract constitutionally extreme fines.” Id. at 27-28.
One extra constitutional argument from an amicus transient warrants word: a quick in assist of Janssen by the Pharmaceutical Analysis and Producers of America (PhRMA) and Superior Medical Expertise Affiliation argues that affirming the district courtroom’s judgment would increase First Modification considerations. The transient cautions that the advertising and marketing of off-label makes use of of medication is truthful business speech, such that any FCA legal responsibility premised on that conduct might have a chilling impact on protected speech in violation of the First Modification. See PhRMA Transient at 25-27.[2]
As now we have beforehand mentioned (right here and right here), a rising checklist of justices, judges, and advocates have questioned the constitutionality of the FCA’s qui tam provisions, and the query is pending earlier than the Eleventh Circuit. If it chooses to take action, the Third Circuit can now handle the query immediately for the primary time in resolving Janssen’s attraction. And the scope of Janssen’s legal responsibility, coupled with the underlying info — together with the shortage of proof of precise hurt to sufferers and the truth that legal responsibility was imposed on a authorized principle that DOJ has disagreed with in different instances — presents a novel alternative to grapple with the extraordinary energy that relators wield beneath the fashionable incarnation of the FCA.
On the identical time, the attraction offers a gap for the Third Circuit to contemplate how the FCA’s civil penalties must be utilized in gentle of the Fifth Modification’s Due Course of Clause and the Eight Modification’s Extreme Fines Clause. An FCA swimsuit within the healthcare area, the place a lot of claims had been submitted to the federal government, offers a ripe event to advance the legislation on what constitutes a proportionate penalty.
[1] The USA has since intervened in Janssen’s attraction for the restricted goal of defending the constitutionality of the qui tam and civil penalty provisions of the False Claims Act.
[2] PhRMA analogizes to United States v. Caronia, the place the Second Circuit held that criminalizing the promotion of a drug’s off-label use beneath the misbranding provisions of the Federal Meals, Drug and Beauty Act (FDCA) would run afoul of the First Modification’s safety of free speech. 703 F.3d 149 (2nd Cir. 2012).
Joshua Drew and Ian Herbert are Members, Bradley Markano is Counsel, and Connor Farrell is a Senior Affiliate at Miller & Chevalier. This text first appeared on the agency’s weblog.
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College College of Legislation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this web site and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility with reference to infringement of mental property rights stays with the creator(s).
by Joshua Drew, Ian Herbert, Bradley Markano, and Connor Farrell
Left to proper: Joshua Drew, Ian Herbert, Bradley Markano, and Connor Farrell (photographs courtesy of Miller & Chevalier)
On July 14, 2025, Janssen filed an attraction to the Third Circuit difficult what it characterised in its transient because the “largest ever” judgment beneath the federal False Claims Act (FCA): roughly $1.6 billion, together with over $1.2 billion in civil penalties and $360 million in treble damages. The scope of legal responsibility imposed on the healthcare firm, together with distinctive info underlying the case, current a number of essential constitutional points, together with Article II-based challenges that the FCA’s qui tam provisions improperly delegate to relators the manager authority to pursue punitive quasi-criminal penalties, in addition to whether or not the penalties imposed violate the Fifth Modification’s Due Course of Clause or Eighth Modification’s Extreme Fines Clause.
In 2012, two qui tam relators — workers of Janssen — introduced swimsuit within the U.S. District Courtroom for the District of New Jersey, alleging 56 claims beneath the federal FCA, the federal Anti-Kickback Statute, and varied state false claims acts. The relators’ claims centered round an alleged scheme by Janssen for off-label promotion of two HIV/AIDS medication, Prezista and Intelence. The federal authorities declined to intervene within the district courtroom case.[1]
After a six-week trial in 2024, the jury discovered Janssen liable beneath the federal FCA for unlawfully selling the off-label use of Prezista or Intelence. DNJ Order at 2. The jury decided that Janssen had submitted 159,574 false claims in violation of the FCA and awarded $120 million in damages. Id.
On Janssen’s movement for judgment as a matter of legislation and relators’ movement for entry of judgment, the district courtroom upheld the jury verdict with respect to violations of the federal FCA, awarding the federal government roughly $360 million in treble damages. Id. at 31. The courtroom additionally awarded civil penalties of $8,000 per declare, “close to the center of the statutory vary”— amounting to $1.63 billion complete. Id. at 33. In figuring out the right penalty throughout the statutory vary, the courtroom thought of Janssen’s “deliberate and calculated” illegal advertising and marketing conduct that spanned a number of years, and the shortage of proof of precise affected person hurt. Id. at 33-34. The courtroom additionally discovered that the penalty, although massive, was “not so grossly disproportionate to the jury’s discovering of precise damages that it could represent extreme punishment or a breach of due course of beneath the U.S. Structure,” noting that penalties “falling under the utmost statutory fines for a given offense…obtain a powerful presumption of constitutionality.” Id. at 34 (quoting Yates v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1314 (eleventh Cir. 2021)).
In awarding fines exceeding $1 billion, the District of New Jersey deviated from quite a few courts which have not too long ago refused to award comparable damages, citing grave considerations in regards to the threat of extreme fines. These embrace a July 7, 2025, case from the Southern District of New York in United States ex rel. Bassan v. Omnicare, Inc., which refused to use the FCA’s civil penalties “to the letter” when doing so would end in an award of practically $26 billion. No. 15 CIV. 4179 (CM), (S.D.N.Y. July 7, 2025). Equally, in U.S. ex rel. Taylor v. Healthcare Associates of Tex. (N.D. Tex. Feb. 26, 2025), the jury discovered defendants liable beneath the FCA for $2.7 million in damages for the submission of practically 22,000 false claims. The courtroom held that even the imposition of minimal statutory penalties would end in a $300 million complete, and 100 instances the damages—an extreme quantity in violation of the Eighth Modification. The courtroom finally imposed an $8 million penalty, representing lower than three p.c of the statutory minimal. And in February of final 12 months, the District of Minnesota in United States of America ex rel. Fesenmaier v. Cameron-Ehlen Group, Inc. et al. agreed with the defendants {that a} $487 million judgment, comprised of $352 million in penalties, was in battle with the Extreme Fines Clause, decreasing the entire award to $217 million.
The district courtroom in Janssen additionally made quick shrift of the corporate’s argument that the qui tam provisions of the FCA are unconstitutional as a result of they symbolize an “impermissible delegation of govt energy to a personal occasion.” DNJ Order at 24. The courtroom rejected as unpersuasive Janssen’s reliance on the latest Florida district courtroom choice in United States ex rel. Zafirov v. Florida Medical Associates, LLC, Civ. No. 19-1236, 2024 WL 4349242 (M.D. Fla. Sept. 30, 2024), declining to observe a single “non-precedential and out-of-circuit courtroom choice” when each federal circuit courtroom of appeals that has addressed the difficulty has held the provisions are constitutional. Id.
Jansen’s transient on attraction to the Third Circuit was filed on July 14, 2025. The attraction raises two noteworthy constitutional arguments which have vital implications for future FCA litigants.
Janssen’s attraction argues that the qui tam provisions are unconstitutional. Noting that the Third Circuit has in a roundabout way addressed the query, Janssen argues that qui tam relators perform as “officers” of america as a result of they “train vital authority pursuant to the legislation of america” and occupy a “persevering with place established by legislation” however usually are not appointed by nor accountable to the President in violation of Article II. Janssen Transient at 49-50.
Janssen once more factors to the holding in Zafirov, which acknowledged that the FCA “permits a relator not solely to direct litigation, but in addition to bind the federal authorities with out direct accountability to anybody within the Govt Department,” independence higher than that afforded to a “Senate-confirmed United States Lawyer.” Id. at 51. Janssen argues that the scope of this vital authority is powerfully illustrated by the damages within the prompt case, during which the relators had been allowed to wield “sweeping and unchecked govt authority” to pursue a authorized principle — that off-label advertising and marketing mechanically renders reimbursement claims false — that DOJ disagrees with and that conflicts with the federal authorities’s “liberal reimbursement coverage for HIV remedy.” Id. at 51-52.
Janssen’s transient additionally argues that the award of greater than $1 billion in civil penalties beneath the FCA was “grossly extreme” in violation of the Fifth Modification’s Due Course of Clause and Eight Modification’s Extreme Fines Clause. See Janssen Transient at 52. Beneath each clauses, Janssen argues that the courtroom did not correctly weigh three elements required by caselaw: (1) the diploma of reprehensibility of the defendant’s misconduct; (2) the disparity between the punitive damages award and the precise or potential hurt suffered; and (3) the distinction between the punitive damages awarded and the civil penalties approved or imposed in comparable instances. Id. at 53.
Arguing that the district courtroom failed to contemplate these elements, Janssen asserts that the $1.2 billion in penalties was grossly disproportionate beneath all three guideposts. Id. at 53-54. The corporate emphasizes that there was no proof of affected person hurt because of its alleged improper advertising and marketing scheme — sufferers had been merely prescribed its medication in lieu of alternate options — and there was no proof that Prezista and Intelence had been much less efficient or extra expensive than the alternate options. Id. at 54. Additional, Janssen asserts that the ten:1 ratio of penalties to compensatory damages ($1.2 billion in penalties to $120 million in damages) exceeded smaller ratios that varied courts had beforehand held constituted the higher restrict of constitutionality, and offered exemplary FCA instances that concerned extra egregious defendant conduct, however resulted in judgments with lesser penalty to damages ratios. Id. at 56-57.
Amici the U.S. Chamber of Commerce and the American Tort Reform Affiliation additionally take concern with the district courtroom’s “mechanical” software of the FCA’s civil penalty provisions, contending that the imposition of a ten-figure punishment was grossly disproportionate to Janssen’s conduct—particularly in gentle of the truth that no sufferers had been really harmed. Chamber Transient at 27. The amici additionally clarify that the penalties within the case completely illustrate the underlying constitutional points with the FCA’s qui tam provisions, the place profit-driven relators who usually are not accountable to the manager or the general public and who usually are not “charged with exercising judgment within the enforcement of the legal guidelines” (as Article II mandates), search to “exploit[] the FCA’s per-claim penalties to extract constitutionally extreme fines.” Id. at 27-28.
One extra constitutional argument from an amicus transient warrants word: a quick in assist of Janssen by the Pharmaceutical Analysis and Producers of America (PhRMA) and Superior Medical Expertise Affiliation argues that affirming the district courtroom’s judgment would increase First Modification considerations. The transient cautions that the advertising and marketing of off-label makes use of of medication is truthful business speech, such that any FCA legal responsibility premised on that conduct might have a chilling impact on protected speech in violation of the First Modification. See PhRMA Transient at 25-27.[2]
As now we have beforehand mentioned (right here and right here), a rising checklist of justices, judges, and advocates have questioned the constitutionality of the FCA’s qui tam provisions, and the query is pending earlier than the Eleventh Circuit. If it chooses to take action, the Third Circuit can now handle the query immediately for the primary time in resolving Janssen’s attraction. And the scope of Janssen’s legal responsibility, coupled with the underlying info — together with the shortage of proof of precise hurt to sufferers and the truth that legal responsibility was imposed on a authorized principle that DOJ has disagreed with in different instances — presents a novel alternative to grapple with the extraordinary energy that relators wield beneath the fashionable incarnation of the FCA.
On the identical time, the attraction offers a gap for the Third Circuit to contemplate how the FCA’s civil penalties must be utilized in gentle of the Fifth Modification’s Due Course of Clause and the Eight Modification’s Extreme Fines Clause. An FCA swimsuit within the healthcare area, the place a lot of claims had been submitted to the federal government, offers a ripe event to advance the legislation on what constitutes a proportionate penalty.
[1] The USA has since intervened in Janssen’s attraction for the restricted goal of defending the constitutionality of the qui tam and civil penalty provisions of the False Claims Act.
[2] PhRMA analogizes to United States v. Caronia, the place the Second Circuit held that criminalizing the promotion of a drug’s off-label use beneath the misbranding provisions of the Federal Meals, Drug and Beauty Act (FDCA) would run afoul of the First Modification’s safety of free speech. 703 F.3d 149 (2nd Cir. 2012).
Joshua Drew and Ian Herbert are Members, Bradley Markano is Counsel, and Connor Farrell is a Senior Affiliate at Miller & Chevalier. This text first appeared on the agency’s weblog.
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College College of Legislation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this web site and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility with reference to infringement of mental property rights stays with the creator(s).
