Qui Tam Quandaries: False Claims Act at a Constitutional Crossroads — EnforceMintz

Explore key constitutional False Claims Act (FCA) issues, including Article II and Excessive Fines Clause challenges. Learn how recent court decisions impact FCA enforcement and penalty limits in 2026.

KEY POINTS:

• Constitutional challenges to the FCA’s qui tam provisions are gaining momentum. Courts are increasingly scrutinizing whether allowing private relators to prosecute FCA cases violates Article II’s Appointments Clause and Take Care Clause. Recent decisions and concurring opinions suggest this issue may reach the Supreme Court soon.
• The government’s defense of the qui tam provisions is changing. DOJ has shifted its arguments, now relying heavily on historical practice to defend the constitutionality of qui tam provisions, reflecting the current administration’s expansive view of executive power.
• Excessive Fines Clause limits are being tested. Courts are reducing FCA penalties in cases where statutory minimums would result in disproportionate awards, signaling that ratios above 4:1 may be constitutionally problematic except in cases involving egregious misconduct.
• High-stakes appeals could reshape FCA enforcement. Pending cases may clarify constitutional limits on both qui tam provisions and civil penalties, creating uncertainty for FCA enforcement in 2026.

This article is part of EnforceMintz: Healthcare Enforcement Trends in 2025 & 2026 Outlook, a series exploring key developments and practical strategies for health care organizations navigating enforcement risks. Read more articles from EnforceMintz to stay current on enforcement trends and compliance strategies.

In 2025, courts continued to grapple with two important constitutional questions that arise in FCA matters. First, defendants have increasingly raised constitutional challenges to the FCA’s qui tam provisions under Article II, which vests executive authority in the president. Second, a number of successful constitutional challenges were brought by defendants who were subject to excessive statutory penalties under the FCA.

Article II Challenges

In the last two editions of EnforceMintz, we highlighted the growing trend of constitutional challenges in FCA matters. Two years ago, we explained how Justice Thomas’s dissent in Polansky — which raised questions about whether the FCA’s qui tam provisions violated the Appointments Clause and the Take Care Clause of Article II — might encourage FCA defendants to “press this constitutional issue” in declined cases. Last year we highlighted Judge Mizelle’s decision in Zafirov, which held that the FCA’s qui tam provisions violate the Appointments Clause. This decision has prompted the government “to step in to defend” the FCA in previously declined cases. Three aspects of the constitutional issue warrant particular attention for any entity subject to FCA scrutiny.

The Government Has Narrowed Its Defense of the FCA’s Qui Tam Provisions

The government’s position on the constitutional issue has narrowed over the course of the Zafirov appeal. Specifically, the government argued in its opening appeal brief that the Appointments Clause applies only to members of the government’s workforce.[1] As such, the government’s initial position was that the Appointments Clause does not even apply to FCA relators in the first instance, but the government “refined” its position in its reply. It now maintains that private actors (like qui tam relators) can be subject to the Appointments Clause at least in some circumstances. The government’s reply also acknowledged, with respect to the Take Care Clause issue, that if the qui tam mechanism were a “new development,” there would be “substantial questions” as to its permissibility. The government thus anchored its defense of the qui tam provisions on an appeal to their long history since the time of the country’s founding.

What explains that shift? A change of administration. The government filed its opening brief in January 2025 and the reply brief in April 2025, with a presidential inauguration occurring in between. The current administration takes an expansive view of executive power under Article II and separation of powers principles, and that view is in tension with the qui tam provisions, which allow private parties to initiate investigations and litigation the executive branch may or may not wish to advance. The government’s current defense of the FCA thus has narrowed and is based on the arguments that (1) a relator’s position is not “continuing” and thus does not present an Appointments Clause problem, and (2) historical practice establishes the constitutionality of the FCA’s qui tam provisions.

The Constitutional Challenge May Extend to Intervened Cases

Over the past few years, the constitutional argument has principally been raised in declined cases. However, in the Zafirov appeal, defendants asserted the argument that the FCA’s qui tam provisions are facially unconstitutional and thus violate Article II regardless of the government’s intervention decision. The District Court did not address this issue, but the Eleventh Circuit might. Presumably, the defendants asserted this facial challenge to preserve the issue in the event Zafirov is appealed to the Supreme Court.

Other Judges Are Weighing In

Zafirov is the only District Court case to hold that the FCA’s qui tam provisions violate the Appointments Clause, but a number of other judges have signaled agreement with Judge Mizelle. We expect additional courts and judges will address this issue in 2026.

For example, in March 2025, Judge Duncan of the Fifth Circuit issued a concurring opinion to “point out the constitutional flaws in the FCA’s qui tam device, which our precedent prevents us from addressing.”[2] Specifically, Judge Duncan argued that the qui tam provisions violate both the Appointments Clause and the Take Care Clause because a “Constitution like ours — one that vests all federal executive power in a President — does not allow this outsourcing of prosecutorial power to a private person.”[3]

More recently, in November 2025, Judge Ho of the Fifth Circuit issued a similar concurrence, noting that, in an appropriate case, the court “should revisit whether there are serious constitutional problems with the qui tam provisions” of the FCA.[4] The constitutional argument is also pending on appeal in the Third Circuit. By contrast, the Sixth Circuit recently denied interlocutory review of the constitutional issue, citing prior circuit precedent upholding the constitutionality of the FCA.

These three trends all point in the same direction: Constitutional challenges to the FCA’s qui tam provisions are gaining momentum. When the Eleventh Circuit decides Zafirov, it will be interesting to see whether that decision is limited to the Appointments Clause or whether it also addresses the Take Care Clause or the defendants’ facial constitutional attack. Looking ahead, we expect that the constitutional question may be headed to One First Street by this time next year.

Excessive Fines Challenges

Last year we reported on the Grant ex rel. United States v. Zorn case, in which the Eighth Circuit vacated a punitive damages award as violating the Eight Amendment’s Excessive Fines Clause. As a baseline rule, a civil penalty is unconstitutional if it is “grossly disproportional” to the “gravity” of the defendant’s offense. In 2025, courts further defined the constitutional limits on FCA penalties, focusing on the size of the actual damages award and the nature of the defendant’s conduct.

In United States ex rel. Taylor v. HealthCare Associates of Texas, LLC, a jury found that the defendant submitted 21,844 false claims to Medicare causing $2.75 million in actual damages.[5] The relator sought treble damages of approximately $8.26 million and per-claim civil penalties of $449.3 million, plus post-judgment interest. The civil penalties sought were, in effect, $20,000 per claim (yielding over a 100:1 penalties-to-damages ratio). The District Court reduced the civil penalty, reasoning that application of the FCA’s statutory minimum would yield an unconstitutionally excessive result. In limiting the statutory penalty, the court emphasized that the defendant’s misconduct involved billing rule violations (akin to reporting offenses) rather than deliberate fictitious services. Ultimately, the court imposed a 3:1 penalty-to-damages ratio, awarding approximately $8.26 million in civil penalties.

By contrast, in United States ex rel. D’Anna v. Capstone Medical Resources, LLC, at summary judgment, the court found the defendants submitted nearly 30,000 false claims for psychological and therapeutic services, resulting in approximately $2.1 million in actual damages. The court trebled the initial damages to $6.35 million and imposed statutory penalties of $411.5 million for a total award of $417.9 million (yielding a 65:1 penalty-to-damages ratio).[6] Critically for the purposes of the Excessive Fines analysis, the defendants had previously pled guilty to criminal health care fraud for the same conduct. While the court acknowledged the final judgment was “harsh,” it found the amount constitutionally permissible under the framework established by Congress and because of the deliberate nature of the defendant’s violations.

In United States ex rel. Bassan v. Omnicare, Inc., a jury found that Omnicare submitted over 3.3 million false claims and its parent company caused about 30% of those claims, resulting in about $135.6 million in damages.[7] Trebled damages brought the total damages award to over $406 million. The court acknowledged that a strict application of FCA penalties would have yielded $26.9 billion in penalties, which the court admitted would likely have been unconstitutional. Instead, the government sought $542 million in penalties against Omnicare (4:1 penalties-to-damages ratio), with 30% of those penalties attributed to the parent company jointly and severally. The District Court imposed the penalties requested by the government, finding them constitutionally permissible and noting that a 4:1 ratio was “probably the outer limit” of permissibility in this case, given the substantial damages imposed.

Finally, United States ex rel. Penelow v. Janssen Products, LP, currently pending on appeal in the Third Circuit, raises both an Excessive Fines challenge and an Article II challenge to the FCA’s qui tam provisions.[8] On the Excessive Fines issue, the District Court awarded $120 million in compensatory damages, then imposed a civil penalty award of $1.2 billion (yielding a 10:1 penalty-to-damages ratio). The Janssen appeal is pending and may soon provide additional clarity on appropriate penalty ratios in cases involving substantial damages awards.

These cases highlight two common themes. First, in cases involving technical violations of billing rules or other requirements, constitutional arguments may be particularly compelling in the face of large FCA penalties. Second, in cases involving “substantial” compensatory damages, constitutional concerns may similarly warrant the application of a lesser ratio.

ENDNOTES:

[1]U.S. ex rel. Zafirov v. Florida Med. Assocs., No. 24-13581 (11th Cir. Jan. 6, 2025), ECF 39.

[2]U.S. ex rel. Montcrief v. Peripheral Vascular Assocs., P.A., 133 F.4th 395, 410 (5th Cir. 2025) (Duncan, J., concurring).

[3]Id. at 412 (Duncan, J., concurring).

[4]U.S. ex rel. Gentry v. Encompass Health Rehab. Hosp. of Pearland, L.L.C., No. 25-20093, 2025 U.S. App. LEXIS 28755, at *12 (5th Cir. Nov. 3, 2025) (Ho, J., concurring).

[5]U.S. ex rel. Taylor v. HealthCare Assocs. of Tex., LLC, No. 3:19-CV-02486-N (N.D. Tex. Feb. 26, 2025), ECF 643.

[6]U.S. ex rel. D’Anna v. Capstone Med. Res., LLC, No. 2:19-cv-00391-MHH, 2025 U.S. Dist. LEXIS 60844, at *4 (N.D. Ala. Mar. 31, 2025).

[7]U.S. ex rel. Bassan v. Omnicare, Inc. & CVS Health Corp., No. 15 Civ. 4179 (CM) (S.D.N.Y. July 7, 2025), ECF 779.

[8]U.S. ex rel. Penelow v. Janssen Prods., LP, No. 25-1818 (3d Cir. filed Apr. 29, 2025).

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