Biding Time: SCOTUS Denies Cert in Lilly, but the Constitutional Threat to FCA Relators May Only Be Getting Closer

Why It Matters

The outcome preserves a major FCA recovery but signals that constitutional attacks on relator standing must be preserved early, shaping future enforcement of the False Claims Act.

Key Takeaways

• SCOTUS denied cert, leaving $220M Lilly FCA judgment intact
• Circuit split persists; Eleventh Circuit poised for Supreme Court review
• Defendants must raise Article II challenges early to preserve appeal
• If relators deemed unconstitutional, DOJ may need to intervene more
• Non‑intervened qui tam suits could shrink FCA recoveries significantly

Pulse Analysis

The Supreme Court's refusal to hear Eli Lilly's appeal leaves a $220 million False Claims Act verdict in place, but it does not close the door on a deeper constitutional battle. At issue is whether private relators, who bring qui tam actions without Department of Justice intervention, qualify as "officers of the United States" under the Appointments Clause. Prior circuit precedent has uniformly upheld the constitutionality of such relators, yet the Eleventh Circuit's *Zafirov* decision diverges, creating a clear split that could soon compel the high court to intervene.

Legal scholars note that the procedural posture of the Lilly case was a critical factor in the denial. By introducing the Article II argument only during a petition for rehearing en banc, Lilly failed to preserve the issue at the district and appellate levels, a misstep that the Supreme Court is unlikely to overlook. This reinforces a growing doctrine: defendants must raise constitutional challenges at the earliest stages—typically in motions to dismiss—to keep the door open for appellate review. The lesson reverberates across the litigation landscape, prompting firms to reassess their defense strategies in FCA cases.

The stakes extend beyond a single judgment. If the Eleventh Circuit ultimately rules that relators are unconstitutionally appointed, the federal government could lose a substantial portion of its non‑intervened qui tam enforcement engine. DOJ resources are already stretched, and a requirement for more frequent intervention would likely curtail the volume of FCA recoveries. Stakeholders—from pharmaceutical companies to government contractors—should monitor the appellate proceedings closely, as the resolution will shape the balance between private whistleblower incentives and constitutional limits on federal authority.