Eighth Circuit Curtails False Claims Act Liability Premised On Anti-Kickback Statute Violations

• Published date: 10 August 2022
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Criminal Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Venable LLP
• Author: Mr Ari J. Markenson, W. Hamel, Allison R. Donahoe and Nicholas A. Mongelluzzo

Last week the Eighth Circuit Court of Appeals offered defendants in False Claims Act cases based on Anti-Kickback Statute (AKS) violations a significant new defense in its holding in United States ex rel. Cairns v. D.S. Med., LLC. The Court in Cairns held that when the government or a relator seeks to establish falsity or fraud in a False Claims Act case, it must prove that the defendant would not have included particular "items or services" in its claims to the government "but for the illegal kickbacks." United States ex rel. Cairns v. D.S. Med., LLC No. 20-3010, 2022 WL 2930946 (8th Cir. July 26, 2022). The decision by the Eighth Circuit is the first in the country imposing a "but for" causational standard and creates a circuit split with the Third Circuit, fueling uncertainty and debate on the future of False Claims Act cases premised on AKS violations.

The False Claims Act imposes civil liability on anyone who "presents, or causes to be presented" a "false or fraudulent claim for payment or approval" to the government, usually related to goods or services. The AKS criminalizes soliciting or receiving kickbacks for any "items or services" paid "in whole or in part" by a Federal Health Care Program, including Medicare or Medicaid. In 2010 Congress amended the AKS to state that submitting a claim to the government that "includes items or services resulting from" an anti-kickback violation makes the claim "false or fraudulent" under the False Claims Act. The government has maintained since that amendment was adopted that any claim submitted to the government that violates the AKS is therefore "tainted" and is tantamount to a per se False Claims Act violation.

In Cairns, the Eighth Circuit rejected the government's expansive interpretation, which had previously been adopted by the Third Circuit and other district courts across the...