By John Kruzel
WASHINGTON, May 18 (Reuters) - The U.S. Supreme Court declined on Monday to hear a challenge by drugmaker Eli Lilly to a Civil War-era whistleblower law that has recovered billions of dollars by allowing private individuals to bring fraud lawsuits on behalf of the federal government.
The justices turned away Lilly's appeal of a lower court's ruling that upheld a $183 million judgment arising from a whistleblower lawsuit against the drugmaker for defrauding Medicaid. Lilly had argued
that handing government power to private citizens in this manner violates the U.S. Constitution.
The case stemmed from a 2014 whistleblower lawsuit against Lilly brought by Ronald Streck, a lawyer and pharmacist who accused the company of short-changing drug rebates to Medicaid, the health insurance program for low-income people funded by states and the federal government. Lilly denied wrongdoing.
Streck sued under the False Claims Act, a law that allows private individuals to sue on the government's behalf and share in recoveries through its so-called "qui tam" mechanism. "Qui tam" is an abbreviation for a Latin phrase meaning "Who sues on behalf of the King as well as for himself."
The False Claims Act, also known as Lincoln's Law, was passed by Congress and signed by President Abraham Lincoln in 1863, prompted by defense contractors billing the government for nonexistent or worthless supplies provided to the Union Army during the Civil War. The law was later strengthened in 1986.
A federal jury in 2022 found that Lilly knowingly concealed that it had retroactively increased prices on some drugs, and then failed to rebate Medicaid on the higher prices. A jury awarded $61 million in damages, which was automatically tripled to $183 million under the False Claims Act. The Chicago-based 7th U.S. Circuit Court of Appeals upheld the jury verdict in 2025, prompting the company's appeal to the Supreme Court.
Lilly said the whistleblower provisions of the federal False Claims Act violate the U.S. Constitution by placing too much federal executive power in the hands of people who are not accountable to the U.S. president.
"Fundamentally, executive authority is bestowed upon private citizens with no meaningful supervision or direction, transforming bounty hunters into ersatz executive officers and paying them (and their private attorneys) a pretty penny in the process," their lawyers wrote in a court filing. "None of that is consistent with our constitutional structure."
The U.S. government recovered more than $6.8 billion in settlements and judgments in False Claims Act cases during the 2025 fiscal year, and qui tam whistleblowers were awarded more than $330 million, according to U.S. Justice Department data.
(Reporting by John Kruzel; Editing by Will Dunham)
