Background
The Supreme Court of the United States (SCOTUS) denied Eli Lilly and Company's petition for certiorari in U.S. ex rel. Streck v. Eli Lilly on May 18, 2026, leaving intact an approximately $220 million False Claims Act (FCA) judgment. The case arose from a qui tam action brought by relator Ronald Streck, who alleged that Lilly underpaid Medicaid rebates by misreporting pricing metrics under the Medicaid Drug Rebate Program. The Department of Justice (DOJ) declined to intervene, yet the relator successfully litigated the matter through a jury verdict.
While the appeal of that verdict was pending before the Seventh Circuit, a defendant in U.S. ex rel. Zafirov v. Florida Medical Associates raised the argument that qui tam relators are unconstitutionally appointed "officers of the United States." In September 2024, the Middle District of Florida agreed, holding that relators' litigation authority violates the Appointments Clause of Article II and dismissed the FCA claims.
A few months later, the Seventh Circuit affirmed the jury verdict in Lilly on statutory grounds. Only then, in a petition for rehearing en banc, did Lilly raise the Zafirov constitutionality argument for the first time. Rehearing was denied, and Lilly filed a petition for certiorari. Meanwhile, the Zafirov decision – a ruling that broke from every prior circuit-level consensus upholding qui tam constitutionality – became ripe on appeal before the Eleventh Circuit, where oral argument was held on December 12, 2025. At argument, the panel focused on the degree of government control over relators and whether relators can bind the United States without adequate supervision.
Six months later, SCOTUS denied Lilly's petition for certiorari, declining the opportunity to weigh in on the constitutionality issue.
Key Takeaways from the Court's Denial
A circuit split, and ultimately Supreme Court review, are widely anticipated. The cert denial in Lilly does not necessarily signal disinterest in the constitutional question. Rather, because Lilly failed to preserve the issue below, the Court may have simply viewed the case as a poor vehicle for reaching the issue that Justices Clarence Thomas, Amy Coney Barrett, and Brett Kavanaugh have hinted at over the past several years. Zafirov – where the question was fully briefed, decided, and is actively being litigated on appeal – presents a far cleaner path to Supreme Court review.
Defendants must preserve constitutional challenges early. The lesson of Lilly is clear: SCOTUS will not entertain constitutional arguments that were not squarely raised and decided below. Raising Article II challenges in motions to dismiss and preserving them at every stage of litigation is now effectively mandatory for any defendant seeking eventual Supreme Court review.
The constitutionality issue raises serious questions about non-intervened qui tam enforcement. While the denial can be seen on its face as a win for relators, the issue remains pending in the Eleventh Circuit. If the Eleventh Circuit affirms, non-intervened FCA suits – a substantial share of total enforcement – could be dismissed or severely limited. Because so many FCA recoveries originate from qui tam filings, curtailment of relator authority would force DOJ to intervene far more frequently or forgo cases entirely – and resource constraints make the latter outcome likely. Regardless of the outcome in the Eleventh Circuit, FCA litigators will be watching closely to see whether the Supreme Court ultimately grants certiorari review.
If you have questions about how this decision will impact your business, please contact Thomas H. Barnard, Annie M. Kenville, Sabrina Marquez, or another member of the Baker Donelson Government Enforcement & Investigations group.