What's Happening?
Janssen Products LP, a unit of Johnson & Johnson, and CVS Health Inc. are challenging significant judgments under the False Claims Act (FCA) in 2026. Janssen is appealing a $1.6 billion judgment related
to an HIV drug fraud case, arguing that the FCA's whistleblower provisions violate Article II of the U.S. Constitution. The company contends that whistleblowers act as U.S. officers without proper authorization. CVS is contesting a $165 million penalty, arguing it is excessive under the Eighth Amendment, as a jury found no damages. These cases highlight ongoing constitutional debates and the potential for Supreme Court review if circuit courts diverge in their rulings.
Why It's Important?
The outcomes of these cases could significantly impact the enforcement of the False Claims Act, which is a critical tool for recovering billions in fraud against the government. A ruling against the whistleblower provisions could reduce the government's ability to recover funds, as whistleblower-filed suits accounted for a substantial portion of FCA recoveries. Additionally, the challenges to penalty excessiveness could set new precedents for how penalties are assessed, potentially affecting corporate liability and government partnerships. Companies may become more cautious in their dealings with the government if the risk of liability increases due to complex regulatory interpretations.
What's Next?
Both Janssen and CVS are preparing for appeals in 2026, with potential implications for the Supreme Court if circuit courts issue conflicting rulings. The legal community is closely watching these cases, as they could redefine the scope and application of the FCA. Companies involved in government contracts may need to reassess their compliance strategies, and the government may need to consider legislative adjustments to maintain the effectiveness of the FCA.
