More Disagreement About the Causation Standard for AKS Cases Under the FCA

At Qui Notes, we have been keeping a close eye on decisions regarding the showing required for a claim to be false because it “resulted from” a violation of the Anti-Kickback Statute (AKS). Specifically, we blogged about recent decisions by the Sixth Circuit and the Eighth Circuit holding that “but-for” causation between an alleged kickback and a specific claim is necessary to establish liability under the FCA for a claim to have “resulted from” an alleged kickback. At the time, we noted that how widely those decisions would be followed by other courts would have significant impact on FCA cases based on alleged kickbacks in which the government usually alleges a “taint” theory based on little more than a temporal relationship between an alleged kickback and the submission of a claim.

Last week, a Massachusetts district court ruled on dueling summary judgment motions of the government and defendant in United States v. Teva Pharm. USA Inc., Civ. Act. No. 20-11548-NMG, 2023 WL 4565105 (D. Mass. July 14, 2023) rejecting defendant’s argument to apply the “but-for” causation standard to the government’s claim that co-pay subsidies resulted in false claims to Medicare. In Teva, the defendant moved for summary judgment, relying on the Sixth and Eighth Circuit causation standard, claiming that the government had no evidence of but-for causation between its payments for co-pay assistance and claims submitted to Medicare. On the flip side, the government moved for partial summary judgment arguing against a “but-for” causation standard.

The district court ruled in Teva that “[t]he government need not prove ‘but for’ causation.” Rather, the court relied on an amorphous standard in a First Circuit case holding that there needs to be a “sufficient causal connection” between an AKS violation and claim. Guilfoile v. Shields, 913 F.3d 178, 190 (1st Cir. 2019). Significantly, the First Circuit did not explain what would make a causal connection “sufficient” in Guilfoile, which it did not need to do as it was evaluating the sufficiency of a claim of FCA retaliation that the district court had dismissed (as opposed to the much higher standard required at summary judgment). In Teva, the district court also punted on the issue of what “sufficient” means, instead pointing to evidence of a few defendant emails suggesting that co-pay assistance could increase sales. While this evidence could be relevant to scienter, it is not clear at all how it shows any causal connection between alleged kickbacks and actual claims. The district court also relied on the opinion of a government expert identifying Medicare claims from patients enrolled in defendants’ co-pay programs after defendant funded those programs. That basis seems even weaker, amounting to little more than a temporal connection between the funding of the program by defendants and claims submitted to Medicare.

Adding insult to injury, the district court also granted the government’s two other partial summary judgment motions — first, that a claim resulting from a kickback is per se material under the FCA and second, that the government’s damages for any such claim is the full amount of the payment, not an amount that accounts for the value of medical services that Medicare patients received. At present, the case is set to begin trial September 18, 2023. We expect that this will not be the last word on AKS causation and will continue to follow the issue in this and other FCA cases.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.