Eli Lilly and Company v. United States, et al., ex. rel., Ronald J. Streck

The False Claims Act (“FCA”) permits private parties, known as qui tam relators, to prosecute on behalf of the United States alleged fraud on the government. These private bounty hunters “inhabit[] something of a constitutional twilight zone,” performing Article II functions but operating free of executive supervision. United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 449 (2023) (Thomas, J., dissenting). The pervasive problems with this privatized prosecution regime came to a head in this case, where a serial relator sued Eli Lilly and Company (“Lilly”) under the FCA, alleging that Lilly defrauded the government by employing a reading of a byzantine area of the Medicaid laws that the Third Circuit—in a case brought by the same relator—had already unanimously held reasonable, and that Lilly had repeatedly disclosed to the government. The district court blessed the relator’s gambit, leading to nearly $200 million in treble damages and penalties against Lilly for (purportedly) misreading the law. Expressly “diverg[ing]” from the Third Circuit, Pet.App.29, the Seventh Circuit affirmed, holding that Lilly’s widely shared view of the law was not only wrong, but so “objectively unreasonable” as to constitute “highly probative circumstantial evidence of a culpable state of mind,” Pet.App.38. The questions presented are:

1. Whether the False Claims Act’s qui tam provisions are unconstitutional.

2. Whether a legal interpretation can be deemed so “objectively unreasonable” as to constitute “highly probative” evidence of scienter under the False Claims