On July 14, 2025, Janssen filed an appeal to the Third Circuit challenging what it characterized in its brief as the "largest ever" judgment under the federal False Claims Act (FCA): approximately $1.6 billion, including over $1.2 billion in civil penalties and $360 million in treble damages. The scope of liability imposed on the healthcare company, along with unique facts underlying the case, present several important constitutional issues, including Article II-based challenges that the FCA's qui tam provisions improperly delegate to relators the executive authority to pursue punitive quasi-criminal penalties, as well as whether the penalties imposed violate the Fifth Amendment's Due Process Clause or Eighth Amendment's Excessive Fines Clause.

Background

In 2012, two qui tam relators — employees of Janssen — brought suit in the U.S. District Court for the District of New Jersey, alleging 56 claims under the federal FCA, the federal Anti-Kickback Statute, and various state false claims acts. The relators' claims centered around an alleged scheme by Janssen for off-label promotion of two HIV/AIDS drugs, Prezista and Intelence. The federal government declined to intervene in the district court case.¹   

After a six-week trial in 2024, the jury found Janssen liable under the federal FCA for unlawfully promoting the off-label use of Prezista or Intelence. DNJ Order at 2. The jury determined that Janssen had submitted 159,574 false claims in violation of the FCA and awarded $120 million in damages. Id. 

On Janssen's motion for judgment as a matter of law and relators' motion for entry of judgment, the district court upheld the jury verdict with respect to violations of the federal FCA, awarding the government approximately $360 million in treble damages. Id. at 31. The court also awarded civil penalties of $8,000 per claim, "near the middle of the statutory range"— amounting to $1.63 billion total. Id. at 33. In determining the proper penalty within the statutory range, the court considered Janssen's "deliberate and calculated" unlawful marketing conduct that spanned several years, and the lack of evidence of actual patient harm. Id. at 33-34. The court also found that the penalty, though large, was "not so grossly disproportionate to the jury's finding of actual damages that it would constitute excessive punishment or a breach of due process under the U.S. Constitution," noting that penalties "falling below the maximum statutory fines for a given offense…receive a strong presumption of constitutionality." Id. at 34 (quoting Yates v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1314 (11th Cir. 2021)). 

In awarding fines exceeding $1 billion, the District of New Jersey deviated from a number of courts that have recently refused to award comparable damages, citing grave concerns about the risk of excessive fines. These include a July 7, 2025, case from the Southern District of New York in United States ex rel. Bassan v. Omnicare, Inc., which refused to apply the FCA's civil penalties "to the letter" when doing so would result in an award of nearly $26 billion. No. 15 CIV. 4179 (CM), (S.D.N.Y. July 7, 2025). Similarly, in U.S. ex rel. Taylor v. Healthcare Associates of Tex. (N.D. Tex. Feb. 26, 2025), the jury found defendants liable under the FCA for $2.7 million in damages for the submission of nearly 22,000 false claims. The court held that even the imposition of minimum statutory penalties would result in a $300 million total, and 100 times the damages—an excessive amount in violation of the Eighth Amendment. The court ultimately imposed an $8 million penalty, representing less than three percent of the statutory minimum. And in February of last year, 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 conflict with the Excessive Fines Clause, reducing the total award to $217 million.

The district court in Janssen also made short shrift of the company's argument that the qui tam provisions of the FCA are unconstitutional because they represent an "impermissible delegation of executive power to a private party." DNJ Order at 24. The court rejected as unpersuasive Janssen's reliance on the recent Florida district court decision 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 follow a single "non-precedential and out-of-circuit court decision" when every federal circuit court of appeals that has addressed the issue has held the provisions are constitutional. Id. 

Janssen's brief on appeal to the Third Circuit was filed on July 14, 2025. The appeal raises two noteworthy constitutional arguments which have significant implications for future FCA litigants.

Constitutionality of Qui Tam Provisions

Janssen's appeal argues that the qui tam provisions are unconstitutional. Noting that the Third Circuit has not directly addressed the question, Janssen argues that qui tam relators function as "officers" of the United States because they "exercise significant authority pursuant to the law of the United States" and occupy a "continuing position established by law" but are not appointed by nor accountable to the President in violation of Article II. Janssen Brief at 49-50. 

Janssen again points to the holding in Zafirov, which recognized that 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," independence greater than that afforded to a "Senate-confirmed United States Attorney." Id. at 51. Janssen argues that the scope of this significant authority is powerfully illustrated by the damages in the instant case, in which the relators were allowed to wield "sweeping and unchecked executive authority" to pursue a legal theory — that off-label marketing automatically renders reimbursement claims false — that DOJ disagrees with and that conflicts with the federal government's "liberal reimbursement policy for HIV treatment." Id. at 51-52. 

Constitutionality of Penalties

Janssen's brief also argues that the award of more than $1 billion in civil penalties under the FCA was "grossly excessive" in violation of the Fifth Amendment's Due Process Clause and Eight Amendment's Excessive Fines Clause. See Janssen Brief at 52. Under both clauses, Janssen argues that the court failed to properly weigh three factors required by caselaw: (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the punitive damages award and the actual or potential harm suffered; and (3) the difference between the punitive damages awarded and the civil penalties authorized or imposed in comparable cases. Id. at 53.

Arguing that the district court failed to consider these factors, Janssen asserts that the $1.2 billion in penalties was grossly disproportionate under all three guideposts. Id. at 53-54. The company emphasizes that there was no evidence of patient harm due to its alleged improper marketing scheme — patients were merely prescribed its drugs in lieu of alternatives — and there was no evidence that Prezista and Intelence were less effective or more costly than the alternatives. Id. at 54. Further, Janssen asserts that the 10:1 ratio of penalties to compensatory damages ($1.2 billion in penalties to $120 million in damages) exceeded smaller ratios that various courts had previously held constituted the upper limit of constitutionality, and provided exemplary FCA cases that involved more egregious defendant conduct, but 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 Association also take issue with the district court's "mechanical" application of the FCA's civil penalty provisions, contending that the imposition of a ten-figure punishment was grossly disproportionate to Janssen's conduct—especially in light of the fact that no patients were actually harmed. Chamber Brief at 27. The amici also explain that the penalties in the case perfectly illustrate the underlying constitutional issues with the FCA's qui tam provisions, where profit-driven relators who are not accountable to the executive or the public and who are not "charged with exercising judgment in the enforcement of the laws" (as Article II mandates), seek to "exploit[] the FCA's per-claim penalties to extract constitutionally excessive fines." Id. at 27-28.

First Amendment Concerns 

One additional constitutional argument from an amicus brief warrants note: a brief in support of Janssen by Pharmaceutical Research and Manufacturers of America (PhRMA) and the Advanced Medical Technology Association argues that affirming the district court's judgment would raise First Amendment concerns. The brief cautions that the marketing of off-label uses of drugs is truthful commercial speech, such that any FCA liability premised on that conduct may have a chilling effect on protected speech in violation of the First Amendment. See PhRMA Brief at 25-27.²   

Key Takeaways

As we have previously discussed (here and here), a growing list of justices, judges, and advocates have questioned the constitutionality of the FCA's qui tam provisions, and the question is pending before the Eleventh Circuit. If it chooses to do so, the Third Circuit can now address the question directly for the first time in resolving Janssen's appeal. And the scope of Janssen's liability, coupled with the underlying facts — including the lack of evidence of actual harm to patients and the fact that liability was imposed on a legal theory that DOJ has disagreed with in other cases — presents a unique opportunity to grapple with the extraordinary power that relators wield under the modern incarnation of the FCA. 

At the same time, the appeal provides an opening for the Third Circuit to consider how the FCA's civil penalties should be applied in light of the Fifth Amendment's Due Process Clause and the Eight Amendment's Excessive Fines Clause. An FCA suit in the healthcare space, where a large number of claims were submitted to the government, provides a ripe occasion to advance the law on what constitutes a proportionate penalty. 

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¹ The United States has since intervened in Janssen's appeal for the limited purpose 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, where the Second Circuit held that criminalizing the promotion of a drug's off-label use under the misbranding provisions of the Federal Food, Drug and Cosmetic Act (FDCA) would run afoul of the First Amendment's protection of free speech. 703 F.3d 149 (2d Cir. 2012). 

If you have any questions about the Janssen case, or questions about the False Claims Act generally, please contact one of the Miller & Chevalier attorneys listed below. 

Joshua Drew, jdrew@milchev.com, 202-626-5811

Ian A. Herbert, iherbert@milchev.com, 202-626-1496

Bradley E. Markano, bmarkano@milchev.com, 202-626-6061

Connor W. Farrell, cfarrell@milchev.com, 202-626-5925 

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