FOLLOW US

The U.S. Department of Justice has thrown a curveball into Johnson & Johnson’s high-stakes False Claims Act battle, telling the Third Circuit on Wednesday that a district judge committed errors in both jury instructions and post-trial rulings tied to the eye-popping $1.6 billion FCA judgment against J&J’s Janssen unit.

While the government did not intervene to prosecute the case itself, it filed a brief as a neutral amicus on trial-management issues and as an intervenor on constitutional challenges. In its filing, the DOJ conceded the mammoth award is not legally ironclad but flatly rejected J&J’s constitutional attacks.

Errors in Jury Instructions

According to the DOJ, U.S. District Judge Zahid N. Quraishi misstated reimbursement criteria in his jury instructions, telling jurors that Medicare only covers FDA-approved drugs or those supported in medical compendia. In reality, the DOJ noted, Medicare can reimburse off-label prescriptions even when not specifically approved for an indication.

The government said Janssen had failed to object to the oversight during trial, meaning a new trial should be considered only if the lapse was “highly prejudicial.” Still, it urged the Third Circuit to exercise “extreme caution” before tossing the verdict.

Post-Trial Missteps

The DOJ also flagged errors in the judge’s post-trial opinion, which cemented the judgment in favor of whistleblowers Jessica Penelow and Christine Brancaccio, former Janssen sales representatives. The court wrongly suggested that off-label marketing alone rendered reimbursement claims false under the FCA, the DOJ said.

“Misbranding rules govern marketing, not federal reimbursement,” the brief stressed, adding that the judgment should be vacated and remanded for reassessment under the correct law.

Constitutional Flashpoints

Janssen’s appeal has attracted national attention because it challenges not only the staggering verdict but also the very framework of qui tam whistleblower suits. The DOJ defended the mechanism, emphasizing that private relators act under government authority, not as rogue enforcers.

The DOJ also rebuffed J&J’s claim that the $1.6 billion penalty violates the Eighth Amendment’s ban on excessive fines. Penalties, it argued, are unconstitutional only if they bear “no relationship to the gravity of the misconduct.” Given that the award nearly mirrors Janssen’s $1.7 billion in annual HIV drug revenue, the DOJ said the fine clearly reflects the scale of wrongdoing.

The Road Ahead

The underlying case centered on Janssen’s allegedly unlawful promotion of HIV treatments Prezista and Intelence, one of the stiffest FCA verdicts in U.S. history. A brief from the whistleblowers is due Sept. 17, with J&J’s reply scheduled for Oct. 27.

Janssen is represented by Covington & Burling LLP.
Penelow and Brancaccio are represented by Reese Marketos LLP, Berger Montague, and Kellogg Hansen Todd Figel & Frederick PLLC.
The DOJ’s Civil Division team includes Daniel Winik, Charles W. Scarborough, Michael S. Raab, and Brett A. Shumate.

Representatives for J&J declined immediate comment.