Key Takeaways:
- The First Circuit joined the Sixth and Eighth Circuits in holding that for a violation of the Anti-Kickback Statute (AKS) to automatically trigger False Claims Act (FCA) liability, the AKS violation must be the "but-for" cause of the submitted claim.
- Direct FCA liability for AKS violations in the First Circuit will now require proof that the alleged false claims would not have been paid for by the federal government absent the alleged kickback.
- Nonetheless, contracting entities, and particularly healthcare providers, must remain vigilant to prevent AKS violations. Beyond the statute's wide criminal reach, civil FCA liability remains available through false-certification theories, including the far-reaching "implied false certification" variety.
On February 18, 2025, the First Circuit Court of Appeals issued its decision in U.S. v. Regeneron Pharmaceuticals, ruling that the Anti-Kickback Statute ("AKS") requires the government to prove that an AKS violation was the but-for cause of any false claims submitted to federal healthcare programs in order for that violation to give rise to automatic False Claim Act ("FCA") liability. In doing so, the First Circuit deepened an existing circuit split and the ensuing uncertainty for both providers and government healthcare programs. The Third, Sixth, and Eighth Circuits had already weighed in'reaching varying conclusions'setting up a split potentially ripe for certiorari and Supreme Court resolution.
Background: The Statute and Circuit Split
The Anti-Kickback Statute
The AKS is a criminal statute located within the U.S. code chapter dedicated to Federal healthcare programs. It prohibits kickbacks meant "to induce" the recipient "to purchase, lease, order ... or recommend purchasing, leasing, or ordering any ... item" reimbursable by "a Federal health care program." 42 U.S.C. ' 1320a-7b(b)(2). It also prohibits kickbacks to induce referrals payable by Federal healthcare programs, id., as well as solicitation or receipt of kickbacks for either referral or provision of services and goods, id. ' 1320a-7b(b)(1).
But in addition to direct criminal liability, in 2010 Congress amended the AKS such that it now also provides for civil liability through the False Claims Act. The 2010 Amendments provide that "a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of [the FCA]." Id. ' 1320a-7b(g). While AKS violations could previously support FCA liability where a claim for government payment falsely certified compliance with the AKS as a condition of payment, this change made that liability more direct, removing the need for any certification element in at least some cases.
The dispute at issue in Regeneron concerns the degree of causation required by this automatic civil-liability provision: What does the act mean by a claim "resulting from" an AKS violation?
Government's Position: The "Exposure" Test
The government's favored position requires a lesser showing than but-for causation. The Third Circuit was the first to weigh in on this debate when it endorsed this view in, U.S. ex rel. Greenfield v. Medco Health Solutions Inc., 880 F.3d 89, 100 (3d Cir. 2018). That court relied heavily on the legislative history and purpose of the AKS'and particularly of the 2010 Amendments adding ' 1320a-7b(g)'to reach this holding.
Specifically, in sponsoring the amendment, Senator Edward Kaufman explained that it was meant to "strengthen[] whistleblower actions based on medical care kickbacks," including by overruling U.S. ex rel. Thomas v. Bailey, 2008 U.S. Dist. LEXIS 91221 (E.D. Ark. Nov. 6, 2008). 155 Cong. Rec. S10,853 (daily ed. Oct. 28, 2009) (Sen. Kaufman). Thomas had concluded that a hospital's reimbursement claims were not false, even though a manufacturer had violated the AKS by paying doctors to use its products, because the submitting hospital had not itself paid or solicited the kickbacks or known...
