Eighth Circuit Adopts Stricter But-For Causation Standard For False Claims Act Claims Based On Anti-Kickback Violations

• Published date: 19 August 2022
• Subject Matter: Food, Drugs, Healthcare, Life Sciences
• Law Firm: Mintz
• Author: Mr Kevin McGinty and Rachel E. Yount

In a significant win for False Claims Act (FCA) defendants, the Eighth Circuit recently reversed a district court decision that defendants violated the FCA premised on violations of the Anti-Kickback Statute (AKS). The Eighth Circuit adopted a stricter but-for causation standard for FCA claims based on AKS violations, holding that, in order to prevail on these claims, the government must prove that FCA defendants would not have submitted claims for particular items or services to Medicare or Medicaid absent the illegal kickbacks.

Factual Background

In United States ex rel. Cairns v. D.S. Medical LLC, No. 20-2445 (8th Cir. July 26, 2022), a neurosurgeon ordered a high volume of spinal implants from an implant distribution company wholly owned by his fiancée. The arrangement was lucrative for the couple; the fiancée earned $1.3 million in commissions from one manufacturer alone, even though the neurosurgeon was her only large customer. Further, the neurosurgeon received an offer to purchase stock from that same manufacturer, and, in turn, he ordered more implants from the manufacturer. Physicians in other practices grew suspicious and filed complaints against the neurosurgeon and his fiancée's implant distribution company. The government intervened and filed its own complaint, alleging that the couple violated the AKS and the FCA on the premise that the couple received kickbacks that "tainted" claims submitted to Medicare and Medicaid.

FCA Violations Premised on AKS Violations

In 2010, the Affordable Care Act amended the AKS to state that "a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim" constitutes a violation of the FCA. At trial in Cairns, the government relied on this language to bootstrap the FCA to its AKS allegations, arguing that kickbacks "tainted" the neurosurgeon's choice of implants and so his claims submitted to Medicare and Medicaid were false claims. Rejecting defendants' argument that the government has the burden to prove that the implants would not have been used but for the alleged kickbacks, the trial court adopted the government's theory in its instructions to the jury. So instructed, the jury entered a verdict against defendants on the government's AKS-based FCA claims.

On appeal, the Eighth Circuit reversed, concluding that the plain meaning of the term "resulting from" requires that a plaintiff asserting an FCA claim based on purported AKS violations establish...