The U.S. Court of Appeals for the Eighth Circuit recently weighed in on the causation standard for False Claims Act (“FCA”) cases premised on Anti-Kickback Statute (“AKS”) violations. United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828 (8th Cir. 2022). The panel adopted a strict interpretation, finding that the government or whistleblowers must show a “but-for” causal relationship between kickbacks and claims for payment to establish the requisite link in the FCA liability chain, creating a circuit split on an issue that courts have struggled with for years.
The decision is notable for FCA defendants as it offers support for a defense they have long asserted, and that courts have been reluctant to condone, including an opinion from the U.S. Court of Appeals for the Third Circuit that refused to require a direct causal link between an AKS violation and a false claim.
Decision based on language from 2010 amendment
Pursuant to a 2010 amendment to the FCA, submitting a claim for reimbursement to the government that “includes items or services resulting from” an AKS violation makes that claim “false or fraudulent” under the FCA. 42 U.S.C. § 1320a-7b(g) (emphasis added). Looking to “dictionary definitions” and Supreme Court precedent interpreting identical text in another statute, the Eighth Circuit had “little trouble concluding that, in common and ordinary usage, the participle phrase ‘resulting from’ also expresses ‘a but-for causal relationship.’” In other words, the phrase “resulting from” means the government or whistleblowers must prove that defendants “would not have included particular ‘items or services’ absent the illegal kickbacks.”
The Eighth Circuit firmly rejected the government’s “alternative causal standards.” The government interpreted the phrase “resulting from” to mean that it was only required to prove that an AKS violation “tainted” or “may have been a contributing factor” to reimbursement claims for certain “items or services.” The Eighth Circuit viewed these “alternative standards” as “hardly causal at all.” In its view, “a ‘taint’ could occur without the illegal kickbacks motivating the inclusion of any of the ‘items or services,’” and whether an illegal kickback “‘may have been a contributing factor’ does not establish anything more than a mere possibility.”
Circuit split could result in Supreme Court consideration
The Eight Circuit acknowledged that it was departing from the Third Circuit’s more permissive interpretation in United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89 (3d Cir. 2018). In that case, the Third Circuit declined to interpret the phrase “resulting from” to require “a direct causal link” between kickbacks and claims for payment. Instead, it opted for “something in between” a “direct causal link” and “no link at all.” The Eighth Circuit rejected this approach because it relied on legislative history and Congressional intent rather than the plain meaning of unambiguous statutory text.
The government declined to seek rehearing of the Eighth Circuit’s opinion. It has until October 24, 2022, to petition the Supreme Court for review.