Supreme Court Should Resolve False Claims Act Causation Question

The causation element under the False Claims Act is a matter of significant controversy being adjudicated in federal courts. The matter arises when claims are submitted for government reimbursement for items or services rendered or provided under federal health-care programs, in which a violation of the Anti-Kickback Statute is alleged.

On interlocutory appeal, the US Court of Appeals for the First Circuit in United States v. Regeneron on Feb. 18 decided the burden of proof the government must meet for the causation element under the FCA. A three-judge panel ruled the government must meet a “but-for” proof standard, adding to a circuit split.

The FCA specifies elements that must be proven for there to be a violation of the AKS. In 2010, Congress amended the statute to explicitly provide that, for the causation element under the FCA, a Medicare claim for payment for items and services “resulting from a violation” of the AKS constitutes a false claim under the FCA, creating a per se rule of falsity.

There is a circuit split about the meaning of “resulting from” in the text of the 2010 amendment. As pertinent here, the government filed a lawsuit involving the amendment against Regeneron Pharmaceuticals Inc. in the US District Court for the District of Massachusetts.

In United States v. Regeneron, the government alleged violations under the FCA related to Regeneron’s marketing of its drug Eylea. The government contended that Regeneron funded a charity to provide copay subsidies to Medicare Part B beneficiaries who were prescribed Eylea. It alleged that the funding’s purpose was to induce physicians to prescribe Eylea, violating the AKS. Claims submitted by physicians to the government were viewed as false, violating the FCA.

On cross-motions for summary judgment, the district court construed the text “resulting from” under the 2010 amendment to the AKS. The court said the government must meet a but-for standard to prove causation—but for the illicit inducement, the claim for payment wouldn’t have been submitted. The government advocated for a more lenient standard—whether there was a “causal connection” between the kickback and a claim for payment.

With the First Circuit decision on interlocutory appeal, the causation standard under the FCA in that circuit is now a but-for standard.

For context, the Third Circuit has adopted a lenient standard that only requires a “link,” or “some connection,” between the alleged kickback and a claim for payment. The Sixth and Eighth Circuits have applied the more stringent but-for causation standard.

Lawsuits will continue to be brought under the FCA with prospects for divergent views on the 2010 AKS amendment. With the circuit split, in 2023 the US Supreme Court in United States ex rel. Martin v. Darren Hathaway declined to grant review, instead allowing the circuit courts to further develop the case law.

Notably, the First Circuit in United States v. Regeneron took note of the hardship raised by the government and qui tam litigants in meeting the proof element of causation under the but-for standard. The government lamented that it can be difficult to prove, under the but-for standard, why a doctor prescribed a particular drug.

However, the three-judge panel summarily rejected this argument. It observed that the government didn’t argue that it would “rarely be able” to prove but-for causation. Additionally, the First Circuit reasoned that there is a high bar to satisfy in proving the scienter element under the FCA, so the causation element wasn’t an outlier in the context of burden of proof under the statute.

If the Supreme Court grants review, the justices might construe “resulting from” in one of several ways.

In parsing the text, the court could embrace the plain meaning rule—citing its prior case law outside of the FCA context—in support of but-for causation. This would be particularly compelling if it could be shown that such an interpretation wouldn’t be contrary to the legislative design of the FCA evidenced by Congress.

Alternatively, if the court reads “resulting from” as based on the notion that the AKS prohibits inducement, such that if a kickback is given to induce the purchase of an item or service, then there would be a sufficient causal connection. It would be an AKS violation regardless of whether such purchase would have resulted in the absence of the inducement. The government favors this reading.

It seems plausible the Supreme Court would be receptive to this reading of the statutory text, particularly if it is argued that such a construction effectuates intent by Congress to afford a less burdensome pathway for the government and qui tam litigants to pursue recoveries under the statute for false claims.

The Supreme Court’s decision not to grant certiorari to rule on the causation standard under the FCA for claims predicated under the AKS presents uncertainty nationally on the burden of proof that must be met under the FCA causation element for lawsuits brought by the government or in qui tam cases.

This is a particularly pressing issue for the health-care sector given the significant monetary liability exposure for violations under the FCA. The government and parties that pursue qui tam lawsuits, as well as the defense bar, must await the grant of review by the Supreme Court to definitively define the causation element of “resulting from” as it applies to FCA causes of action alleging AKS violations.

The case is United States v. Regeneron Pharmaceuticals, Inc., 1st Cir., No. 23-2086, decided 2/18/25.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Stuart Silverman is a licensed attorney in Washington, D.C, and he has practiced health-care law.

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