Yet Another Court Adopts the “But-For” AKS Causation Standard: First Circuit Finally Weighs In

Yesterday, in a long-awaited decision, the First Circuit joined the Sixth and Eighth Circuits in holding that a 2010 amendment to the federal Anti-Kickback Statute (AKS) providing that a claim “resulting from” an AKS violation is false or fraudulent under the False Claims Act (FCA) requires a plaintiff to prove “but-for” causation. United States v. Regeneron Pharms., No. 1:20-cv-11217 (D. Mass.). The case centered on government allegations that a pharmaceutical company’s patient co-pay assistance payments for a doctor-administered injectable medicine violated the FCA because they were kickbacks. Applying the “but-for” causation standard, the First Circuit affirmed the district court’s decision in favor of the defendant company holding that “if a doctor would have purchased (and sought reimbursement) for [the medicine] anyway, then the subsequent Medicare claim cannot have ‘result[ed] from’ the [company’s] allegedly illicit payments.”

The First Circuit undertook a detailed inquiry into whether the “resulting from” language of the amendment requires “but-for” causation. It began by noting Supreme Court decisions that have held that statutory phrases like “resulting from” ordinarily require “but-for” causation. The court then carefully examined the government’s arguments that the “default assumption” of “but-for” causation should not apply because “contextual indications” regarding the 2010 amendment justified a departure.

First, the government argued for a lower causation standard because the AKS itself requires no actual causation of a claim to the government to support an AKS violation (in contrast to an FCA violation). The court rejected this argument observing that Congress may add elements when making the violation of one provision the basis for liability under a different provision. More significantly, the court noted that the government had already conceded that the amendment requires “proof of some type of actual causality,” yet the government’s proposed standard — that all claims following co-pay assistance are actionable even if the patient would have used the medicine anyway — “requires no proof of actual causation at all.”

In addition, the government argued that a lower causation standard should apply because Congress passed the 2010 amendment to make it easier for the government to file FCA cases based on kickbacks under a false certification theory, which the court described as applying “when someone falsely represents compliance with a material requirement that there be no AKS violation in connection with the claim.” The court held that “claims under the 2010 amendment run on a separate track” from false certification claims, which “require no proof of causation.” It applied the same reasoning to the government’s argument based on statements by bill sponsors in the legislative history about needing the amendment to “circumvent an arguable weakness in the false-certification theory,” which some courts found did not apply if the person submitting the claim knew nothing of the kickbacks. The First Circuit stated the legislative history reinforced the view that the 2010 amendment created a separate pathway for FCA claims based on alleged kickbacks.

Finally, the court addressed the government’s claim of difficulty in proving “why a doctor prescribed a particular drug.” The court rejected that concern, noting that “the same could be said” about the difficulty of proving other elements such as scienter, and noted the district court’s holding that the government had presented enough evidence to “withstand summary judgment on the issue of [but-for] causation.”

As the First Circuit noted, there remains a circuit split given the holding of the Third Circuit that a sufficient causal connection exists if a patient chose a product after being “exposed” to an inducement even if the patient would have chosen that product anyway. United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 100 (3d Cir. 2018). We may hear from the Supreme Court on this issue given that split. Meanwhile, the government will likely sharpen its focus on the false certification theory in bringing AKS-based FCA cases.

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