The Anti-Kickback Statute (AKS) (as amended in 2010) provides that a claim for payment by a federal health care program “that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of” the False Claims Act (FCA). Courts have disagreed on whether “resulting from” requires the government to show that the claim would not have been submitted “but for” the kickback or whether it merely requires the government to show a patient was exposed to an illegal referral and that a claim for that patient was submitted.
In United States v. Regeneron Pharmaceuticals Inc., No. 23-2086, the First Circuit held that “resulting from” in the 2010 amendment to the AKS requires the government to “prove that the AKS violation was a “but-for” cause of the false claim.” The First Circuit joins the Sixth Circuit and Eighth Circuit in holding that the more rigorous but-for causation standard is the appropriate standard for AKS-based FCA claims. Only the Third Circuit has held that the more lenient standard applies.
Defendant Regeneron manufactures an expensive drug used to treat wet age-related macular degeneration (AMD) called Eylea. Over the course of several years, Regeneron made donations to a foundation that provides copayment assistance to patients suffering from wet AMD. The government argued that these payments to the funds were unlawful kickbacks. The government alleged that the kickbacks induced prescriptions of Eylea and that when doctors filed Medicare claims for Eylea prescribed to patients receiving copayment assistance, those claims “resulted from” a violation of the AKS making the Medicare claims “false or fraudulent” under the FCA.
The District Court of Massachusetts ruled on cross-motions for summary judgment and held that the “but-for” causation standard was appropriate, then sought interlocutory review. Assuming for the sake of argument that the donations were unlawful kickbacks, the First Circuit affirmed the district court’s ruling and confirmed that “but-for” causation was the appropriate standard.
The First Circuit, like the rest of the “but-for” cohort, cited the U.S. Supreme Court’s decision in Burrage v. United States, No. 12-7515, which interpreted the phrase “resulting from” as requiring “but-for” causation in the context of the Controlled Substances Act. The First Circuit acknowledged that such an interpretation in the “usual course” should serve as “a default assumption” in other applications of the same language so long as the plain text of the statute and the context of the statute as a whole allows. The court considered each potential exception to the “default assumption” in turn.
The government argued that the text of the 2010 amendment did not allow for a “but-for” causation standard because the AKS was built on the principle that “financial conflicts in themselves corrupt medical decisionmaking.” The court rejected that argument, noting that “resulting from” requires at least some showing of causality, so the premise that the causation requirement “must track that of the AKS fails to get out of the starting blocks.”
The court noted that it is not unusual for Congress to require additional elements when tethering the violation of one statute to another, citing RICO and the Armed Career Criminal Act. The court also explained that the “[c]riminal provisions of the AKS serve a different purpose than the provisions linking an AKS violation to FCA falsity.” While the former seeks to protect patients from doctors whose judgments may be clouded by improper financial motives, the FCA’s civil penalties seek to provide restitution to the government for losses through fraud. So, the court concluded, it makes sense that a claim is only false for FCA purposes when the kickback is the actual cause of the claim.
The government argued that the context of the AKS as a whole is incompatible with the “but-for” causation standard. Citing AKS-based false certification cases (where FCA liability arises because a defendant falsely certified compliance with the AKS in a claim for federal funds), the government argued that statutory history has allowed for FCA liability to attach without connecting an AKS violation to a particular claim. The court agreed with the government’s characterization of the requirements for a false certification case, but explained that under the language of the 2010 amendment, the “but-for” causation standard does not apply in the false certification context. Instead, the court said the 2010 amendment provides a “separate track” to FCA liability.
Finally, the government argued that it can “sometimes be difficult” to prove why a doctor prescribed a particular drug. The court said that other FCA elements (like scienter) can also be difficult to prove and noted that “giving ‘resulting from’ its ordinary meaning” does not “render[] it so difficult to establish liability that the 2010 amendment would have no practical effect.” The court pointed to the government’s ability to withstand summary judgment at the district court level on the issue of “but-for” causation as evidence.
The Regeneron decision is a huge win for defendants, and the First Circuit’s analysis could have a significant impact in establishing “but-for” causation as the majority standard in ASK-based FCA cases.
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