This contrasts with the Third Circuit, which held in 2018 that a plaintiff need only show “some connection” between a kickback and the subsequent claim. The First Circuit is slated to consider the issue on interlocutory appeal in the coming months. But even as the circuit split created in 2022 has widened, the Supreme Court declined to take up the issue as recently as October 2023.
Background
The statutory provision at the center of this circuit split was enacted in 2010, purportedly to address disparate approaches applied by courts in FCA cases predicated on alleged AKS violations.[1] Congress amended the AKS through the Affordable Care Act to specifically provide that “a claim that includes items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of” the FCA.[2] The circuit split centers on the phrase “resulting from.”
In 2018, the Third Circuit became the first appellate court to interpret this provision in United States ex rel. Greenfield v. Medco Health.[3] It held that a plaintiff need only show a “link” – that is, “some connection between a kickback and a subsequent reimbursement claim” – to establish that the false claims at issue resulted from the AKS violation.[4] The court declined to read “resulting from” as requiring a but-for causation standard; it agreed instead with the government’s view that a requirement of actual causation would “dilute” the FCA’s enforcement effect by imposing direct causation as a requirement for FCA liability but not for AKS liability.[5]
The Eighth Circuit reached the opposite conclusion in 2022 in United States ex rel. Cairns v. D.S. Med. LLC,[6] holding that the phrase “resulting from” requires a “but-for” causal relationship between the AKS violation and the allegedly false claim. The court characterized the phrase “resulting from” as “unambiguously causal” and flatly rejected the government’s view that the standard could be satisfied by a showing that the illegal kickbacks “tainted” the claim for reimbursement.[7] Instead, an FCA plaintiff relying on an AKS violation must establish that a claim “would not have included particular ‘items or services’ but for the illegal kickbacks.”[8]
Sixth Circuit joins Eighth Circuit in requiring but-for causation
On March 28, 2023, the Sixth Circuit in United States ex rel. Martin v. Hathaway joined the Eighth Circuit in requiring but-for causation in FCA cases alleging an AKS violation.[9] Like the Eighth Circuit, the Sixth Circuit rejected a broader interpretation, reasoning that if Congress had wanted to use language such as “tainted by” or “provided in violation of,” it could have; instead Congress chose to use “resulting from,” the “ordinary meaning” of which is but-for causation.[10] The court further declined to adopt the government’s legislative-history based argument, noting that “we generally do not consider legislative history in construing a statute with criminal applications[.]”[11]
The relator sought review of the decision, including the portion addressing causation.[12] The Sixth Circuit denied rehearing on May 16, 2023,[13] and the Supreme Court denied certiorari on October 2, 2023.[14]
First Circuit on deck to interpret “resulting from” on interlocutory appeal
The First Circuit is set to decide the issue next in a review of an intra-circuit split arising from two cases in the District of Massachusetts: United States v. Teva Pharmaceuticals USA, Inc.[15] and United States v. Regeneron Pharmaceuticals, Inc.[16] These decisions, both issued in 2023, reached opposite conclusions as to the meaning of “resulting from” in an FCA case premised on AKS violations.
Prior to these decisions, the only First Circuit guidance on the meaning of “resulting from” was in 2019. In Guilfoile v. Shields, the First Circuit touched upon, but did not decide, the issue in the context of a motion to dismiss an FCA retaliation claim.[17] Citing to (but not discussing or adopting) the Third Circuit’s decision in Greenfield, the First Circuit noted that “resulting from” would require, at minimum, “a sufficient causal connection between an AKS violation and a claim submitted to the federal government” to establish falsity.[18] The First Circuit did not, however, define “sufficient causal connection.”[19]
In July 2023, in Teva, Judge Nathaniel Gorton of the District of Massachusetts determined that the government need not prove but-for causation.[20] Citing both Guilfoile and Greenfield, Judge Gorton held that the government need only establish a “sufficient causal connection” between the claims for payment and an underlying AKS violation.[21] Teva moved to certify Judge Gorton’s decision for interlocutory appeal, and on August 14, 2023, Judge Gorton allowed the motion, agreeing that the causation standard is “a controlling question of law as to which there is substantial ground for difference of opinion.”[22]
Two months later in Regeneron, Judge R. Dennis Saylor reached an opposite conclusion as to causation. In denying, in relevant part, both parties’ motions for summary judgment, Chief Judge Saylor adopted the reasoning of the Sixth and Eighth Circuits and required the government to show but-for causation.[23] He agreed with Regeneron that Guilfoile did not define “sufficient causal connection” and, in fact, that the First Circuit had expressly declined to address the “full implications” of the statute for causation analysis.[24] Chief Judge Saylor further declined to adopt the Third Circuit’s decision in Greenfield, describing it as “fraught with problems. . . . [and] divorced from the actual language of the statute and from basic principles of statutory interpretation.”[25] He rejected the government’s position that, once an AKS violation was established, the government need only establish that a particular patient was “exposed” to the illegal kickback to establish a causal link.[26]
The First Circuit has granted interlocutory review of the district courts’ decisions in Teva[27] and Regeneron, with briefing scheduled for early 2024.[28]
Looking ahead
The circuit split regarding causation is here to stay, at least until the Supreme Court elects to weigh in. The First Circuit’s decision will inevitably further complicate the landscape for litigants on both sides of the “v”. As Judge Saylor acknowledged when certifying the Regeneron decision for interlocutory appeal, allowing cases to proceed to trial without guidance from the relevant court of appeals on the proper causation standard will no doubt result in inconsistent applications across courts.[29]
FCA defendants can expect to see increasingly creative arguments among government attorneys and the relators’ bar to craft causation theories in an attempt to avoid the application of the “but for” causation standard. For example, the government has advanced a theory that, even in FCA cases premised on AKS violations and even in light of Cairns and Hathaway, falsity can be satisfied without relying on the “resulting from” requirement in 42 U.S.C. § 1320a-7b(g), such as by establishing that a claim violates a material reimbursement condition. The District of Minnesota squarely rejected this theory late in 2022, stating unequivocally that “there is no such thing as a False Claims Act case premised on an Anti-Kickback violation that need not go through § 1320a-7b(g).”[30] However, other courts have expressed an openness to these alternative theories.[31]
As courts continue to tackle this issue, FCA litigants should be mindful of the controlling caselaw in the circuits in which they reside; for those litigants without controlling circuit case law, it will be important to stay abreast of developments across the country. We continue to monitor and assess this changing landscape and implications for our clients.
References
[1] S.Rept. No. 110-507, at 19 (2008) (citations and footnotes omitted), available at https://www.congress.gov/110/crpt/srpt507/CRPT-110srpt507.pdf.
[2] False Claims Act Corrections Act, 42 USCA § 1320a-7b(g) (2009).
[3] United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018).
[4] Id. at 98, 100.
[5] Id. at 97.
[6] United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 834 (8th Cir. 2022).
[7] Id. at 836.
[8] Id.
[9] United States ex rel. Martin v. Hathaway, 63 F.4th 1043, 1053 (6th Cir. 2023).
[10] Id. at 1053.
[11] Id. at 1054.
[12] The Sixth Circuit also ruled against Martin on a separate issue regarding what constitutes “remuneration” under the AKS.
[13] United States ex rel. Martin v. Hathaway, No. 22-1463, 2023 WL 3806274, at *1 (6th Cir. May 16, 2023).
[14] See https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/23-139.html, --- S.Ct. ----, 2023 WL 6378570 (Mem).
[15] United States v. Teva Pharms. USA, Inc., No. CV 20-11548-NMG, 2023 WL 4565105, at *1 (D. Mass. July 14, 2023).
[16] United States v. Regeneron Pharms., Inc., No. CV 20-11217-FDS, 2023 WL 6296393, at *1 (D. Mass. Sept. 27, 2023).
[17] Guilfoile v. Shields, 913 F.3d 178, 190 (1st Cir. 2019).
[18] Id.
[19] Id.
[20] Teva Pharms. USA, Inc., 2023 WL 4565105, at *5.
[21] Id.
[22] Ord. Allowing Def. Teva’s Mot. Cert. Court’s July 14, 2023 Ord., United States v. Teva Pharms. USA, Inc., No. CV 20-11548-NMG (D. Mass Aug. 14, 2023), ECF No. 235.
[23] Regeneron Pharms., Inc., 2023 WL 6296393, at *16.
[24] Id. at *7.
[25] Id. at *10.
[26] Id. at *7-14.
[27] Mem. and Ord., United States v. Teva Pharms. USA, Inc., No. CV 20-11548-NMG (D. Mass. Aug. 14, 2023), ECF No. 195 (certifying interlocutory appeal); Judgment, United States v. Teva Pharms. USA, Inc., No. 23-8028 (1st Cir. Nov. 17, 2023) (granting petition for permission to appeal).
[28] Mem. and Ord., United States v. Regeneron Pharms., Inc., No. CV 20-11217-FDS (D. Mass. Oct. 25, 2023), ECF No. 366 (certifying interlocutory appeal); Corrected Judgement, United States v. Regeneron Pharms., Inc., No. 23-8036 (1st Cir. Dec. 20, 2023) (granting petition for permission to appeal).
[29] Mem. and Ord., supra note 28, at 3.
[30] United States of Am. ex rel. Scott Louderback, Relator, v. Sunovion Pharms., Inc., Defendant., No. 17-CV-1719 (ECT/LIB), 2023 WL 8188879, at *13 (D. Minn. Nov. 27, 2023); see also id. (distinguishing contrary authority from the same district as “flawed”).
[31] See, e.g., United States ex rel. Hueseman v. Pro. Compounding Centers of Am., Inc., No. SA-14-CV-00212-XR, 2023 WL 2669879, at *10 n.4 (W.D. Tex. Mar. 27, 2023) (declining to apply Cairns in part because “the Government has asserted alternative theories of falsity under the FCA”).