Taylor Files Lawsuit Against Healthcare Associates of Texas

In a significant legal battle that could reshape government fraud enforcement, a recent case involving Healthcare Associates of Texas (HCAT) has brought renewed scrutiny to the False Claims Act, a Civil War-era statute that allows private citizens to sue entities that defraud the federal government.

The case began when whistleblower Cheryl Taylor filed a qui tam lawsuit against HCAT under the False Claims Act. A jury ultimately determined that HCAT had submitted over tens of thousands of fraudulent Medicare claims, resulting in more than two million dollars in taxpayer losses.

Facing substantial liability, HCAT has revived a constitutional challenge that has been consistently rejected by lower courts for decades. The healthcare provider argues that the qui tam provisions of the False Claims Act violate Article II of the U.S. Constitution by allowing private citizens to exercise enforcement powers that should be exclusively reserved for the executive branch.

The U.S. District Court for the Northern District of Texas dismissed HCAT’s constitutional arguments, citing binding circuit precedent. Undeterred, HCAT has elevated the case to the U.S. Court of Appeals for the Fifth Circuit, where it continues to press its constitutional claims.

In January 2026, the Constitutional Accountability Center intervened in the case, filing an amicus brief on behalf of legal scholars. The brief provides extensive historical context demonstrating that qui tam litigation has deep roots in Anglo-American legal tradition and has never been considered an infringement on executive authority.

The legal scholars’ brief details how qui tam litigation emerged in England as early as the thirteenth century and became a standard feature of law enforcement, with Parliament eventually enacting hundreds of statutes authorizing private citizens to bring such actions. This legal tradition crossed the Atlantic with British colonists, who established similar provisions throughout colonial America.

Perhaps most compelling is the evidence that the Founding Fathers themselves participated in and supported qui tam enforcement. Alexander Hamilton, while serving as a New York State Representative, drafted tax legislation that included qui tam provisions. Meanwhile, John Adams regularly represented clients in civil qui tam actions, indicating the founders’ comfort with this enforcement mechanism.

Following the Constitution’s ratification, the first several Congresses under Presidents Washington and Jefferson enacted dozens of statutes with qui tam provisions. Courts routinely handled these cases without questioning their constitutionality. Historical records even show that early presidential administrations concluded they lacked authority to interfere with penalties recovered by private qui tam litigants—a telling indication that executive branch oversight was never considered essential to these proceedings.

Throughout the nineteenth century, Congress continued to pass legislation authorizing qui tam enforcement, and federal courts adjudicated these cases without constitutional objection. When concerns about qui tam actions arose during this period, they centered on potential litigation abuses rather than constitutional questions about executive power infringement.

The HCAT case represents the latest chapter in the long history of the False Claims Act, which was originally signed by President Abraham Lincoln in 1863 to combat fraud by defense contractors during the Civil War. The law has since evolved into one of the government’s most effective tools for combating fraud, recovering over $70 billion since 1986 when the act was substantially strengthened.

Healthcare fraud cases represent the largest portion of False Claims Act recoveries in recent years, with pharmaceutical companies and hospital systems frequently targeted. As healthcare spending continues to represent an increasing share of federal expenditures, the outcome of this constitutional challenge could have profound implications for the government’s ability to combat Medicare and Medicaid fraud.

The Fifth Circuit’s eventual ruling could potentially set up a circuit split that might attract Supreme Court review, making this case one that legal experts and healthcare compliance officers across the nation are watching closely.