Constitutional Challenges Reshape False Claims Act Enforcement

Constitutional challenges to the False Claims Act are gaining momentum in federal courts, potentially reshaping the landscape of government fraud enforcement as 2026 approaches. Two key constitutional questions have dominated FCA litigation: whether the law’s qui tam provisions violate Article II of the Constitution, and whether the statutory penalties imposed in certain cases violate the Eighth Amendment’s Excessive Fines Clause.

The qui tam provisions, which allow private citizens (known as relators) to file lawsuits on behalf of the government and share in any recovery, face mounting scrutiny. These challenges center on Article II, which vests executive authority in the president. Critics argue that allowing private individuals to prosecute cases on behalf of the government violates the Constitution’s Appointments Clause and Take Care Clause.

The landmark case in this debate is Zafirov, where Judge Mizelle ruled that the FCA’s qui tam provisions violate the Appointments Clause. This decision prompted the Department of Justice to defend the constitutionality of the FCA in previously declined cases, signaling the seriousness with which the government views these challenges.

Notably, the government’s defense strategy has shifted following the recent change in administration. Earlier briefs argued that the Appointments Clause applies only to government employees, not private relators. However, more recent filings have “refined” this position, acknowledging that private actors can be subject to the Appointments Clause in certain circumstances.

The current administration, with its expansive view of executive power, has narrowed its defense of qui tam provisions. It now argues that a relator’s position is not “continuing” and thus doesn’t present an Appointments Clause problem, while emphasizing the historical precedent for qui tam provisions dating back to the nation’s founding.

While Zafirov remains the only district court case to rule the qui tam provisions unconstitutional, several judges have signaled agreement with this position. In March 2025, Judge Duncan of the Fifth Circuit issued a concurring opinion highlighting the “constitutional flaws in the FCA’s qui tam device,” arguing that the Constitution “does not allow this outsourcing of prosecutorial power to a private person.”

Similarly, in November 2025, Judge Ho of the Fifth Circuit suggested the court should reconsider whether the qui tam provisions present “serious constitutional problems.” These judicial opinions suggest the issue may reach the Supreme Court within the next year.

Another significant constitutional concern involves the Excessive Fines Clause. Courts have increasingly scrutinized whether the FCA’s statutory penalties—which can reach tens of thousands of dollars per false claim—violate the Eighth Amendment when they become “grossly disproportional” to the gravity of the offense.

In United States ex rel. Taylor v. HealthCare Associates of Texas, a jury found the defendant submitted 21,844 false claims causing $2.75 million in damages. The relator sought treble damages plus civil penalties totaling a staggering $449.3 million—a ratio of over 100:1 compared to actual damages. The court reduced this to approximately $8.26 million, applying a more reasonable 3:1 ratio, noting that the violations involved technical billing issues rather than deliberate fraud.

By contrast, in United States ex rel. D’Anna v. Capstone Medical Resources, the court upheld penalties of $411.5 million on $2.1 million in damages (a 65:1 ratio), primarily because the defendants had previously pled guilty to criminal healthcare fraud for the same conduct.

In the Omnicare case, where actual damages reached $135.6 million, the court approved penalties at a 4:1 ratio, noting this was “probably the outer limit” of constitutionality given the substantial damages involved.

These cases reveal emerging patterns: courts are more likely to reduce penalties in cases involving technical violations or when compensatory damages are already substantial. The judiciary appears to be signaling that ratios exceeding 4:1 may be constitutionally problematic except in cases involving egregious misconduct.

The pending Janssen Products appeal in the Third Circuit, which involves both qui tam and Excessive Fines challenges, may soon provide additional clarity on appropriate penalty ratios. In that case, the court imposed a $1.2 billion penalty on $120 million in damages—a 10:1 ratio now under appellate review.

As these constitutional challenges progress through the courts, organizations subject to FCA scrutiny face significant uncertainty. The resolution of these cases could fundamentally alter the government’s enforcement approach, potentially limiting both who can bring FCA cases and what penalties can be imposed when violations are found.

With high-stakes appeals underway and judges increasingly willing to question established FCA practices, 2026 may mark a turning point in how the government pursues fraud claims against federal contractors and healthcare providers.