Federal False Claims Act Faces Significant Shifts in Enforcement and Constitutional Challenges

The Federal False Claims Act, a cornerstone of the government’s anti-fraud efforts that yielded nearly $3 billion in judgments and settlements in fiscal year 2024, is undergoing potentially transformative changes that could reshape its enforcement landscape.

Two major developments are converging to alter how the law is applied and enforced. First, the Department of Justice (DOJ) and Department of Health & Human Services (HHS) have established a dedicated False Claims Act Working Group to coordinate enforcement actions. Second, the constitutionality of the law’s qui tam provisions—which allow private citizens to file lawsuits on the government’s behalf—is facing unprecedented judicial scrutiny.

These developments could have far-reaching implications for pharmaceutical companies, healthcare providers, and other entities conducting business with the federal government.

The FCA serves as the government’s primary legal tool to combat fraud in federal programs and recover funds for healthcare programs including Medicare, Medicaid, and TRICARE. Under the law, anyone knowingly submitting false claims to the government faces treble damages plus inflation-linked penalties.

A distinctive feature of the FCA is its qui tam mechanism, which empowers private individuals—called relators—to initiate civil actions representing government interests. These whistleblowers, often insiders with firsthand knowledge of alleged fraud, receive between 15% and 30% of any resulting judgment or settlement. Last fiscal year, relators initiated a record 979 FCA actions, accounting for $2.4 billion of the $2.9 billion recovered through FCA enforcement.

In July 2025, the newly formed DOJ-HHS Working Group signaled heightened coordination in FCA enforcement, particularly in six priority areas: Medicare Advantage; drug and medical device pricing; barriers to patient access; kickback arrangements; defective medical devices affecting patient safety; and manipulation of electronic health records.

The Working Group has actively encouraged whistleblowers to report violations in these priority areas, while also discussing when DOJ should dismiss qui tam complaints rather than declining to intervene. The Justice Manual outlines potential dismissal grounds, including claim merit, preventing interference with agency policies, and protecting DOJ’s litigation prerogatives.

Industry observers note the Working Group’s formation suggests two parallel trends: increased enforcement actions in priority areas, coupled with more critical evaluation of qui tam cases by DOJ, including dismissal of claims deemed unmeritorious or misaligned with government priorities. Companies operating in the Working Group’s targeted sectors should prepare for heightened scrutiny.

Simultaneously, the qui tam provisions that drive most FCA litigation are facing unprecedented constitutional challenges. Justice Thomas, dissenting in U.S. ex rel. Polansky v. Executive Health Resources, Inc. (2023), characterized the FCA’s qui tam provisions as inhabiting “something of a constitutional twilight zone.” He raised “substantial arguments that the qui tam device is inconsistent with Article II” of the Constitution. Justices Kavanaugh and Barrett encouraged the Supreme Court to address these constitutional questions “in an appropriate case.”

Following this signal from the high court, some lower courts have begun questioning qui tam constitutionality. In U.S. ex rel. Zafirov v. Florida Medical Associates (2024), currently on appeal to the Eleventh Circuit, a district court found that FCA qui tam provisions violate the Constitution’s Appointments Clause, which requires “Officers of the United States” be appointed by the President.

Fifth Circuit Judges have similarly expressed constitutional concerns in separate concurrences. Judge Duncan in Montcrief v. Peripheral Vascular Associates (2025) wrote that qui tam provisions violate both the Appointments Clause and the Take Care Clause, which mandates that the President “shall take Care that the Laws be faithfully executed.” Judge Ho later called for revisiting “serious constitutional problems with the qui tam provisions” in a separate case.

These judicial opinions appear to invite defendants to challenge the constitutionality of qui tam provisions. However, most courts examining this issue post-Polansky have upheld their constitutionality, creating an evolving and potentially inconsistent legal landscape.

Companies potentially subject to FCA actions should monitor these developments closely. The Working Group’s priorities will likely shape both government-led and relator-initiated litigation in the near term, suggesting a need for proactive compliance reviews. Simultaneously, the constitutional questions surrounding qui tam provisions could fundamentally alter the enforcement landscape if courts begin invalidating this mechanism that generates the majority of FCA cases.