District Court Adopts Middle of the Road Approach in Determining Causation in Anti-Kickback Statute-Based False Claims Act Case

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The U.S. District Court for the District of Maryland recently weighed in on the appropriate causation standard when evaluating whether a claim “result[s] from” a violation of the Anti-Kickback Statute sufficient to constitute a false or fraudulent claim for purposes of the False Claims Act. In U.S. ex rel. Fitzer v. Allergan, Inc., the court adopted a middle of the road approach under which a causal link between the remuneration and the claim is required, but a showing that the remuneration succeeded in producing the prescription is not.

In this case, Relator Matthew A. Fitzer filed a False Claims Act lawsuit against two medical device companies that have, at different times, owned the LAP-BAND brand. In the suit, Fitzer alleged that the website the defendants used to advertise and market the LAP-BAND product, which included a physician locator tool that allowed potential patients to identify bariatric surgeons in their area who could perform the surgery required to implant the LAP-BAND device, was a way for defendants to conduct an unlawful kickback scheme in violation of the AKS by providing surgeons with valuable free advertising on the website in order to induce surgeons to recommend the LAP-BAND medical device instead of alternative options.

In deciding defendants’ Rule 12(b)(6) motion to dismiss, the court addressed whether the AKS language providing that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA]” imposes a but-for causation standard or only requires an AKS violation to be the proximate cause of a false claim. The court noted that other courts have rejected both the but-for cause standard and attempts to stretch the proximate cause standard to categorically include any and all claims “tainted” by an AKS violation. Instead, the court adopted a “middle of the road” approach articulated by several other courts.  Under that approach, “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.” In other words, “[i]t is sufficient to show that Defendant 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.”

The court determined that Relator failed to meet his burden to show causation for three reasons: (1) the allegations did not adequately allege that the purportedly representative claims were, in fact, related to LAP-BAND surgeries; (2) even if the claims were related to LAP-BAND surgeries, Relator’s allegations did not link them to any “particular patient” who was “exposed to an illegal recommendation or referral”; and (3) the complaint did not provide any information about when the relevant procedures took place and when each claim was submitted. Relator’s claims thus failed to allege that “a particular patient [was] exposed to an illegal recommendation or referral and [that] a provider submit[ted] a claim for reimbursement pertaining to that patient.” Additionally, the court noted that Relator’s allegations also left open the possibility that the providers were never aware of their listing on the physician locator, and that an AKS violation cannot causally be related to a claim for reimbursement if the provider was never aware of the alleged kickback in the first place.

The opinion in Fitzer highlights the causation analysis that must be considered when involved in FCA and AKS cases.

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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