Circuit Split on Causation Standard in False Claims Act Claims based on the Anti-Kickback Statute; First Circuit Is Set to Weigh In 

The Anti-Kickback Statute (AKS) is a criminal law that prohibits giving or receiving “remuneration” to induce patient referrals or generate business involving any item or service payable by Federal health care programs. Remuneration can include anything of value and is not limited to cash, such as free rent, expensive hotel stays, and excessive compensation for services. While it’s acceptable to reward those who refer business in some industries, it’s considered a crime within the Federal health care programs.

Violating the AKS can lead to liability under the False Claims Act (FCA). In 2010, Congress amended the AKS, making violations of the statute also lead to liability under the FCA. Third, Sixth, and Eighth Circuits Courts have directly addressed the causation requirement (i.e. the “resulting from” part of the AKS) in FCA actions based on AKS violations.

The question at hand is the causal link that the government must prove between the alleged AKS violation and the allegedly false claim for payment. The Sixth and Eighth Circuits held in U.S. ex rel. Martin v. Hathaway and U.S. ex rel. Cairns v. D.S. Medical LLC, respectively, adopted the “but for” causation standard. The Eighth Circuit concluded that “resulting from” unambiguously requires that “when a plaintiff seeks to establish falsity or fraud . . . it must prove that a defendant would not have included particular ‘items or services’ but for the illegal kickbacks.”

However, the Third Circuit’s decision in U.S. ex rel. Greenfield v. Medco Health Solutions indicated that a direct causal link is not necessary. According to the court, only a “link” between a kickback and a specific submitted claim is required. The phrase “resulting from” was interpreted as needing only a “link,” meaning that plaintiffs can succeed by demonstrating “some connection between a kickback and a subsequent reimbursement claim.” However, mere “temporal proximity” between a kickback scheme and submitted claims would not suffice. On the other hand, demonstrating that a patient for whom reimbursement claims were submitted was “exposed” to a referral or recommendation that violated the AKS would be considered enough. The Third Circuit did not accept a “but for” causation standard, deeming it too stringent as it might weaken the FCA’s enforcement effect by imposing direct causation as a requirement for FCA liability but not for AKS liability.

The First Circuit has been expected to weigh in on this split in United States v. Regeneron Pharmaceuticals. On July 22, 2024, the First Circuit Court of Appeals heard oral argument on what the appropriate standard of causation is for AKS-based FCA claims. The decision has yet to be rendered. Stay tuned!