By John Kruzel

WASHINGTON, May 18 (Reuters) - The U.S. Supreme Court declined on Monday to hear a challenge by drugmaker Eli Lilly to a Civil War-era whistleblower law that has recovered billions of dollars by allowing private individuals to bring fraud lawsuits on behalf of the federal government.

The justices turned away Lilly's appeal of a lower court's ruling that upheld a $183 million judgment arising from a whistleblower lawsuit against the drugmaker for defrauding Medicaid. Lilly had argued that handing government power to private citizens in this manner violates the U.S. Constitution.

The case stemmed from a 2014 whistleblower lawsuit against Lilly brought by Ronald Streck, a lawyer and pharmacist who accused the company of short-changing drug rebates to Medicaid, the health insurance program for low-income people funded by states and the federal government. Lilly denied wrongdoing.

Streck sued under the False Claims Act, a law that allows private individuals to sue on the government's behalf and share in recoveries through its so-called "qui tam" mechanism. "Qui tam" is an abbreviation for a Latin phrase meaning "Who sues on behalf of the King as well as for himself."

The False Claims Act, also known as Lincoln's Law, was passed by Congress and signed by President Abraham Lincoln in 1863, prompted by defense contractors billing the government for nonexistent or worthless supplies provided to the Union Army during the Civil War. The law was later strengthened in...

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