In 2010, Congress amended the Anti-Kickback Statute (AKS) to provide that claims “resulting from” an AKS violation are “false or fraudulent” for False Claims Act (FCA) purposes. 42 U.S.C. § 1320a-7b(g). For over a decade, courts have wrestled with the significance of the “resulting from” requirement and the degree of causation it warrants for an FCA violation premised on an illegal kickback, as we have covered in prior posts.
In its recent decision, U.S. ex rel. Cairns v. D.S. Medical LLC, the U.S. Court of Appeals for the Eighth Circuit added to this ongoing causation debate, splitting with the U.S. Court of Appeals for the Third Circuit and holding that “resulting from” requires but-for causation between the AKS violation and the alleged false claim. Cairns is the first to impose such a rigorous causation standard in AKS-based FCA cases and marks a significant departure from the Third Circuit’s precedent in U.S. ex rel. Greenfield v. Medco Health Solns., Inc., which held that a direct causal link is not required between the prohibited kickback and the subsequent claim for reimbursement. For a detailed discussion of the Greenfield decision, see here.
In Cairns, the relators alleged the defendants – a neurosurgeon, his medical practice, his fiancée and a medical device distributor wholly owned by his fiancée – engaged in a prohibited kickback scheme whereby the neurosurgeon ordered spinal implants from his fiancée’s device company, generating substantial sales commissions and lucrative stock options from the device manufacturer. According to the relators, these financial gains led the neurosurgeon to order even more implants. The government intervened, asserting that the defendants’ claims for federal reimbursement were false because they were “tainted” by illegal kickbacks. The district court agreed, instructing the jury that the government could establish falsity if it proved that the claim for reimbursement merely “failed to disclose the [AKS] violation.” This ultimately resulted in a jury verdict for the government on two out of three FCA claims.
On appeal, the Eighth Circuit examined the plain meaning of “resulting from,” applying a prior U.S. Supreme Court decision that had interpreted the phrase to require but-for causality in the context of the Controlled Substances Act. Rejecting the government’s list of “alternative causal standards” and Greenfield’s reliance on “legislative history and ‘the drafters’ intentions’ to interpret” the AKS, the Eighth Circuit explained that the phrase “resulting from” is “unambiguously causal.” Therefore, the appeals court held that proving falsity or fraud based on an AKS violation requires the government to show that “a defendant would not have included particular ‘items or services’ but for the illegal kickbacks.”
Implications of Cairns
By requiring but-for causation between the prohibited kickback and the claim for reimbursement, Cairns makes it more challenging for relators or the government to bring FCA cases predicated on AKS violations. While Greenfield requires at least some connection between the illegal kickback and the subsequent claim, the Third Circuit refused to require a direct causal relationship between the two. A key difference between these two standards is that under the stricter Eighth Circuit standard, defendants can potentially avoid FCA liability if they can point to any reason other than the alleged kickback to support the submission of a claim for reimbursement.
We will continue to monitor courts’ interpretation of the “resulting from” language and how courts navigate this latest circuit split on the requirements for proving an FCA case. For more information about Cairns or other FCA-related case law developments, please subscribe to this blog or contact a member of the Bass, Berry & Sims Healthcare Fraud & Abuse Task Force.