Last week the Eighth Circuit Court of Appeals offered defendants in False Claims Act cases based on Anti-Kickback Statute (AKS) violations a significant new defense in its holding in United States ex rel. Cairns v. D.S. Med., LLC. The Court in Cairns held that when the government or a relator seeks to establish falsity or fraud in a False Claims Act case, it must prove that the defendant would not have included particular "items or services" in its claims to the government "but for the illegal kickbacks." United States ex rel. Cairns v. D.S. Med., LLC No. 20-3010, 2022 WL 2930946 (8th Cir. July 26, 2022). The decision by the Eighth Circuit is the first in the country imposing a "but for" causational standard and creates a circuit split with the Third Circuit, fueling uncertainty and debate on the future of False Claims Act cases premised on AKS violations.

The False Claims Act imposes civil liability on anyone who "presents, or causes to be presented" a "false or fraudulent claim for payment or approval" to the government, usually related to goods or services. The AKS criminalizes soliciting or receiving kickbacks for any "items or services" paid "in whole or in part" by a Federal Health Care Program, including Medicare or Medicaid. In 2010 Congress amended the AKS to state that submitting a claim to the government that "includes items or services resulting from" an anti-kickback violation makes the claim "false or fraudulent" under the False Claims Act. The government has maintained since that amendment was adopted that any claim submitted to the government that violates the AKS is therefore "tainted" and is tantamount to a per se False Claims Act violation.

In Cairns, the Eighth Circuit rejected the government's expansive interpretation, which had previously been adopted by the Third Circuit and other district courts across the country. The Cairns Court's holding turned on the meaning of the words "resulting from" in the 2010 AKS amendment. The Court looked to a 2014 Supreme Court case applying the phrase "results from" in the context of the Controlled Substances Act. The Supreme Court in Burrage v. United States held that "results from" necessarily imposes "a requirement of actual causality" such that the use of drugs had to be a "but-for cause of the death." Burrage v. United States, 571 U.S. 204 (2014). The Eighth Circuit explained in Cairns that the interpretation in Burrage also applied to the AKS amendment, holding that in order to establish falsity or fraud under the False Claims Act premised on an AKS violation, the plaintiff must show that "but for" the illegal kickbacks, the defendants would not have included the "particular items or services" in their claims to the government.

Companies faced with False Claims Act allegations in the Eighth Circuit now have a meaningful defense when the government bases its theory on Anti-Kickback Statute violations. While it remains to be seen what other district and circuit courts will adopt the Cairns Court's reasoning, this holding promises to fuel a contentious debate across the country between relators, the government, and companies regarding the ability to bootstrap AKS violations into False Claims Act liability.