EXECUTIVE SUMMARY
A recent ruling from the United States Court of Appeals for the Eighth Circuit makes it harder to prove some False Claims Act allegations. Other circuit courts might follow suit.
- The ruling involves false claims and anti-kickback violations.
- The court supported the plain language of the statute.
- The Eighth Circuit is the first to directly address the issue.
Healthcare providers received some news from the United States Court of Appeals for the Eighth Circuit, with a ruling that makes proving fraud or falsity under Anti-Kickback Statute (AKS) more difficult.
The ruling is a big win for the healthcare industry, says Lisa M. Noller, JD, partner with Foley & Lardner in Chicago.
The ruling came in the case of United States ex rel. Cairns v. D.S. Med., LLC, which involved an allegation of an AKS violation. The court addressed the part of the statute noting claims for items or services “resulting from” a violation of the AKS constitute false or fraudulent claims for purposes of the False Claims Act (FCA). The Eighth Circuit said to prove fraud or falsity under the FCA, the government must show “a defendant would not have included particular items or services but for the illegal kickbacks.”1
A New High Bar
The ruling sets a high bar for causation. “The Anti-Kickback Statute criminalizes payments that have, as any one purpose, the inducement or reward for a referral. When that statute was amended in 2010, a section was added that made it a false claim if there is any claim submitted resulting from a violation of the AKS,” Noller explains. “That really codified case law, but since then there have been very few circuits that have had an opportunity to evaluate it.”
The Eighth Circuit said it was clear the “but for” clause in the statute was unambiguous, so the government must prove the defendant would not have submitted the alleged false claim in the absence of the alleged kickback.
“The false claim must have resulted from the kickback, not just that it was undisclosed, or it happened to be orbiting in the same universe. There has to literally be ‘but for’ causation,” Noller says. “As far as we can tell, this is the first circuit that has gone that far. Frankly, it should, because it is just what the statute says.”
The ruling means a violation of the AKS alone, without a tie to a false claim, cannot be the basis for a FCA lawsuit. “Assume a hypothetical kickback. That could be punished under the Civil Monetary Penalty statute, and it could be punished under the AKS, but alone it cannot form the basis for treble damages and penalties under the False Claims Act,” Noller explains.
The ruling only applies to the Eighth Circuit, but it could signal how other courts will rule in the future, Noller says. Essentially, the ruling is just an acknowledgment of the plain language in the statute, so logic suggests other courts should follow the same path.
Noller notes the Third Circuit Court of Appeals previously declined to address the issue, making the Eighth Circuit the first to give a firm decision.
“Chalk one up for the good guys,” Noller says. “The relators’ bar is so money hungry right now and they are filing lawsuits left and right regardless of whether they have merit, so any ruling where the court acknowledges that the statute should be read under plain language is a victory because perhaps it will have the effect of deterring some whistleblowers.”
REFERENCE
- United States Court of Appeals for the Eight Circuit. United States ex rel. Cairns v. D.S. Med., LLC. July 26, 2022.
SOURCE
- Lisa M. Noller, JD, Partner, Foley & Lardner, Chicago. Phone: (312) 832-4363. Email: [email protected].
Healthcare providers received some news from the United States Court of Appeals for the Eighth Circuit, with a ruling that makes proving fraud or falsity under Anti-Kickback Statute more difficult.
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