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DOJ Files Statement Of Interest Rebutting Application Of A “But-For” Causation Standard In False Claims Act Cases Predicated On Violations Of The Anti-Kickback Statute

On October 27, 2023, in a declined District of Massachusetts qui tam case called United States ex rel. Witkin v. Medtronic, Inc., the Department of Justice (“DOJ”) filed a sweeping statement of interest on the proper causation standard in False Claims Act (“FCA”) cases predicated on violations of the anti-kickback statute (“AKS”), as well as on the meaning of “remuneration” in the AKS.

In 2010, Congress amended the AKS to provide that any “claim that includes items or services resulting from [an AKS] violation” is a false claim for FCA purposes. 42 U.S.C. § 1320a-7b(g). Until recently, courts consistently had construed this “resulting from” language not to require the plaintiff (whether it be the government or, in a declined case, the relator) to prove but-for causation. See, e.g., United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89 (3d Cir. 2018). Two judges in the District of Massachusetts have issued rulings consistent with Medco. See United States ex rel. Bawduniak v. Biogen Idec, Inc., No. 12-cv-10601-IT, 2018 WL 1996829 (D. Mass. Apr. 27, 2018); United States v. Teva Pharms. USA, Inc., No. 20-cv-11548-NMG, 2023 WL 4565105 (D. Mass. July 14, 2023). In the past year-and-a-half, however, two circuit courts of appeal elsewhere in the country have held otherwise. See United States ex rel. Cairns v. D.S. Medical, LLC, 42 F.4th 828 (8th Cir. 2022); United States ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023). And, a court in the District of Massachusetts recently decided to follow Cairns. See United States v. Regeneron Pharm., Inc., No. 20-cv-11217-FDS, 2023 WL 6296393, at *11 (D. Mass. Sept. 27,2023). Notably, both the Teva and Regeneron courts have certified their contrary decisions for interlocutory appeal to the First Circuit. DOJ’s Witkin statement of interest thus presages arguments the government likely soon will make in those appeals.

The statement of interest encourages the Witkin court to follow that same court’s earlier holding in Bawduniak:

“Relators need not show that a quid pro quo exchange occurred, or that the physicians would not have prescribed Defendant’s medication but for the kickbacks. It 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.”

Bawduniak, 2018 WL 1996829, at *3.

The government then explains that the Cairns and Martin courts erred in borrowing the but-for causation standard from a Supreme Court decision involving the Controlled Substances Act, given that the same decision limited its interpretation of the meaning of “results from” to situations “‘[w]here there is no textual or contextual indication to the contrary.” See Burrage v. United States, 571 U.S. 204, 212 (2014). In the AKS, the government points out, “Congress imposed criminal liability for paying a kickback with no need to also show that the kickback actually led to the intended outcome.” The context of the AKS, the government argues, does not suggest that Congress intended to impose a higher causation standard in civil cases. Indeed, the legislative history of the 2010 amendment to the AKS shows that Congress meant to “strengthen[] whistleblower actions based on medical care kickbacks.” 155 Cong. Rec. S10852, S10853, 2009 WL 3460582 (daily ed. Oct. 28, 2009).

In a footnote, the government describes the absurd consequences that would flow from wider adoption of a but-for causation standard in AKS/FCA cases: “if a device company gave a doctor suitcases of cash intending to induce his use of the company’s devices, but that doctor (perhaps fearing prosecution, revocation of medical license, or even loss of future patients) claimed that he would have selected that company’s devices regardless, the device company could argue that there is no FCA liability.” This is hardly a crazy hypothetical. As even the Regeneron court recognized, almost no physician would acknowledge that a kickback, no matter how large, influenced his or her medical judgment unless the physician were “immunized” from prosecution.

The Witkin SOI points out that “the AKS’s animating principle . . . [is] that financial conflicts make it impossible to trust that treatment or referral decisions were motivated solely by the best interests of the patient, whether or not such conflicts can actually be shown to have altered the provider’s specific treatment or referral choices.” Consequently, the government contends, the court should not apply a causation standard that, in many kickback cases, would be impossible to satisfy no matter how egregious the kickback.

The SOI also takes issue with the Martin court’s holding that “remuneration,” for purposes of the AKS, is limited to a “a payment or transfer.” The meaning of “remuneration” in the AKS is much broader than that, the government argues, and can include giving “an opportunity to bill.” The government asserts that the First Circuit already has addressed this issue: “[i]n United States v. Bay State Ambulance & Hospital Rental Service, Inc., 874 F.2d 20, 29 (1st Cir. 1989), the court of appeals affirmed a criminal AKS conviction, holding that ‘[g]iving a person an opportunity to earn money may well be an inducement to that person to channel potential Medicare payments towards a particular recipient.’”

We look forward to hearing how the First Circuit construes the causation question, likely sometime next year.