J&J Unit Urges Court to Set Aside $1.6 Billion Fraud Judgment

Janssen Products LP urged a federal appeals court Wednesday to throw out a $1.6 billion False Claims Act judgment, attacking the case two whistleblowers made on critical elements of their fraud claims.

Whistleblowers Jessica Penelow and Christine Brancaccio convinced a jury in 2024 that Janssen—now called Johnson & Johnson Innovative Medicine—violated the FCA by engaging in an off-label promotion scheme involving two HIV drugs, Prezista and Intelence.

The US Court of Appeals for the Third Circuit should toss the “largest” award in FCA history, said Janssen’s attorney, Mark Mosier of Covington & Burling LLP, for lack of falsity and materiality. The government health-care programs here didn’t look at whether off-label marketing occurred when deciding to reimburse claims, he said, which should defeat the whistleblowers assertions of falsity.

Their fraud case also fails for lack of materiality because the government never stopped paying for the drugs despite seeing the whistleblowers’ allegations over a decade ago, he argued.

And, the jury didn’t hear a proper but-for causation instruction, Janssen argued. A proper instruction, Mosier said, would be to tell the jury that an event wouldn’t happen the absence of off-label marketing.

The whistleblowers’ attorney, David Frederick of Kellogg, Hansen, Todd, Figel & Frederick PLLC, said the award should stand because, despite the government’s continued payments, the government lacked actual knowledge of misconduct when it made the payments.

Frederick said the government didn’t get the full range of evidence until the whistleblowers pursued their case to trial. The lower court didn’t err on causation, and the jury properly considered whether the promotion was a substantial factor for the submission of false claims, he also argued.

Janssen “hoodwinked” doctors into writing improper prescriptions, Frederick said, addressing Judge Cindy K. Chung’s questions about falsity. Janssen told thousands of doctors falsehoods about the medical effects of the drugs to get them to write prescriptions, he said.

Article II

Michael McGinley of Dechert LLP, arguing on behalf of the US Chamber of Commerce, urged the court to dismiss the suit for violating Article II of the US Constitution.

The whistleblower provision in the FCA “destroys” accountability by giving core executive power to individuals the executive branch doesn’t control, McGinley said.

Chung and Judge Paul B. Matey asked McGinley, as well as Daniel Winik of the US Department of Justice, about how to consider the long history of qui tam suits when assessing the constitutionality issue.

McGinley asserted there’s no evidence suggesting qui tam suits were the subject of great debate at the country’s founding. Winik said, however, that the suits have deep historical roots.

Winik also said the modern FCA is constitutional because of extensive mechanisms of government control. Whistleblowers under the FCA can file suits under seal—bringing cases to the government’s attention—and allowing the government to decide whether to intervene and seek dismissal, or intervene and help prosecute, Winik pointed out.

The appointments clause in Article II, Winik said, doesn’t apply to FCA whistleblowers because they don’t have a continuing US office. The role of a whistleblower can’t be handed off to another whistleblower, he noted.

Although Janssen argued in its brief that the $1.6 billion award is excessive under the Eighth Amendment, neither the judges nor the attorneys raised the issue during Wednesday’s oral argument.

The whistleblowers, who sued in 2012, alleged Janssen’s tactics caused Medicare, Medicaid, and the AIDS Drug Assistance Program to improperly pay claims seeking reimbursement for the HIV drugs.

The US District Court for the District of New Jersey in 2021 said 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.

The government should receive $360 million in trebled damages and $1.28 billion in penalties, the US District Court for the District of New Jersey ruled in 2025. The penalties consist of $8,000 for each of the 159,574 false claims the jury found Janssen caused to be submitted to the government, the district court said.

Judge Arianna J. Freeman was also on the panel.

Reese & Marketos LLP and Berger Montague PC also represent the whistleblowers.

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