In recent years, disagreement has arisen among the U.S. Courts of Appeals as to how courts should interpret the causation element of the False Claims Act (“FCA”) when an Anti-Kickback Statute (“AKS”) violation serves as a predicate violation of the false claims law. United States v. Regeneron Pharmaceuticals Inc.currently being reported by the government and Regeneron to the United States Court of Appeals for the First Circuit (the “First Circuit”).
Circuit Partitioning Context
Federal circuits have generally split into two camps regarding the causation standard. The Sixth and Eighth Circuits have applied a restrictive “but for” causation standard, which requires the government to prove that a claim would not have been brought but for the unlawful remuneration that violated the AKS. We have previously noted that Sixth Circuit decisions: Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023)followed the Eighth Circuit's standard, reflected in cases such as Cairns v. DS Med LLC, 42 F.4th 828 (8th Cir. 2022).
In contrast, the U.S. Third Circuit Court of Appeals Greenfield v. Medco Health Sols, Inc.880 F.3d 89 (3d Cir. 2018), used a “proximate” cause standard and concluded that proving causation requires demonstrating “some connection between the kickback and the subsequent refund claim.” Thus, the Third Circuit has applied a much looser standard for demonstrating an FCA violation premised on an AKS violation.
Regeneron District Court Decision
in RegeneronAt the heart of the dispute is the question of whether Regeneron's donations to its Patient Assistance Program (PAP) That is In essence, the government alleges that Regeneron violated charitable donation laws by making donations to cover the high out-of-pocket costs of one of its drugs, a charitable foundation that runs a patient fund.
The procedural history at the court level has been interesting: Regeneron filed a motion to dismiss, which the U.S. District Court for the District of Massachusetts (the “District Court”) denied, applying the proximate cause test used in the Third Circuit decision. GreenfieldTo prove causation, the district court wrote, the government “needs only to prove that a particular patient received an unlawful recommendation or referral and that the provider subsequently submitted a claim for reimbursement regarding that patient.”
However, the district court changed course at the decision stage on Regeneron and the government's cross-motion for summary judgment. There, the district court issued an opinion based on the Sixth and Eighth Circuit standards, namely, the causation exception. Although the district court found that the government had presented sufficient evidence to support a factual trial under the causation exception, it found that the government had not established the necessary nexus as a matter of law to Regeneron's AKS violations.
Regeneron then filed suit in district court spontaneously The District Court granted summary judgment on the interlocutory appeal. The District Court agreed, and the Government filed the present petition for leave to appeal, which the First Circuit granted.
Current Appeal
In its brief to the First Circuit, the government urges the court to adopt the Third Circuit's standard, reiterating that it is not necessary to prove that the goods or services requested would not have been provided but for the kickback. Rather, the government argues that the AKS “prohibits kickbacks offered to induce the purchase of specific goods or services, regardless of whether it can be shown that the kickback altered medical decision-making.” Thus, according to the government, it is not necessary to prove that the kickback “altered medical decision-making,” because that is irrelevant to the proximate cause standard. If the kickback was “offered to induce the purchase of a specific drug, and the intended purchase was subsequently made, a claim for reimbursement for the purchase would include: Goods or services arising fromFor purposes of the FCA, this would be a breach of the AKS.
Regeneron argues that the Sixth and Eighth Circuits' standard is correct and requires the government to prove “but for” causation. According to Regeneron, this standard is correct because it “derives directly from the express text of statutes enacted by Congress and Supreme Court precedent.” Specifically, the phrase “results in” in the AKS implies “but for” causation “absent overriding textual or contextual indications to the contrary. … A showing of “but for” causation reflects the ordinary meaning of the phrase and constitutes the minimum requirement for a causation finding permitted by law. Based on this rationale, Regeneron concludes that:[t]To show that a Medicare reimbursement claim submitted on behalf of a patient who received copayment assistance from a charity resulted from an AKS violation (Regeneron's donations to the charity, under the government's theory), the government must show that the claim would not have been submitted without the donations.”
The government has until next month to respond to Regeneron's opinion.
summary
What is unique and noteworthy is that Regeneron At issue is that the U.S. Department of Health and Human Services' Office of Inspector General (OIG), the federal agency responsible for interpreting the AKS, issued favorable advisory opinions (e.g., 24-02) and guidance regarding PAP donations in 2005. Although both the government and Regeneron referenced the OIG's 2005 guidance in their briefs, it is unclear whether the First Circuit would consider the reasoning set forth in any of the OIG's favorable advisory opinions, because neither Regeneron nor the government referenced such advisory opinions in their briefs.
Despite the regulatory requirement that OIG advisory opinions be issued and binding only on the party that requested such advisory opinion, the potential disconnect between the OIG's seemingly favorable view of PAPs and the government's current prosecutorial policy is unclear. Regeneron This could be an opportunity for both federal agencies to discuss and gauge enforcement priorities.
