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The U.S. Supreme Court let stand a $194 million award against Eli Lilly and Co. in a whistleblower suit accusing the company of engaging in Medicaid fraud by misreporting its drug prices.
The justice without comment refused to consider a far-reaching company appeal that sought to overturn the U.S. False Claims Act. Lilly contended that the law violates the Constitution by authorizing private parties to enforce federal law on behalf of the government and then share any recovery.
In a written statement to The Indiana Lawyer on Monday, a spokesperson said the company is disappointed in the court’s denial of certiorari.
“The grave constitutional concerns at the heart of our petition remain, as does the basic unfairness of penalizing Lilly for adopting an interpretation of a complex federal law that four federal judges — including the Third Circuit — expressly found reasonable,” the statement reads. “Lilly takes its obligations to comply with the law seriously and acts in good faith to follow federal price reporting rules, even when — as here — those rules are anything but clear.”
The case would have been a business blockbuster had the court agreed to take it up. Whistleblowers filed a record 979 False Claims Act lawsuits in fiscal 2024, and settlements and judgments exceeded $2.9 billion, according to Justice Department statistics.
The case against Lilly centered on the rebates that drug companies must pay to state Medicaid programs to subsidize some of the cost. Whistleblower Ronald Streck alleged that Lilly understated the amount of money it received from wholesalers, reducing the amount of rebates the company had to pay by $61 million. A federal jury in Chicago found Lilly liable.
In its appeal, Lilly called Streck a “private bounty hunter” who has been pressing cases against pharmaceutical companies for 17 years. Lilly contended that it was being penalized for using a widespread industry practice that four federal judges had upheld in a separate case against the company filed by the same whistleblower.
“The Constitution does not permit prosecution by private vigilantes,” Lilly argued in its unsuccessful appeal. “Nor does it allow regulation by hindsight.”
Streck urged the justices not to hear the case, telling them “there is no reason for this court to reweigh the evidence and thereby second-guess the jury’s fact-bound conclusion.”
Streck litigated the case without the help of the Justice Department, which chose not to take over the lawsuit, as the government is allowed to do under the False Claims Act.
The Supreme Court’s conservative wing has previously raised doubts about the False Claims Act, with Justices Clarence Thomas, Brett Kavanaugh and Amy Coney Barrett saying in 2023 that the court should consider declaring the law unconstitutional. That was one short of the four votes required for the court to take up an appeal.
The case is Lilly v. United States ex rel. Streck, 25-1126.
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