First Circuit Requires But-for Causation for AKS-Based FCA Liability, Bolsters Majority View

What is the proper causation standard for an Anti-Kickback Statute violation to trigger liability under the False Claims Act? The First Circuit has answered that question in a much anticipated interlocutory decision in Regeneron. The court held that, to prove FCA falsity under the AKS, the government must show an illicit kickback was the but-for cause of a submitted claim—rather than meet a more relaxed “link” or “exposure” standard. The First Circuit joined the Sixth and Eighth Circuits, forming a 3–1 majority favoring but-for causation.

For years, courts have wrestled with determining when the criminal Anti-Kickback Statute (AKS)[1] imposes additional, civil False Claims Act (FCA) liability for claims for goods or services “resulting from” an illegal kickback. In an interlocutory appeal in United States v. Regeneron Pharmaceuticals, Inc.,[2] the First Circuit decided in favor of but-for causation, meaning the government must prove the AKS violation actually caused submission of a false claim—giving that view an enhanced, 3–1 majority among circuits that have considered the issue.[3] The FCA bar has been closely watching the appeal, where an alternative decision would have created a 2–2 circuit split.

Background

In modern AKS-predicated FCA cases, the government must show the defendant submitted payment claims for items or services “resulting from” a prohibited kickback.[4] In 2018, the Third Circuit interpreted that causation language as requiring plaintiffs to show “a link” between the AKS violation and presentment of a payment claim.[5] In 2022, the Eighth Circuit (and the Sixth Circuit the following year) rejected that standard, interpreting “resulting from” to require but-for causation,[6] i.e., the claim would not have been submitted “in the absence of—that is, but for” the alleged kickback.[7]

The circuit division is echoed at the trial court level, sometimes within the same district: Regeneron was one of two District of Massachusetts AKS/FCA cases where the causation issue was decided in opposite ways just two months apart in 2023,[8] leading to twin interlocutory appeals.

The Regeneron defendant, a pharmaceutical manufacturer of a macular degeneration drug, made donations to a foundation that helps cover co-pays for patients with that disease. The foundation distributes donated funds, first-come first-served, to patient applicants. The government alleges the donations were kickbacks intended to induce providers to prescribe defendant’s drug, and that Medicare claims the providers filed therefore “resulted from” an AKS violation, making them “false or fraudulent” claims under the FCA.

The district court, deciding twin summary judgment motions, conducted a careful statutory analysis regarding the causation standard. The court was unpersuaded by the Third Circuit’s reasoning in Greenfield, finding the lack of analysis of the statute’s causal language, the foray into legislative history, and the ill-defined “exposure” standard there all problematic. In contrast, the court found (following Cairns and Martin) that, given an “unambiguous” statutory text, there was no basis for questioning the default meaning of “resulting from” as but-for causation. In the end, the court denied summary judgment to the government, rejecting its assertion of the Greenfield “exposure” standard. The appeal to the First Circuit followed (we covered the district court decision and certification of the interlocutory appeal here).[9]

Interlocutory Appeal to First Circuit

Meaning of “resulting from.” On appeal, the government argued, first, that but-for causation is merely a “default,” and that “textual and contextual indications” can—and here do—dictate alternative standards. The government relied on the Supreme Court’s holdings in Burrage v. United States and Paroline v. United States for support.[10] In describing Burrage as holding that courts “read phrases like ‘results from’ to require but-for causality’ only if ‘there is no textual or contextual indication to the contrary,” it arguably framed but-for causality as an exception rather than a default.[11]

The defendant, in contrast, emphasized the strong presumption favoring but-for causality absent some contrary “overriding textual or contextual indication” and noted that Burrage “hardly broke new ground on this point.” Because “resulting from” is not defined in the statute, the defendant argued that courts assume the words carry “their plain and ordinary meaning.” The defendant acknowledged the Supreme Court’s recognition that special circumstances may warrant departing from but-for causation, but emphasized such circumstances are “quite rare.” And, in such unusual circumstances, courts typically move to a more, not less, demanding standard—such as proximate causation.

The First Circuit agreed with the defendant regarding the existence of a strong presumption that “resulting from” in the 2010 AKS amendment requires but-for causation.[12] And the court found no “textual indication” in the statute’s plain language to support departing from that standard.[13]

Statutory purposes. The government also argued the 2010 amendment’s “resulting from” language cannot mean but-for causation because that standard would defeat the AKS’s purpose of facilitating kickback-based whistleblower actions. Since the AKS imposes criminal liability for kickbacks “without requiring a showing that the kickbacks actually changed medical decisionmaking,” the government reasoned there is no basis for believing Congress meant to require a heightened showing for FCA civil liability. To supplement this argument, the government also invoked legislative history: “Congress meant to make it easier to prove ‘whistleblower actions based on medical care kickbacks’” and therefore it “defies reason” that Congress intended to add “an onerous element of proof” for civil liability.

The court rejected these arguments, noting the government’s concession that “the words ‘resulting from’ require proof of some type of actual causality” while “AKS liability . . . does not require any causal link between an inducement and any payment”—and concluding, therefore, that “the premise that the 2010 amendment’s causation requirement must track that of the AKS fails to get out of the starting blocks.”[14] The court similarly rejected the government’s invitations to consider legislative history and statutory history, and the contention that proving but-for causation “can sometimes be difficult.”[15]

Implications

With the First Circuit’s Regeneron decision, a clear majority has now coalesced around but-for causation in AKS-predicated FCA cases—with the Eighth, Sixth, and First Circuits all endorsing that standard and the Third Circuit standing as the lone outlier. While a circuit split obviously remains, the majority view appears to be moving in the direction of becoming settled law.[16] Moreover, beginning with the Eighth Circuit’s Cairns decision in 2022, the appellate opinions on this issue provide careful statutory interpretation and have had the benefit of analyzing the contrary holding in Greenfield, which they have ultimately rejected.

Companies defending AKS/FCA actions can now draw on a strengthened body of case law endorsing the but-for standard, controlling in three circuits and constituting persuasive authority elsewhere. However, defendants need to be wary of forum shopping by relators seeking venue within the Third Circuit, where the minority view is precedential—although Regeneron and its forerunners should still be invoked there for their persuasive weight. Dinsmore will continue to monitor this and other key FCA litigation issues.