Overview
On February 18, the US Court of Appeals for the First Circuit issued its long-awaited decision in United States v. Regeneron Pharmaceuticals, Inc.1 joining a high-profile circuit split on the extent of the causal connection required for claims "resulting from" violations of the federal Anti-Kickback Statute (AKS) to be definitionally false under 42 U.S.C. § 1320a-7b(g), which was enacted in 2010 as part of Obamacare. The First Circuit agreed with Chief Judge F. Dennis Saylor of the District of Massachusetts that §1320a-7b(g) imposes liability under the False Claims Act (FCA) for claims "resulting from" AKS violations, provided that those kickbacks cause a claim's submission to a federal healthcare program. It is not sufficient that a kickback was paid in connection with a prescription that was later reimbursed by a federal healthcare program. Instead, the kickback must have altered the doctor's prescribing choice or otherwise caused the submission.
The First Circuit joins the Sixth and Eighth circuits in adopting this "but-for" causation standard. In contrast, the Third Circuit remains alone in applying a more relaxed "causal connection" standard. The crystallizing circuit split increases the chance of Supreme Court review.
In the meantime, however, this holding offers companies and other defendants a crucial argument against FCA liability premised on AKS violations. In cases where a provider would have prescribed and sought reimbursement for a drug or device regardless of any kickback, Regeneron protects against FCA liability for that reimbursement. This significantly narrows the number of claims that § 1320a-7b(g) would have otherwise rendered automatically false under the looser causation standard adopted by the Third Circuit.
I. Legal Background
The AKS imposes civil and criminal liability for "knowingly and willfully" offering or paying any remuneration—such as kickbacks, bribes, or certain types of rebates—to entice someone to purchase goods, facilities, or services that may be partially or fully covered by federal healthcare program.2 In practical terms, "remuneration" under the AKS most typically takes the form of expensive dinners, invitations to extravagant educational conferences, honoraria for speaker programs, and other paid consulting arrangements with physicians. Although AKS violations can be enforced either as civil or criminal violations, they are more often enforced via the FCA. The FCA forbids "knowingly" making false statements or misrepresentations on an application for payment or benefit, including under a federal healthcare program.3 Prior to the enactment of §1320a-7b(g), a reimbursement claim for medical goods or services under a federal healthcare program could be considered false if the claimant had engaged in an AKS violation but certified—either expressly or implicitly—that the submitter was in compliance with federal law. However, this theory of liability required the government (or relator) to prove (1) either implicit or express certification in the claim and (2) that such certification was a condition of payment of that claim.4 This often presented both legal and evidentiary challenges to establish FCA liability based on AKS violations.
Obamacare, officially known as the Patient Protection and Affordable Care Act,5 was enacted in 2010. In the law, Congress included a provision intended to lessen the proof burden for establishing FCA liability based on AKS violations. Specifically, the provision states that a claim for payment from a federal healthcare program is per se false if it "includes items or services resulting from a violation of the AKS."6 Violations of the FCA can be pursued by whistleblowers, known as qui tam relators, and can result in treble damages and statutory penalties.7 In other words, as long as the government can establish (1) an AKS violation, and (2) the submission of claims "resulting" from such violations, it is relieved of any need to show any implicit certification of AKS compliance.
As a result of §1320a-7b(g)'s enactment, the government has more easily extracted a significant number of high-dollar FCA settlements based on AKS violations. This is largely due to a broad reading of "resulting from."8 The government's typical position was that every claim that was submitted for a particular good or service where there was a pattern of providing healthcare providers with some sort of "remuneration" in connection with that good or service was considered false and materially misleading. Because these patterns of purported AKS violations often span several years and encompass hundreds of thousands, if not millions, of claims, the government could often threaten pharmaceutical and medical device companies with liability in the hundreds of millions of dollars, given the FCA's provisions for treble damages and per-claim penalties.9 However, outside of the government settlement context, where the government and relators have proceeded to litigate FCA claims, defendants have advocated for a narrower construction of “resulted from”—i.e., one that requires proof of "but for" causation.
The case law interpreting this provision has eventually evolved into a circuit split. The Third Circuit found that there needed only to be some sort of "causal link," which can exist even if the item or service would have been prescribed and subject to reimbursement regardless of any kickback.10 This was a plaintiff-friendly test that meant that defendants could be held liable for nearly every prescription submitted for federal reimbursement that was in any way tethered to a kickback however attenuated, a position largely in line with that taken by the government when engaging in pre-litigation settlement discussions. In contrast, the Sixth and Eighth Circuits adopted a narrower "but for" causation standard. Those two circuits have held that §1320a-7b(g) only makes a claim false if the healthcare services at issue would not have been provided "but for" the alleged kickbacks.11 While there is some variation in the interpretation of §1320a-7b(g) among district courts in other circuits, including differing views among judges within the District of Massachusetts,12 most courts have applied the Third Circuit's less stringent "causal link" standard.13
II. The District Court Opinion
By way of background, Regeneron manufactures a drug called Eylea, a treatment for wet age-related macular degeneration (AMD). This eye disease causes abnormal blood vessels to leak fluid and blood, damaging the macula and leading to vision loss.
Physicians purchase Eylea, prescribe it to patients, and administer it in their offices before submitting a reimbursement claim. Under Medicare Part B, Medicare covers 80% of Eylea's cost, and the patient covers the remaining 20%. However, during the relevant time period, Eylea cost $1,850 per injection. As a result, patients routinely face copays of over $2,000 per year because treatment requires multiple injections. To help make Eylea more affordable for patients unable to pay that amount, third-party patient copay assistance foundations use donations to help defray the cost. Drug and device manufacturers often donate to such third-party foundations, which ultimately help patients afford the manufacturer's drug or device. In Regeneron, the government alleged that the company paid more than $60 million over roughly five years to the Chronic Disease Fund (CDF), a foundation that offers copay assistance to patients suffering from wet AMD. As alleged by the government, Regeneron's payments to CDF for copay assistance constituted a kickback scheme in violation of the AKS and, therefore, the FCA.14
After the close of discovery, Regeneron moved for summary judgment, arguing in relevant part that even if its payments to CDF constituted AKS violations—a point Regeneron strongly disputes—those purported violations did not cause physicians to prescribe a drug that they would not have otherwise prescribed. Therefore, Regeneron contended that these actions did not "result" in a claim under § 1320a-7b(g).
In opposing summary judgment, the government argued that the district court should follow the Third Circuit's ruling in Guilfoile v. Shields,15 which requires only that "a particular patient is exposed to an illegal kickback and a provider submits a claim for reimbursement pertaining to that patient."16 The government asserted that there was an alleged kickback relating to a class of patients and that the providers submitted claims for reimbursement in connection with a drug received by those patients. According to the government, that was all that was required to establish FCA liability.
Diverging from other decisions from this court, the district court here noted that the meaning of "resulted from" in §1320a-7b(g) was an open question and that the First Circuit had not ruled on this issue in Guilfoile.17 Additionally, the district court further concluded that it was not bound by its own prior decision denying Regeneron's motion to dismiss, as that decision had only addressed the issue of causation at a "relatively superficial level."18 The district court went on to criticize the Third Circuit's Greenfield decision, describing it as being "fraught with problems." Specifically, the court argued that the causal link standard was "divorced from the actual language of the statute and from basic principles of statutory interpretation" and was also "disconnected from long-standing common-law principles of causation."19 Given the uncertainty among district courts in Massachusetts and the importance of this issue for resolving the Regeneron complaint, the district court certified the question for interlocutory review.
III. The First Circuit Opinion
The First Circuit granted review and ultimately affirmed the district court's decision, holding that "resulting from" requires "but-for" causation under §1320a-7b(g).20 In its examination of the causation question, the First Circuit first rejected the government's argument that Guilfoile had adopted the Third Circuit's "causal link" standard. The First Circuit emphasized Guilfoile's own stated limitations, noting that its application was specific to the context of FCA retaliation. Finding that proof of an AKS violation was different from pleading an FCA retaliation claim, the First Circuit held that it was not bound by Guilfoile and was free to establish a causation standard for an AKS violation.
Next, the court examined the usual meaning of "resulting from." Citing Supreme Court precedents Burrage v. United States21 and Paroline v. United States,22 the court recognized that "resulting from" calls for "but-for causation" "in the usual course." However, the court acknowledged that textual and contextual indications might support an "alternative causation standard."23 If, for example, “the text at issue, when read in the context of the statutory scheme as a whole, indicates that a but-for standard would 'undermine congressional intent,' it may be inappropriate" to impose such a standard.24
Here, however, nothing in the amendment's text "contraindicated a but-for causation standard." Regarding the context, the government posited (1) that criminal violations of the AKS do not require causation, and §1320a-7b(g) does not support a more stringent causation standard for civil violations; and (2) that §1320a-7b(g) did not create a new pathway to AKS liability but merely expanded existing theories of FCA liability that previously did not require "but-for" causation.
The court quickly disposed of the first argument, stating that, regardless of the standard for a criminal AKS violation, a civil FCA violation is free to impose additional requirements. Even if different statutes were not involved, "it is not unheard of for the same statute to impose different evidentiary burdens for related civil and criminal claims," especially where the criminal and civil aspects of the statute serve different purposes.25 According to the court, criminal AKS liability exists to protect patients from provider decisions that may be clouded by improper financial considerations. In contrast, civil FCA liability provides restitution to the government when it has paid claims it would have otherwise refrained from paying. Additionally, the FCA also permits private parties to initiate suits without government approval, which is impossible under criminal law. Given these distinctions, the court concluded that §1320a-7b(g) could only render a claim false under the FCA if a kickback directly caused a claim’s submission to the government.
The court addressed the government's argument that the legislative intent of §1320a-7b(g) was only to close the holes under the "false-certification" theory of FCA liability. In reviewing §1320a-7b(g) in this context, the First Circuit explained that §1320a-7b(g) established a new, separate mechanism to establish FCA liability that functioned in parallel with the false-certification theory. A plaintiff can allege either that the defendant's claim was false because it falsely certified compliance with the AKS or that even if there was no false certification (e.g., because the certifier was unaware of the kickback), the defendant's claim was nonetheless false because it resulted from a kickback. Under this new theory of liability, there was no contextual reason to depart from the default presumption that "resulting from" requires "but-for" causation.
The government's final argument was that §1320a-7b(g) should not be read as imposing a "but-for" standard of causation because such a standard would be challenging to prove. In rejecting this argument, the court reasoned that while it might sometimes be difficult to prove, the same could be said for proving "scienter" and other FCA elements. The court asserted that a "but-for" causation standard does not make proving an FCA violation so difficult that it would render the FCA meaningless. Furthermore, the court emphasized that, as the district court found, the government alleged enough evidence to withstand summary judgment on the issue of causation, even under a "but-for" causation standard.
IV. Implications
As the government argued in Regeneron, proving but-for causation will indeed be difficult. Applying the Regeneron test will turn on the circumstances that led physicians and other healthcare providers to prescribe reimbursable drugs or devices. These physicians and providers will be loathe to admit that they were convinced to act against their patients' best interests under the influence of kickbacks. Barring circumstantial evidence, plaintiffs will be hard-pressed to prove that physicians and providers would not have prescribed the same drugs or devices but for kickbacks received from pharmaceutical companies.
Despite these evidentiary challenges,26 there is now a clear trend towards interpreting §1320a-7b(g) to require but-for causation. Future courts outside of the Third Circuit will be hard-pressed to rule otherwise, especially in light of this trend. Barring Supreme Court review—which was sought by relators in United States ex rel. Martin v. Hathaway27 and which the government may seek here—courts are expected to continue holding that §1320a-7b(g) requires proof that kickbacks were a but-for cause of the submission of claims to the government before those claims are found to be categorically "false" under §1320a-7b(g).
Notwithstanding this trend, however, the government will likely continue to take the position during settlement negotiations—even in investigations in the First, Sixth, and Eighth Circuits—that all false claims for a drug or service made by a provider after receiving a kickback are claims that "resulted from" that kickback. Given the risks of large jury verdicts based on the FCA's treble damages and per-claim violation provisions, defendants may find that they have no choice but to accept that interpretation during settlement negotiations. However, the Regeneron decision does provide companies under investigation with additional leverage during those negotiations and with a stronger legal argument for limiting damages where litigation does ultimately ensue.
1 128 F.4th 324 (1st Cir. 2025).
2 42 U.S.C. § 1320a-7b(b)(2).
3 31 U.S.C. § 3729(a)(1).
4 Universal Health Servs., Inc. v. United States, 579 U.S. 176, 181, 186 (2016).
5 Pub. L. No. 111-148, 124 Stat. 119 (2010).
6 42 U.S.C. § 1320a-7b(g) (emphasis added). This amendment was, at least in part, intended to address case law that found no FCA liability where a hospital, unaware that one of its physicians had received kickbacks in violation of the AKS, submitted a reimbursement claim that certified compliance with the AKS. See United States ex rel. Thomas v. Bailey, No. 06-cv-00465, 2008 WL 4853630 (E.D. Ark. Nov. 6, 2008).
7 31 U.S.C. § 3729(a)(1)(G).
8 In 2024, for example, ChristianaCare paid $42.5 million to resolve FCA allegations that it had provided illegal remuneration to neonatologists and surgeons in the form of services from ancillary support providers to inpatients at ChristianaCare hospitals. See Press Release, ChristianaCare Pays $42.5 Million to Resolve Health Care Fraud Allegations, DOJ (Jan. 4, 2024), available at https://www.justice.gov/usao-de/pr/christianacare-pays-425-million-resolve-health-care-fraud-allegations-0.
9 31 U.S.C. § 3729(a)(1); see Press Release, Justice Department's False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021, DOJ (Feb. 1, 2022), available at https://www.justice.gov/archives/opa/pr/justice-department-s-false-claims-act-settlements-and-judgments-exceed-56-billion-fiscal-year.
10 United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 96–97 (3d Cir. 2018).
11 See United States ex rel. Martin v. Hathaway, 63 F.4th 1043, 1052–55 (6th Cir. 2023); United States ex rel. Cairns v. D.S. Med. LLC, 42 F. 4th 828, 834–35 (8th Cir. 2022).
12 Compare United States v. Regeneron Pharms., Inc., No. 20-cv-11217, 2023 WL 6296393, at *8 (D. Mass. Sept. 27, 2023), motion to certify appeal granted, No. 20-cv-11217, 2023 WL 7016900 (D. Mass. Oct. 25, 2023), and motion to certify appeal granted, No. 23-8036, 2023 WL 8599986 (1st Cir. Dec. 11, 2023), and aff’d, 128 F.4th 324 (1st Cir. Feb. 18, 2025), and Omni Healthcare, Inc. v. MD Spine Sols. LLC, No. 18-cv-12558, 2025 WL 32676, at *8 (D. Mass. Jan. 6, 2025) (holding that §1320a-7b(g) requires but-for causation), with United States v. Teva Pharms. USA, Inc., 682 F. Supp. 3d 142, 146, 148 (D. Mass. 2023) (rejecting but-for causation requirement), and United States ex rel. Witkin v. Medtronic, Inc., No. 1:11-cv-10790, 2024 WL 1892405, at *18–19 (D. Mass. Mar. 31, 2024) ("Medtronic is incorrect that but-for causation is the appropriate standard where an FCA action is predicated on a violation of the AKS.").
13 See, e.g., United States v. Pac. Dermatology Inst., Inc., No. 20-cv-01906, 2024 WL 3086586, at *9 (C.D. Cal. May 16, 2024) (“The Court declines to interpret this as a ‘but-for’ causation requirement.’”); United States ex rel. Heller v. Guardian Pharm. of Atl., No. 18-cv-03728, 2023 WL 11909741, at *27 (N.D. Ga. Sept. 30, 2023) (rejecting but-for causation requirement); Kuzma v. N. Ariz. Healthcare Corp., 607 F. Supp. 3d 942, 954 (D. Ariz. 2022) (applying Third Circuit standard of causation); United States ex rel. Schroeder v. Medtronic, Inc., No. 17-cv-02060, 2021 WL 4168140, at *23–24 (D. Kan. Sept. 14, 2021) (rejecting “but for” causation at the motion to dismiss stage); United States ex rel. Arnstein v. Teva Pharm. USA, Inc., No. 12-cv-03702, 2019 WL 13244248, at *2–3 (S.D.N.Y. Apr. 11, 2019) (declaring courts have universally declined to adopt a but for standard of causation); United States ex rel. Fitzer v. Allergan, Inc., No. 1:17-cv-00668, 2024 WL 3015364, at *2 (D. Md. June 3, 2024) (identifying Greenfield as the most persuasive authority on causation); United States ex rel. Hueseman v. Pro. Compounding Ctrs. of Am., Inc., 664 F. Supp. 3d 722, 741–42 (W.D. Tex. 2023) (utilizing the Third Circuit’s standard of causation); United States ex rel. Headen v. Abundant Life Therapeutic Servs. Tex., LLC, No. H-18-773, 2019 WL 1930274, at *6 (S.D. Tex. Apr. 30, 2019) (applying Greenfield to require complaint plead a sufficient causal link); United States ex rel. Everest Principals, LLC v. Abbott Labs., Inc., 622 F. Supp. 3d. 920, 932 (S.D. Cal. 2022) (requiring a causal link); United States ex rel. Wallace v. Exatech, Inc., No. 18-cv-01010, 2020 WL 4500493, at *19 (N.D. Ala. Aug. 5, 2020) (same).
14 The Department of Health and Human Services Office of Inspector General has taken the position that copay assistance programs through nonprofit organizations associated with pharmaceutical companies are inherently suspect and lend themselves to AKS violations. See, e.g., Publ’n of OIG Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees, 70 Fed. Reg. 70623, 70627 (Nov. 22, 2005); Suppl. Special Advisory Bulletin: Indep. Charity Patient Assistance Programs, 79 Fed. Reg. 31120, 31121 (May 30, 2014); Dep’t Health & Hum. Servs., Office of Inspector Gen., OIG Advisory Opinion 20-05, (Sept. 18, 2020).
15 913 F.3d 178 (1st Cir. 2019).
16 Greenfield, 880 F.3d at 100.
17 Regeneron, 2023 WL 6296393, at *7 (relying on Guilfoile's pronouncement that it did not decide “full implications” of §1320a-7b(g) because issue before it was not "the standard for proving an FCA violation based on the AKS, but rather the requirements for pleading an FCA retaliation claim") (quoting Guilfoile, 913 F.3d at 190).
18 Id. at *8.
19 Id. at *10.
20 Regeneron, 128 F.4th at 326.
21 571 U.S. 204 (2014).
22 572 U.S. 434 (2014).
23 Regeneron, 128 F.4th at 329.
24 Id. (internal quotations omitted).
25 Id. at 331.
26 See Michael J. Castiglione, et al., AKS-Predicated FCA Actions: The Link Needed Between Kickback and Claim, 70 DOJ J. Fed. L. & Prac. 71, 72 (2022) (AUSA authors arguing that Greenfield is "better-reasoned" and should be followed).
27 2023 WL 5304005, cert. denied, 144 S. Ct. 224 (2023).
