Courts Grapple with Causation Requirement in FCA Cases Based on Violations of Anti-Kickback Statute

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Congress amended the Anti-Kickback Statute (AKS) in 2010 to confirm that a claim “resulting from” an AKS violation constitutes a false or fraudulent claim for purposes of the FCA. 42 U.S.C. 1320a-7b(g). However, Congress did not define the phrase “resulting from.” That question is immaterial in a criminal AKS case because the offer or receipt of the payment completes the crime. But in order to prevail in a civil FCA case, a relator or the government must prove the submission of a false claim to a federal healthcare program. In recent civil FCA cases, courts have struggled to articulate the precise link that is required in order to establish that a claim “result[s] from” an illegal kickback, often relying on traditional causal concepts to help articulate the required link. This developing area of the law is one to watch as courts continue to grapple with the interplay between the link required by the plain language of the AKS and the body of case law related to FCA causation.

U.S. ex rel. Greenfield v. Medco Health Sys., Inc.

In U.S. ex rel. Greenfield v. Medco Health Sys., Inc., the relator alleged that the defendants illegally donated to certain charities in order to receive patient referrals and then allegedly falsely certified compliance with the AKS when seeking reimbursement. The U.S. District Court for the District of New Jersey granted summary judgment for the defendants, reasoning that the relator had not shown a causal link between the defendants’ donations and any claims for payment. Although discovery revealed that the defendants submitted claims for 24 federally insured patients during the relevant time period, the district court concluded that this evidence alone did not provide “the link between defendants’ 24 federally insured customers and defendants’ donations to [the charities].” Instead, it explained that the relator was required to show that the federally insured patients were referred to the defendants as a result of the defendants’ donations to the charities. “Absent some evidence … that those patients chose Accredo because of its donations,” the relator could not carry his burden on his claim.

The U.S. Court of Appeals for the Third Circuit affirmed the judgment, agreeing that “[a] ‘link’” or “some connection” between the illegal kickback and subsequent claim for reimbursement is required, but rejecting the district court’s reasoning that relators must provide “proof that the underlying medical care would not have been provided but for a kickback” in order to survive summary judgment. The Third Circuit reasoned that neither the AKS nor FCA “requires a plaintiff to show that a kickback directly influenced a patient’s decision to use a particular medical provider,” noting that requiring such a direct causal link could undermine both statutes’ intent to reach a broad swath of fraud and abuse in the federal healthcare system.

Notably, the Third Circuit expressly rejected the argument that the “taint” of the alleged kickbacks automatically “renders every reimbursement claim false,” finding a temporal connection between defendants’ charitable donations and its submission of claims insufficient to survive summary judgment. Instead, the Third Circuit held that the relator was required to show, “at a minimum, that at least one of the 24 federally insured patients for whom [defendants] provided services and submitted reimbursement claims was exposed to a referral or recommendation of [defendant] by [the charities] in violation of the AKS,” which he failed to do. However, because the relator pled no link at all, the precise link that is required remains an open question for future cases.

U.S. ex rel. Arnstein v. Teva Pharmaceuticals, Inc.

In U.S. ex rel. Arnstein v. Teva Pharmaceuticals, Inc., two former Teva sales representatives filed a qui tam action alleging Teva paid kickbacks to physicians to participate in “sham” educational speaker programs in exchange for prescribing its drugs. The U.S. District Court for the Southern District of New York denied the defendants’ motion for summary judgment, finding that the relators raised genuine issues of material fact as to Teva’s alleged AKS violation and, for purposes of associated FCA liability, successfully linked the purported AKS violations to claims for prescriptions.

The district court noted the dispute among courts over the “applicable causation standard” based on the “resulting from” language of the AKS. It then echoed the court’s concerns in Greenfield that reading the “resulting from” language of the AKS to require direct or “but for” causation for prescriptions could lead to under-enforcement, as courts would struggle to unravel why doctors or pharmacists recommended a given drug or service to patients. The court acknowledged that the law on the issue of the requisite link “is not well developed” and recognized the tension between various “guiding principles,” including that “the FCA does not require the kickback to be the ‘but for’ cause of the prescription” and yet “Relators’ burden of production at [summary judgment] is not satisfied by a mere ‘correlation equals causation’ argument.”

The court surveyed applicable case law, including the Greenfield case and its “middle of the road” approach, and determined that the relators could survive summary judgment by showing that Teva paid kickbacks to a physician for the purpose of inducing the physician to prescribe specific drugs, and that the physician then prescribed those drugs, even if the physician would have prescribed those drugs absent the kickback. In other words, “Relators need only show that the speakers’ referral of Teva drugs actually sat in the causal chain.”

U.S. ex rel. Fesenmaier v. The Cameron-Ehlen Group, Inc.

The U.S. District Court for the District of Minnesota recently affirmed an order requiring DOJ to articulate the factual basis for its allegations that the defendants’ claims for payment “resulted from” kickbacks. In U.S. ex rel. Fesenmaier v. The Cameron-Ehlen Grp., Inc., DOJ objected to the defendants’ 30(b)(6) deposition notice that requested “[f]or each claim identified as false … the factual basis and methodology for the United States of America’s determination that the claim resulted from the alleged kickback.”

At a discovery conference on the issue, the defendants argued that that topic sought to discover the facts and methodologies DOJ used to conclude (1) that particular surgeries occurred because of a kickback and (2) a particular physician would not have chosen to use the defendants’ products but for the kickback. DOJ countered that those questions were inconsistent with the relevant causation standard in FCA cases and argued, “[t]he standard is that once there is a kickback, that kickback taints claims going forward.” DOJ argued that it need only show that a physician received a kickback and subsequently submitted a claim to Medicare during the “taint period,” which it presumed to be one year. In response, the defendants argued that if DOJ was relying solely on a legal presumption, it could respond as such to the deposition topic, but that if it was relying on any factual basis for its causation or taint-period determinations, it must disclose those facts in discovery.

The magistrate judge overruled DOJ’s objections and ordered DOJ to provide a “clear, written statement” addressing (1) whether the government was aware of any evidence of actual causation of additional surgeries or use of the defendant’s products, separate and apart from any deposition testimony taken to date; and (2) why the government had chosen a taint period of one year and what factors it was relying on when it found the taint period to be greater than one year. DOJ appealed, and the district court affirmed, finding the ruling was not clearly erroneous or contrary to law.

In affirming the ruling, the district court quoted the AKS’s “resulting from” language and noted that the parties did not dispute that “there is a causation element that the United States must prove” but disagreed as to the “precise causation standard” required to establish its case. The court declined to resolve the question of the precise causation standard, noting it was unnecessary to do so for purposes of the appeal. The court noted that the deposition topic could lead to relevant and discoverable information even if that information is not ultimately dispositive or admissible in evidence.

The government’s proposed taint theory in Fesenmaier and other cases runs contrary to the Third Circuit’s observation in Greenfield that “[a] kickback does not morph into a false claim unless a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient.” Although courts continue to grapple with the precise causal link required under the AKS, requiring a causation standard more specific than a blanket taint theory could go a long way in cabining potential liability in FCA cases based on AKS violations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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