The Texas Supreme Court denied a petition for writ of mandamus filed by Novartis Pharmaceuticals Corporation in a case involving healthcare fraud litigation, with two justices expressing that the matter raises constitutional concerns worthy of the court's attention.
Justice Young and Justice Sullivan issued a statement respecting the denial of the petition in *In re Novartis Pharmaceuticals Corporation* (Tex. 2025), acknowledging that while the case presents weighty issues that perhaps should have been set for oral argument, the court's decision to deny the petition was understandable given procedural circumstances.
The justices noted that a new statewide appellate court has already asserted jurisdiction over disputes similar to the one presented by Novartis. The court indicated it may defer to this appellate court's analysis before addressing what the justices described as "constitutional concerns surrounding qui tam litigation under what is now called the Texas Health Care Program Fraud Prevention Act."
The case arises under Texas's healthcare fraud statute, which the Supreme Court of Texas has previously characterized as "a powerful tool for targeting fraud against the Texas Medicaid program and securing the program's integrity." In *In re Xerox Corp.* (Tex. 2018), the court explained that the statute grants the attorney general broad investigative and enforcement authority while also deputizing private citizens through qui tam provisions to pursue actions on the government's behalf.
Qui tam litigation allows private individuals, known as whistleblowers or relators, to file lawsuits on behalf of the government against entities alleged to have defrauded government programs. Under these provisions, private citizens can pursue civil actions for violations of the healthcare fraud prevention act, potentially recovering damages for the state while also receiving a portion of any recovery as compensation.
The Texas Health Care Program Fraud Prevention Act, formerly known as the Texas Medicaid Fraud Prevention Act, was recently expanded in 2023 to cover additional healthcare programs beyond Medicaid. The 88th Legislature broadened the statute's scope to include two additional healthcare programs, demonstrating the state's continued commitment to combating healthcare fraud across multiple government-funded programs.
The justices' statement suggests the court recognizes the significant legal questions presented by the case, particularly regarding the constitutional implications of qui tam enforcement mechanisms. However, rather than immediately addressing these concerns, the court appears willing to allow the new statewide appellate court to weigh in first on the jurisdictional and substantive issues presented.
This approach reflects judicial efficiency and the principle of allowing lower courts to develop the legal record on complex constitutional questions before higher court review. The justices indicated that awaiting the appellate court's analysis "may assist this Court in its eventual and inevitable consideration" of the constitutional issues surrounding qui tam litigation under the healthcare fraud statute.
The case highlights ongoing tensions in healthcare fraud enforcement, where government agencies and private parties work together to police alleged misconduct by healthcare companies and providers. Pharmaceutical companies like Novartis often face scrutiny under these statutes for various practices, including pricing, marketing, and billing procedures related to government healthcare programs.
While the specific allegations against Novartis in this case are not detailed in the court's statement, the company's petition for mandamus suggests it sought relief from a lower court's handling of the litigation. Mandamus petitions are extraordinary remedies requesting higher courts to direct lower courts to take specific actions or correct legal errors.
The denial of mandamus relief indicates the Supreme Court of Texas found insufficient grounds to intervene in the lower court proceedings at this time. However, the justices' acknowledgment of the case's significance suggests the constitutional and procedural questions raised may eventually return to the high court for resolution.
The reference to a "new statewide appellate court" likely refers to recent changes in Texas's judicial structure, where specialized appellate courts have been established to handle specific types of complex litigation. These courts are designed to develop expertise in particular areas of law and provide more consistent statewide application of legal principles.
For healthcare companies and the broader pharmaceutical industry, this case represents another example of ongoing legal challenges related to government healthcare program compliance. The constitutional questions raised by the justices may ultimately affect how qui tam litigation proceeds under Texas law and could influence similar enforcement mechanisms in other states.
The case also demonstrates the evolving nature of healthcare fraud enforcement, where state and federal authorities increasingly rely on private citizens to identify and prosecute alleged misconduct. As these enforcement mechanisms continue to develop, courts will likely face more questions about their constitutional boundaries and proper implementation.
The Supreme Court of Texas's decision to await further appellate court analysis suggests a measured approach to resolving these complex issues, allowing for thorough legal development before final resolution of the constitutional concerns identified by the justices.