A decision by the First Circuit Court of Appeals has deepened the legal debate surrounding False Claims Act (FCA) actions based on violations of the Anti-Kickback Statute (AKS). This decision has increased speculation that the Supreme Court of the United States may step in to settle the issue.
On February 18, 2025, the First Circuit joined the Sixth and Eighth Circuits in applying a heightened standard to certain FCA claims based on AKS violations. In United States v. Regeneron Pharmaceuticals, the First Circuit held that to establish civil liability under the FCA based on a violation of the AKS, the alleged kickback must be the “but-for” cause of the submitted claim for reimbursement. This decision marks the third departure from the Third Circuit’s 2018 decision in United States ex rel. Greenfield v. Medco Health Solutions, Inc., which adopted a more relaxed causation standard, only requiring “some connection” or link “between the alleged kickbacks and the medical care received.”
What Are the FCA and the AKS? And How Are They Related?
The FCA is a federal statute that imposes civil and criminal penalties for knowingly submitting false claims to the government. Similarly, the AKS, upon significant overhaul in 2010, prohibits individuals and entities from offering, paying, soliciting, or receiving any type of remuneration in exchange for a business transaction or claim payable by a federal healthcare program. Because the AKS prohibits these types of transactions, violations of the AKS may serve as a basis for FCA liability. Therefore, these two statutes together work to impose severe penalties on healthcare providers and other healthcare industry participants who violate the AKS (and in doing so, potentially, the FCA).
But a mere claim seeking federal healthcare funds related to a kickback does not automatically create liability under the FCA. Instead, the AKS requires that claims for federal healthcare dollars that “include[ ] items or services resulting from a violation of” the AKS qualify as a false claim under the FCA. What exactly that “resulting from” language means is somewhat unclear. Litigants have wrestled with the meaning of the phrase “resulting from,” and federal courts have similarly divided on the appropriate level of causation to apply to such claims. Recently, however, we have noticed a trend indicating that federal courts are taking a narrower view of what it means for a claim to “result[ ] from” an AKS violation.
The Trend Towards Imposing a Heavier Burden on the Government
In 2018, in United States ex rel Greenfield v. Medco Health Solutions, Inc., the Third Circuit Court of Appeals concluded that “resulting from” meant that the government must only demonstrate “some connection” between the alleged kickback and the false claim for reimbursement. This is a low bar. In fact, it’s so low that the Third Circuit’s holding expanded the scope of conduct that could expose providers and industry participants to FCA liability.
However, since the 2018 decision in Greenfield, three of the thirteen Federal Circuit Courts of Appeal have interpreted “resulting from” to require more than just “some connection” between the alleged kickback and false claim submitted to the government. Rather, the Eighth, Sixth, and most recently, the First Circuit have adopted a more stringent “but-for” causation standard. Under this standard, the government is required to prove that the alleged kickback was the direct, but-for cause of the submitted claim—that is, without the alleged kickback, the claim for federal healthcare funds would not have been submitted.
What This Means for the Healthcare Industry
This trend towards a more stringent causation requirement implicates both businesses and individuals who are subject to the AKS. A heightened causation requirement means that the government has a heavier burden in proving the relationship between the AKS violation and the government payment. Therefore, those subject to the AKS should confirm that communications with contract counterparties are well documented. Maintaining robust documentation of communications surrounding these types of transactions will significantly limit the risk of turning a potential AKS violation into an FCA claim.
However, it’s important to note that (1) there are exemptions to the causation requirement, and (2) those subject to the AKS are still well-advised to build robust compliance systems and continually monitor for AKS compliance.
While federal courts are trending towards expecting more from the government in proving causation, the deepening disagreement among the various circuit courts increases the likelihood that the Supreme Court of the United States will step in and settle the question. The parties in United States v. Regeneron Pharmaceuticals have until May 18, 2025, to petition the Supreme Court for certiorari of the First Circuit’s decision.
While the Supreme Court can intervene to resolve the uncertainty, such a decision is still a long way off, and it is by no means a foregone conclusion that the Court will take the chance to do so. One thing we know is that the evolving legal standards for FCA cases based on AKS violations highlight the importance of robust compliance systems in the healthcare industry. As the legal debate deepens, healthcare providers must stay informed and prepared for potential changes in the legal landscape.
