First Circuit Embraces More Restrictive View Of False Claims Act Kickback Enforcement Provision

The United States Court of Appeals for the First Circuit's opinion in United States v. Regeneron Pharmaceuticals, Inc. has sharpened the circuit split for demonstrating the effect of a kickback on healthcare decisions under the False Claims Act (FCA). The Regeneron court held that an FCA claim based on an alleged violation of the Anti-Kickback Statute (AKS) requires demonstrating that an alleged unlawful kickback was the "but-for" cause of a submitted claim.

The Regeneron case involves alleged kickbacks relating to an injectable drug called Eylea – a treatment for an ophthalmological condition. The government alleged that the support of charitable foundations, which assist patients with copays for this treatment, constituted unlawful kickbacks.

The issue in Regeneron was the proper interpretation of the phrase "resulting from" in the following provision of the AKS: "[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. A three-judge panel of the First Circuit interpreted "resulting from" to mean that the government must show that an illicit kickback was the but-for cause of a submitted claim, i.e., that the claim would not have been paid by the government but for the AKS violation. The First Circuit rejected the government's position that Medicare claims for drugs prescribed to patients who receive copay assistance from the pharmaceutical manufacturer were necessarily the "result" of improper kickbacks in the form of copay assistance, and that this is all the government needed to show.

The First Circuit's decision amplifies an existing circuit split. With Regeneron, the First Circuit joins the Sixth and Eighth Circuits in adopting the "but-for" causation standard, in contrast to the Third Circuit's less-restrictive standard for establishing that a claim for reimbursement is "resulting from" an unlawful kickback.

In the Third Circuit, demonstrating the causal link between the AKS violation and submission of a claim requires only the causal link that "a particular patient [was] exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient." United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 100 (3d Cir. 2018). The Sixth and Eighth (and now the First) Circuits on the other hand, have adopted a "but-for" causation standard. See United States ex rel. Martin v. Hathaway, 63 F.4^th 1043, 1052-55 (6^th Cir. 2023) (interpreting the phrase "resulting from" as imposing a "but-for" causation requirement); United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4^th 828, 834-35 (8th Cir. 2022) (same).

The Regeneron court's decision follows its grant of interlocutory review, with the District Court of Massachusetts having noted the significant conflict among circuit courts and the First Circuit's silence on the issue, and finding that an immediate appeal would materially advance the resolution of the case. With the First Circuit joining the Sixth and Eighth Circuits, this issue will likely be decided by the Supreme Court of the United States.

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