On February 18, 2025, a panel of the U.S. Court of Appeals for the First Circuit unanimously decided that in order to transform an Anti-Kickback Statute (AKS) violation into a false or fraudulent claim for purposes of False Claims Act (FCA) liability, the government (or relators) must prove that the alleged kickbacks were the “but for” cause of the alleged false claim (United States v. Regeneron Pharmaceuticals, Inc., No. 23-2086 (1st Cir. Feb 18, 2025)). The case is significant because:
- By requiring the government to prove that alleged kickbacks were the direct or “but for” cause of a doctor’s prescribing decision, the court rejected the government’s argument that exposure to an improper inducement and a later claim was enough to satisfy the causation requirement.
- The First Circuit followed recent decisions by the Sixth and Eighth Circuits and rejected the Third Circuit’s more lenient approach, thus signaling a growing consensus that plaintiffs must prove “but for” causation to establish FCA liability under the AKS statute.
- Plaintiffs may still be able to prove an FCA case without establishing “but for” causation if they can show that the defendant expressly or implicitly certified that it had complied with the AKS when it submitted its claims.
- The case highlights the need for life sciences companies to implement strong controls around their interactions with health care providers to ensure prescribing decisions are based solely on the provider’s independent medical judgment.
The Case
On June 24, 2020, the Department of Justice (DOJ) filed an action under the FCA against Regeneron Pharmaceuticals, Inc. in the United States District Court for the District of Massachusetts. DOJ alleged that Regeneron induced prescriptions of one of its drugs, in violation of the AKS, by purportedly funneling money to an independent co-pay assistance charity that covered co-payments for certain patients who received Regeneron’s drug. The government alleged that Medicare claims filed by doctors for patients who received prescriptions subsidized by the co-pay assistance charity “resulted from” a violation of the AKS, and therefore also violated the FCA, regardless of whether the same claims would have been submitted if the Regeneron-funded foundation had not subsidized the patients’ co-payments. Both parties moved for summary judgment. The district court largely denied both motions, but, observing that its decision placed the case squarely within a developing circuit split, certified the case for an interlocutory appeal.
Key to the district court’s decision on summary judgment was its interpretation of a provision of a 2010 amendment to the AKS that provides for FCA liability premised on a “claim that includes items or services resulting from a violation of” the AKS. The district court determined that this provision requires the government to prove that such claims would not have been submitted “but for” the AKS violation. This reasoning aligned the district court with precedent from the Sixth and Eighth Circuits, both of which have also interpreted the statute to require proof of but-for causation. DOJ, meanwhile, argued that the proper standard was instead a less rigorous interpretation adopted by the Third Circuit, which holds that the government may meet the FCA’s causation requirement with evidence that “a particular patient is exposed to an illegal recommendation or referral” and is later connected to a claim for reimbursement.
On February 18, 2025, the First Circuit sided with the Sixth and Eighth Circuits, similarly adopting a but-for causation standard for FCA claims arising out of AKS violations. The court held that the phrase “resulting from” generally implies a but-for causation standard, and that the text and legislative context of the AKS provision did not suggest another interpretation. Based on its reading, the First Circuit affirmed the district court’s order disposing of the parties’ summary judgment arguments.Implications
The First Circuit’s decision may reveal a coalescing majority view: The First Circuit is now the third appellate court to require but-for causation in FCA claims premised on the AKS, where only one appellate court has adopted a more lenient standard. While wider application of the but-for standard may have the practical effect of limiting some FCA investigations premised on alleged AKS violations, we anticipate that product support and other health care provider- and patient-facing activities will continue to experience scrutiny under the FCA, which historically has provided a source of government revenue across administrations. Indeed, the First Circuit itself observed that “alternative theories of FCA liability” such as the false certification theory require no proof of causation at all.
For life sciences companies, this decision highlights the need to ensure that product support and other customer-facing activities do not — by design or execution — influence a provider’s independent medical judgment. Sound evidence that providers exercise independent judgment in their prescriptions may be able to defeat a contention that company activity improperly induced claims for government reimbursement.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.