In a much-anticipated decision, the First Circuit unanimously ruled the government and relators must prove that a violation of the federal Anti-Kickback Statute (AKS) was the “but-for” cause of a false claim under the False Claims Act (FCA). By adopting the more stringent “but-for” causation standard, the First Circuit now joins the Sixth and Eighth Circuits, forming a majority regarding the applicable causation standard.

A victory for laboratories and healthcare entities, this decision sets a higher standard for relators and the government to prove FCA claims predicated on AKS violations. Notably, the First Circuit’s decision affirms the causation standard Judge Patti B. Saris recently applied in OMNI Healthcare, Inc. et al. v. MD Spine Solutions LLC when granting the defendant’s summary judgment motion. Robinson+Cole represented MD Spine Solutions LLC.

In U.S. v. Regeneron Pharmaceuticals, Inc., the government alleged Regeneron improperly funneled over 60 million dollars to the Chronic Disease Fund (CDF) to subsidize patient copays for Eylea, a drug manufactured by Regeneron. Specifically, the government argued that the CDF payments were meant to incentivize physicians to write more prescriptions of Eylea, which Regeneron would submit for reimbursement under the Medicare Part B program. The government claimed Regeneron’s purported kickback scheme caused false claim submissions. On summary judgment, Chief Judge Dennis F. Saylor concluded that “but-for” causation was the proper standard to determine whether the government could show that Regeneron’s donations resulted in false claims, creating a split among judges in the District of Massachusetts.

On appeal, the First Circuit was asked to determine the proper standard of causation required to turn an AKS violation into a per se false claim under the FCA, thus resolving the intra-district split. In dispute was the meaning “resulting from” as used in the 2010 amendment to the AKS. The 2010 amendment states that “a claim [for payment by a federal healthcare program] that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of” the FCA.

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