The United States Court of Appeals for the First Circuit recently joined the Sixth Circuit (2023) and Eighth Circuit (2022) in holding that the term “resulting from” in the Federal Anti-Kickback Statute (“AKS”) (as amended in 2010) requires but-for causation to establish AKS-premised liability under the False Claims Act (“FCA”). See United States v. Regeneron Pharm., Inc., 23-2086, 2025 WL 520466, at *1 (1st Cir. Feb. 18, 2025). This decision turns the existing circuit split into a 3-1 majority, favoring the strict but-for causation standard.
United States v. Regeneron Pharmaceuticals, Inc. involves an FDA approved drug, Eylea, used to treat neovascular age-related macular degeneration, a.k.a. “wet AMD.” Eylea is a “buy and bill” drug under Medicare Part B, meaning that physicians buy, prescribe and administer the drug before submitting a reimbursement claim to Medicare. Eylea is also subject to Medicare Part B cost-sharing provisions, requiring patients to cover 20% of the cost. The challenge … Eylea is expensive; a single injection costs $1,850, and the drug regimen requires multiple injections per year.
The government claims that Regeneron paid more than $60 million to the Chronic Disease Fund, which in turn provided copayment assistance to patients suffering from wet AMD. HHS identifies these situations (where a manufacture donates to a foundation and the foundation then covers a patient’s co-pay) as conduits for manufacturer rebates and thus violations of the AKS. For purposes of this appeal, all parties agreed to assume those donations were unlawful kickbacks.
The 2010 AKS Amendment states, “a claim [for payment by a federal healthcare program] that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of the FCA.” The instant appeal focused on the proper standard of causation required to turn an AKS kickback into a per se FCA violation.
The government contended that Regeneron knowingly induced prescriptions of Eylea by covering copayments for certain patients who received the drug. When doctors filed Medicare reimbursement claims for Eylea prescribed to patients receiving copayment assistance, those claims “resulted from” a violation of the AKS, regardless of whether those claims would have been made had Regeneron not covered the co-pay. Accordingly, those Medicare claims were false or fraudulent for purposes of the FCA.
In turn, Regeneron argued that an AKS violation must be a but-for cause of the challenged claim. If the doctor would have purchased and sought reimbursement for Eylea anyway, then the subsequent Medicare claim cannot have resulted from Regeneron’s allegedly illicit payments.
Government’s Arguments Against But-For Causation Do Not Sway First Circuit
The First Circuit agreed with Regeneron, relying on the principle of statutory construction, that the phrase “resulting from” imposes a requirement of actual causality, which, in the ordinary course, takes the form of but-for causation.
The government nevertheless asserted three contextual arguments to support its claim that but-for causation was not the applicable standard.
1) “Animating Principle” Argument
The government argued that the AKS itself requires no proof that the government would have paid a claim but-for the inducement of the offered kickbacks. Rather, the “animating principle” of the AKS is that financial conflicts in themselves corrupt medical decision making. Insomuch as the 2010 Amendment was built on that statutory scheme, it too should require only that payments are meant to induce the provision of services and that those services are subsequently provided.
The First Circuit rejected that argument, reasoning that the government concedes the words “resulting from” require proof of some type of actual causation. The absence of any causation requirement in establishing AKS liability provides little interpretative insight. While prior precedent recognizes that “resulting from” may in some instances not require but-for causation, that precedent does not provide license to read “resulting from” as requiring no actual causation whatsoever.
2) Statutory History Argument
The government also argued that Congress passed the 2010 Amendment against a backdrop of false-certification cases. FCA liability in a false-certification case lies when a defendant falsely represents AKS compliance on a federal agency form. The government reasoned that those cases did not require proof of causation to demonstrate falsity under the FCA (a material misrepresentation of compliance with the AKS was enough), and when Congress passed the 2010 Amendment, it did not clearly intend to alter false-certification caselaw by imposing a but-for causation requirement.
The Court again rejected that argument and stated that there is nothing in the 2010 Amendment that requires proof of but-for causation in false-certification FCA cases. Rather, the 2010 Amendment offers a pathway to establish falsity in FCA actions based on AKS violations without reliance on the false-certification theory. Claims under the 2010 Amendment run on a separate track than do claims under a false-certification theory. There is no reason to think that, because false-certification claims require no proof of causation, Congress therefore avoided any actual causation requirement under the 2010 Amendment. By its own terms, the 2010 Amendment requires some proof of causation; the only question is what type of causation.
3) Legislative History Argument
The government’s final argument relied on the floor statement of Bill Sponsor, Senator Ted Kaufman. Senator Kaufman stated, “the amendment would ensure that all claims resulting from illegal kickbacks are false or fraudulent even when the claims are not submitted directly by the wrongdoers themselves.” The government argued that an ostensible purpose of the 2010 Amendment was to circumvent that arguable weakness in the false-certification theory.
The Court reasoned that nothing in the floor statement was inconsistent with an interpretation of the 2010 Amendment that imposes but-for causation. Rather, the floor statement reinforces the government’s view that the 2010 Amendment creates a different pathway to establish falsity in FCA actions based on AKS violation, without reliance on the false-certification theory. If a medical provider accepts kickbacks and then personally represents compliance with the AKS, then FCA liability can flow from that false representation. But, if the medical provider does not represent compliance with the AKS, a claim submitted on the provider’s behalf can still be “per se false” under the 2010 Amendment if the government can show the illicit kickback was a but-for cause of the submitted claim.
Ultimately, the First Circuit did not find a convincing textual or contextual reason to deviate from the default presumption that the phrase “resulting from” imposes a but-for causation standard. To demonstrate falsity under the 2010 Amendment, the government must show that an illicit kickback was the but-for cause of a submitted claim.
Key Takeaways:
- This decision raises the bar for FCA enforcement in the First Circuit, making it more difficult for the government and whistleblowers to establish AKS-premised liability under the FCA.
- In October 2023, the Supreme Court declined to review the Sixth Circuit case addressing this issue. However, growing division among circuits increases the likelihood of Supreme Court review. In the interim, stakeholders in health care and life sciences should be aware of controlling case law and continue to prioritize AKS compliance.
- While the Second Circuit has yet to weigh in on the issue, district courts in New York have applied a more lenient causation standard. See United States v. Teva Pharm. USA, Inc., 13 CIV. 3702 (CM), 2019 WL 1245656, at *24, 27 (S.D.N.Y. Feb. 27, 2019) (holding that, in the context of summary judgment, the government need not demonstrate that the providers would not have prescribed those drugs absent the kickbacks, and that relators only need to show that the speakers’ referral of Teva drugs “actually sat in the causal chain”).
