Overview:
A recent ruling by the First Circuit Court of Appeals deepens the False Claims Act divide among circuit courts.
A recent ruling by the First Circuit Court of Appeals has deepened the divide among circuit courts regarding False Claims Act (FCA) liability based on violations of the Anti-Kickback Statute (AKS).
In United States v. Regeneron Pharmaceuticals, Inc., No. 23-2086, the First Circuit adopted a but-for causation standard. The First Circuit found that to establish False Claims Act liability, the government must show that a claim would not have been submitted but for the AKS violation. This creates a higher burden for the government and whistleblowers to bring claims.
Three attorneys from Baker Donelson, one of the largest U.S. law firms, wrote an article on the decision. In the article, the attorneys indicated this recent decision may lead to a U.S. Supreme Court (Court) Review because the decision creates a further divide among the circuit courts. Notably, per the article, “this decision aligns with the Sixth and Eighth Circuits while rejecting the Third Circuit’s more lenient standard, which allowed claims to be deemed false even if an AKS violation had no actual impact on provider decision-making.”
Whether the Court will hear the matter is ultimately up to the Court. A party may petition the Court to hear their case if the party is not satisfied with the decision of a lower court. The party petitions the Court by asking it to grant a writ of certiorari.
The Court does not have to hear the case and in many instances does not. Each year the Court is asked to hear over 7,000 cases and of those cases only accepts around 100.
According to the Supreme Court’s guidelines, the Court tends to give priority to a case that “could have national significance, might harmonize conflicting decisions in the federal Circuit courts, and/or could have precedential value.”
Additionally, the Court tends to hear cases that, per its website, “have been decided in either an appropriate U.S. Court of Appeals or the highest Court in a given state (if the state court decided a Constitutional issue).” Per the Court’s rules, “four of the nine Justices must vote to accept a case.”
Is there a connection between False Claims and Anti-Kickback rules?
The circuit courts appear to be divided on certain False Claims Act issues, including the connection of the false claim to anti-kickback violations. This division, according to Baker Donelson attorneys “makes it increasingly likely that the Supreme Court will be asked to resolve the issue.” According to the Donelson article, if the Court decides to hear the matter “its ruling could reshape the landscape of False Claims Act enforcement, either reinforcing the trend toward a higher burden of proof or restoring a more flexible standard that favors government enforcement efforts.”
While it is unclear whether the Court will hear this case, the Court has already shown that it is willing to hear cases involving False Claims Act issues, issuing its most recent False Claims Act decision this year. Last month, in a unanimous ruling, the Court seemed to support a broad definition of claims under the False Claims Act. The case is captioned Wisconsin Bell, Inc. v. United States Ex rel. Heath, No. 23–1127.
For more OTW coverage on the False Claims Act, see “Are Whistle Blower Qui Tam Provisions Constitutional?”
