Headlines that Matter for Companies and Executives in Regulated Industries

Federal Judge Rules Government Must Demonstrate “But-For” Causation for Anti-Kickback Statute Claims

On September 27, 2023, Chief Judge Dennis Saylor of the US District Court for the District of Massachusetts ruled that the federal government must demonstrate but-for causation in order to prove that Regeneron Pharmaceuticals, Inc., the manufacturer of the drug Eylea, submitted false claims resulting from violations of the Anti-Kickback Statute (AKS).

In 2020, the US Attorney’s Office for the District of Massachusetts brought an action against Regeneron alleging that it improperly funneled millions of dollars to a charity to subsidize patient copays.

In late 2022 and early 2023, the parties filed competing summary judgment motions and argued, among other things, over which causation standard applied under the 2010 amendments to the AKS. The 2010 amendments provide that any Medicare claim “that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].”

The government argued that the court should adopt the “exposure” theory of causation set forth in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 96-98 (3d Cir. 2018) — that once the government has proven an AKS violation occurred, to demonstrate causation, it need only prove a causal link that (1) a patient has been “exposed to an illegal recommendation or referral” and (2) that the provider has submitted a reimbursement claim for that patient. In contrast, Regeneron argued that the stricter standard of “but-for” causation should apply — that the government must demonstrate that an AKS violation occurred and that the remuneration actually caused the provider to provide different medical treatment and thus caused the false claims.

Last week, Chief Judge Saylor issued a decision holding that “[t]he adoption by Congress of the ‘resulting from’ language in the [AKS] statute requires a finding that the appropriate standard is but-for causation.” While the court agreed with Regeneron on which causation standard to apply, it found that the Government had alleged enough to withstand summary judgment on the issue of causation. Chief Judge Saylor denied the government’s partial summary judgment motion and partially granted Regeneron’s summary judgment motion on the unjust enrichment claim.

The case is United States v. Regeneron Pharmaceuticals Inc., Case No. 20 CV 11217.

Jury Convicts Individuals in Home Health Fraud and Money Laundering Scheme

On October 3, 2023, a federal jury in Miami, Florida convicted Karel Felipe and Tamara Quicutis for conspiracy to commit health care fraud, wire fraud, and money laundering, in connection with their role in allegedly billing millions of dollars for fraudulent home health therapy.

According to the US Department of Justice (DOJ), Felipe and Quicutis conspired to submit false claims to Medicare for three home health companies for services that were never rendered, using lists of stolen patient identities. The defendants allegedly used hundreds of shell companies and bank accounts to launder the Medicare fraud proceeds and then converted the proceeds into cash at ATMs and stores throughout Miami. As a part of the scheme, their co-conspirators allegedly recruited individuals from Cuba to sign Medicare enrollment documents and appear as owners of the three Michigan home health companies to conceal the identities of Felipe, Quicutis, and others. The DOJ alleges that Felipe and Quicutis billed over $93 million for the fraudulent services.

Last month, one of their co-conspirators, Jesus Trujillo, pleaded guilty to conspiring to commit health care fraud, wire fraud, and money laundering for his alleged role in recruiting nominee owners for home health agencies and shell companies and converting Medicare fraud proceeds into cash.

Felipe and Quicutis are scheduled to be sentenced on January 4, 2024.

The DOJ press release can be found here.

Health Company Settles Allegations Relating to False Claims for $32.5 Million

On October 2, 2023, the DOJ announced that Genomic Health Inc. (GHI) agreed to pay $32.5 million to settle allegations that it violated the False Claims Act (FCA) for submitting false claims for genetic cancer screening tests.

GHI is a Delaware corporation headquartered in California and provides clinical diagnostic tests, including for patients diagnosed with breast, colon, and prostate cancer. According to the DOJ, GHI perpetrated a fraudulent scheme to evade Medicare’s 14-Day Rule, which governs the billing of genomic laboratories tests. The DOJ alleges that GHI improperly manipulated the 14-Day Rule, including by failing to send timely invoices, conspiring and encouraging hospitals and physicians to cancel and reorder tests, receiving direct payments from Medicare for tests that should have been billed to a hospital, and receiving direct payments for tests that should have been covered as part of Diagnosis-Related Group payments to a hospital.

The settlement resolves allegations brought in two separate actions filed against GHI: United States v. Genomic Health, Inc., Civil Action No. 16 CV 4038 (EDNY), and United States. v. Genomic Health, Inc., et al., Civil Action No. 17 CV 4460 (EDNY).

The DOJ press release can be found here.

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