The Third Circuit Joins the FCA Constitutionality Debate

Why It Matters

A ruling could reshape the enforcement landscape of the False Claims Act, limiting private whistleblower actions when the government stays out of the case. This would affect billions of dollars in potential recoveries and the strategy of both plaintiffs and defendants.

Key Takeaways

• Janssen faced a $1.64 billion verdict in a non‑intervened qui‑tam suit
• Supreme Court justices have flagged FCA qui‑tam as potentially unconstitutional
• 3rd Circuit judges probed whether relators hold a “continuing office”
• Court may deem the provision unconstitutional only when government does not intervene

Pulse Analysis

The False Claims Act (FCA) has long relied on qui‑tam lawsuits to uncover fraud against the federal government. Recent opinions from Justices Thomas, Kavanaugh and Barrett argue that allowing private relators to sue without presidential appointment infringes Article II, sparking a wave of constitutional challenges in appellate courts. While the Supreme Court has not yet ruled, lower courts are now the battleground for defining the scope of private enforcement.

During the Third Circuit’s April 2026 oral argument, Judges Matey, Chung and Freeman dissected the historical and functional arguments surrounding the relator’s role. Matey zeroed in on whether a relator occupies a “continuing office,” drawing parallels to special counsel positions, while Chung explored the distinction between facial and applied challenges, suggesting the provision might survive when the government steps in. The judges’ skepticism of both historical narratives indicates a willingness to carve out a nuanced middle ground—potentially invalidating the qui‑tam provision only in cases where the government declines to intervene.

The outcome of this debate will reverberate across the litigation ecosystem. A narrow ruling could curtail private whistleblower actions in non‑intervened cases, shifting the burden of fraud detection back to federal agencies and reducing the billions of dollars recovered through qui‑tam settlements. Conversely, preserving the provision in intervened scenarios would maintain a powerful tool for corporate compliance programs and law firms that specialize in whistleblower litigation. Stakeholders—from healthcare manufacturers to defense contractors—must monitor the Third Circuit’s decision for clues on how the FCA’s enforcement model may evolve.