Government Setback "Resulting From" Another Court Adopting The "But For" Causation Standard For False Claims Act Cases Furthering Court Split

• Jurisdiction: United States,Federal
• Law Firm: WilmerHale
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Food and Drugs Law
• Author: Mr George P. Varghese, Benjamin Conery and Melissa Morel
• Published date: 22 October 2023

The U.S. District Court for the District of Massachusetts recently weighed in on the burgeoning court split in False Claims Act (FCA) cases, adopting an approach that puts a higher burden on the government to prove Medicare reimbursement submissions were directly caused by allegedly illegal kickback payments.¹ At issue was the FCA's language that the Medicare submission "resulting from" an alleged kickback is a per se false claim. In interpreting the statutory language, Chief Judge F. Dennis Saylor IV ruled that the alleged kickbacks must be the "but for" cause of improper Medicare reimbursement submissions in order to violate the FCA. Judge Saylor's ruling sets up an intra-circuit split after another District of Massachusetts judge in a similar case previously rejected the "but for" test in favor of a less exacting approach.²

This most recent case, United States v. Regeneron Pharmaceuticals, involves a pharmaceutical company that manufactures Eylea, a drug to treat an eye disease that primarily affects elderly people. The government's theory stems from an amendment to the Anti-Kickback Statute (AKS) as part of the 2010 Patient Protection and Affordable Care Act that makes any Medicare claim "resulting from" a violation of the AKS a false or fraudulent claim for purposes of the FCA.³ This statutory change was long sought by the government, who have argued that reimbursements for health care services tainted by kickbacks were per se false claims. In Regeneron, the government is arguing that the company induced physicians to prescribe Eylea by donating millions of dollars to a patient-assistance foundation to help patients cover copays for the medication. Regeneron is one of a series of "copay cases" brought by the U.S. Attorney's Office in the District of Massachusetts that has alleged that pharmaceutical companies' donations to copay charities that assist patients to purchase their medication were kickbacks.⁴

In his summary judgment order last month, Judge Saylor held that "improperly structured donations to copay-assistance charities may violate the AKS if they are made with the intent to induce Medicare-funded referrals or drug purchases."⁵

Judge Saylor's ruling will soon be reviewed'either directly or indirectly'by the First Circuit, which is set to consider the issue in another copay case, United States v. Teva Pharmaceuticals USA et al.⁶ According to a report in Law360, Judge Saylor said on October 18, 2023, that he may allow for an appeal of his...