J&J Unit to Fight Historic $1.6 Billion False Claims Act Award

Janssen Products LP is prepared to throw everything it can at the largest False Claims Act judgment in history, a $1.6 billion award tied to its marketing of HIV drugs.

The J&J unit is seeking to overturn a verdict holding it responsible for the submission of nearly 160,000 false claims to the government through the unlawful promotion of the antiviral drugs Prezista and Intelence.

A federal judge in New Jersey backed that jury verdict in 2025 and ordered the company to pay $1.28 billion in penalties and $360 million in treble damages.

The US Court of Appeals for the Third Circuit on Wednesday will hear Janssen’s appeal of that verdict, potentially forcing the Philadelphia-based appeals court to consider whether whistleblowers filing lawsuits against alleged fraudsters on the government’s behalf is constitutional.

But legal observers say Janssen has a better shot at reversing the award based on other arguments. The company says the whistleblowers that brought the suit failed to demonstrate that any alleged fraud was material because the government didn’t stop paying for the drugs despite knowledge of the whistleblowers’ claims.

Janssen—now called Johnson & Johnson Innovative Medicine—also argues the award is excessive under the Eighth Amendment, and that Article II doesn’t allow the suit in the first place.

The Third Circuit “faces significant institutional pressure not to be the first circuit to strike down the qui tam provision,” of the FCA, “particularly where every other circuit that has addressed the issue has upheld it,” said Nadia Patel of ArentFox Schiff LLP. “As such, the Third Circuit is likely to resolve the appeal on other grounds.”

At stake is one of the signature wins for combating fraud: the award currently on the books constituted almost one-fourth of the US Justice Department’s more than $6.8 billion recovery from FCA suits in 2025, which was a record-breaking year.

Materiality Issue

Whistleblowers Jessica Penelow and Christine Brancaccio, who sued in 2012, alleged that Janssen’s tactics caused federal health-care programs to improperly pay claims seeking reimbursement for the HIV drugs.

A federal district judge said in 2021 the case could advance, finding the whistleblowers sufficiently argued that Janssen’s off-label drug promotion misled doctors about their appropriateness for patients with lipid conditions, and therefore claims seeking reimbursement from the government were false.

Patel said Janssen should lead on appeal with its “strongest argument,” that the whistleblowers can’t satisfy the FCA materiality requirement.

“The undisputed evidence that the government has continued to pay Prezista and Intelence claims with full knowledge of the allegations is a significant challenge to the relators’ materiality case,” she said.

Penelow and Brancaccio responded to Janssen’s materiality arguments by saying they demonstrated the government wouldn’t have paid claims had it known about the misleading drug promotion.

Calling the $1.6 billion award “astronomical,” Janssen also says the lower court violated the Eighth Amendment’s prohibition on excessive fines by failing to assess the disparity between the penalties and the benefits of the company’s investment in lifesaving drugs.

But the gravity of the misconduct, and the fact the US views the award as proportionate, makes it unlikely the Third Circuit will be sympathetic to that argument, said James Miller of Miller Shah LLP, which represents FCA whistleblowers.

The penalties are “within the bounds of reasonableness, as well as the statutory structure designed by Congress,” he said.

Jury Instruction

In its brief, the government agreed with Janssen that the lower court got it wrong on the element of falsity.

The district court incorrectly suggested to the jury that US Food and Drug Administration approval of a drug for a given usage is necessary for a health-care program like Medicare to reimburse a claim for payment, the government said.

“The jury instruction claim could be promising” for Janssen, said Martin Weinstein of Cadwalader, Wickersham & Taft LLP, who represents FCA defendants.

“If the Third Circuit agrees that the district court gave an incorrect jury instruction by inserting the ‘on the label’ concept, that could be a strong basis for the court to question the verdict,” he said.

Reese Marketos LLP; Kellogg, Hansen, Todd, Figel & Frederick PLLC; and Berger Montague PC represent the whistleblowers. Covington & Burling LLP represents Janssen.

The case is United States ex rel. Penelow v. Janssen Prods. LP, 3d Cir., No. 25-1818, oral argument scheduled 3/18/26.