Last week, the Northern District of Illinois issued a significant opinion in a False Claims Act (“FCA”) qui tam action alleging a nationwide kickback scheme by a pharmaceutical manufacturer to promote its gastrointestinal drugs. United States ex rel. Wilkerson & Jackson v. Allergan Limited, No. 22-CV-3013 (N.D. Ill. Apr. 23, 2025). The court provided important guidance on the pleading standards and causation requirements for FCA claims predicated on alleged Anti-Kickback Statute (“AKS”) violations. Specifically, the court became the latest court to require that a kickback be the but-for cause of claims to establish those claims “resulted from” an AKS violation such that they are false under the FCA. In adopting that standard, the Court largely followed the reasoning in the recent First, Sixth, and Eighth Circuit decisions requiring but-for causation (reported on here, here, and here). The court’s subsequent, rigorous application of that standard to the relators’ complaint resulted in dismissal of the bulk of the relators’ AKS-based claims.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Jaime L.M. Joneshttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngJaime L.M. Jones2025-05-01 09:03:502025-04-30 17:24:38Another Court Requires But-For Causation for AKS/FCA Claims; Cuts Nationwide Case Down to Two Physicians
The Eleventh Circuit once again put effect to Rule 9(b), insisting on clarity and specificity in False Claims Act pleadings for them to survive. In Vargas v. Lincare, Inc., 24-11080, 2025 WL 1122196 (11th Cir. Apr. 16, 2025), the Eleventh Circuit reiterated the importance of pleading facts “showing that a false claim was actually submitted to the government” instead of merely “sketch[ing] out a theory.” In addition, the panel opinion’s author—the long-serving Judge Tjoflat—offered a concurrence condemning “shotgun pleadings” that “lump[] multiple claims together in one count,” imploring district courts to sua sponte strike such complaints “at the outset.”
This week, the Seventh Circuit reversed a conviction under the Anti-Kickback Statute (AKS) because the payments at issue—to advertisers—did not reflect an intent “to induce.” United States v. Sorensen, No. 24-1557 (7th Cir. Apr. 14, 2025). The advertisers, after all, wielded no influence over healthcare decisions. And advertising cannot be an AKS-prohibited “referral” in the first place. In reaching these holdings, the Seventh Circuit notably circumscribed the “outer boundaries” of the AKS—violations of which are among the most important drivers of FCA liability.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-04-18 11:01:262025-04-21 16:06:08Seventh Circuit Clarifies the Bounds of Anti-Kickback Statute Elements
This week, the Second Circuit upheld a dismissal from the Southern District of New York holding that a defendant did not fulfill the False Claims Act (“FCA”) or Anti-Kickback Statute (“AKS”) scienter requirements where the defendant sought and received favorable advisory opinions from the Department of Health and Human Services Office of Inspector General (“HHS-OIG”). SeeUnited States ex rel. Stephen Sisselman v. Zocdoc, Inc., No. 24-2807 (2d Cir. Apr. 14, 2025).
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Jaime L.M. Joneshttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngJaime L.M. Jones2025-04-17 12:01:262025-04-17 12:01:26Second Circuit Upholds District Court Ruling that FCA and AKS Scienter Is Not Present Where Defendant Previously Received Favorable HHS-OIG Advisory Opinions
The Fifth Circuit Court of Appeals recently vacated a $28.7 million verdict in a declined FCA qui tam because the district court improperly relied on the relators’ post-trial expert declarations to calculate damages. Writing separately in a concurrence, Judge Duncan also condemned the “constitutional flaws in the FCA’s qui tam device,” citing the logic of United States ex rel. Zafirov (discussed here), and adding to the number of judges voicing concerns over the constitutionality of the FCA’s qui tam provision. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-04-10 13:34:482025-04-10 13:47:47Fifth Circuit Concurrence Finds FCA’s Qui Tam Device Unconstitutional
Last week, a Special Master, tasked with making a report and recommendation on summary judgment in the Government’s FCA case against United HealthGroup, Inc. (“United”) in the Central District of California, confirmed that the “avoids” prong of the FCA’s reverse false claims provision has a materiality requirement. U.S. ex rel. Poehling v. UnitedHealth Group, Inc., No. CV 16-08697-FMO-PVCx (C.D. Cal. Mar. 3, 2025). That prong imposes liability on a person who knowingly and improperly avoids an obligation to pay the Government. 31 U.S.C. § 3729(a)(1)(G). Although the “avoids” prong does not explicitly refer to materiality, the Special Master held that it incorporates the elements of common law fraud—including materiality. The holding is consistent with broader guidance in recent years from the Supreme Court that the FCA should be interpreted consistent with common law principles—which can result in courts imposing constraints on novel theories of liability.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Jaime L.M. Joneshttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngJaime L.M. Jones2025-03-14 10:21:222025-03-14 10:21:22Court Confirms That Materiality Is a Required Element Under the “Avoids” Prong of Reverse False Claims Theories
Last year, we reported on a rare district court decision from Minnesota finding application of the FCA’s civil penalties unconstitutionally excessive. Last week, a judge in the Northern District of Texas determined that even the minimum amount in FCA penalties, as applied, would have violated the Eighth Amendment’s Excessive Fines Clause. Based on the number of false claims for which the jury found the defendant liable, the minimum penalty mandated by the statute was nearly $300 million—around one hundred times the actual damages. The court instead imposed a reduced penalty of roughly $8 million, about three times the actual single damages, equating to a per-claim civil penalty of approximately $378.18.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-03-06 10:15:592025-03-06 10:15:59Another District Court Finds FCA Civil Penalties Unconstitutionally Excessive
The U.S. Supreme Court recently issued its opinion in Wisconsin Bell, Inc. v. United States ex rel. Heath, holding that reimbursement requests submitted to the private corporation administering the E-Rate program are FCA “claims,” because the Treasury provided a portion of the pool of funds used to pay the requests. We previously reported on the oral argument before the Court here.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2025-03-05 15:10:582025-03-05 15:11:08Supreme Court Unanimously Holds that Reimbursement Requests to a Private Corporation Are FCA “Claims” Because the Treasury Provided a Portion of the Money Requested
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Another Court Requires But-For Causation for AKS/FCA Claims; Cuts Nationwide Case Down to Two Physicians
Last week, the Northern District of Illinois issued a significant opinion in a False Claims Act (“FCA”) qui tam action alleging a nationwide kickback scheme by a pharmaceutical manufacturer to promote its gastrointestinal drugs. United States ex rel. Wilkerson & Jackson v. Allergan Limited, No. 22-CV-3013 (N.D. Ill. Apr. 23, 2025). The court provided important guidance on the pleading standards and causation requirements for FCA claims predicated on alleged Anti-Kickback Statute (“AKS”) violations. Specifically, the court became the latest court to require that a kickback be the but-for cause of claims to establish those claims “resulted from” an AKS violation such that they are false under the FCA. In adopting that standard, the Court largely followed the reasoning in the recent First, Sixth, and Eighth Circuit decisions requiring but-for causation (reported on here, here, and here). The court’s subsequent, rigorous application of that standard to the relators’ complaint resulted in dismissal of the bulk of the relators’ AKS-based claims.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
Eleventh Circuit Condemns “Shotgun Pleadings” in Florida FCA Suit
The Eleventh Circuit once again put effect to Rule 9(b), insisting on clarity and specificity in False Claims Act pleadings for them to survive. In Vargas v. Lincare, Inc., 24-11080, 2025 WL 1122196 (11th Cir. Apr. 16, 2025), the Eleventh Circuit reiterated the importance of pleading facts “showing that a false claim was actually submitted to the government” instead of merely “sketch[ing] out a theory.” In addition, the panel opinion’s author—the long-serving Judge Tjoflat—offered a concurrence condemning “shotgun pleadings” that “lump[] multiple claims together in one count,” imploring district courts to sua sponte strike such complaints “at the outset.”
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph S. Katz
Washington, D.C.
joseph.katz@sidley.com
Seventh Circuit Clarifies the Bounds of Anti-Kickback Statute Elements
This week, the Seventh Circuit reversed a conviction under the Anti-Kickback Statute (AKS) because the payments at issue—to advertisers—did not reflect an intent “to induce.” United States v. Sorensen, No. 24-1557 (7th Cir. Apr. 14, 2025). The advertisers, after all, wielded no influence over healthcare decisions. And advertising cannot be an AKS-prohibited “referral” in the first place. In reaching these holdings, the Seventh Circuit notably circumscribed the “outer boundaries” of the AKS—violations of which are among the most important drivers of FCA liability.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Second Circuit Upholds District Court Ruling that FCA and AKS Scienter Is Not Present Where Defendant Previously Received Favorable HHS-OIG Advisory Opinions
This week, the Second Circuit upheld a dismissal from the Southern District of New York holding that a defendant did not fulfill the False Claims Act (“FCA”) or Anti-Kickback Statute (“AKS”) scienter requirements where the defendant sought and received favorable advisory opinions from the Department of Health and Human Services Office of Inspector General (“HHS-OIG”). See United States ex rel. Stephen Sisselman v. Zocdoc, Inc., No. 24-2807 (2d Cir. Apr. 14, 2025).
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph T. McNally
Chicago
jmcnally@sidley.com
Fifth Circuit Concurrence Finds FCA’s Qui Tam Device Unconstitutional
The Fifth Circuit Court of Appeals recently vacated a $28.7 million verdict in a declined FCA qui tam because the district court improperly relied on the relators’ post-trial expert declarations to calculate damages. Writing separately in a concurrence, Judge Duncan also condemned the “constitutional flaws in the FCA’s qui tam device,” citing the logic of United States ex rel. Zafirov (discussed here), and adding to the number of judges voicing concerns over the constitutionality of the FCA’s qui tam provision. (more…)
Scott D. Stein
Chicago
sstein@sidley.com
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Lauren McBride
Chicago
lmcbride@sidley.com
Court Confirms That Materiality Is a Required Element Under the “Avoids” Prong of Reverse False Claims Theories
Last week, a Special Master, tasked with making a report and recommendation on summary judgment in the Government’s FCA case against United HealthGroup, Inc. (“United”) in the Central District of California, confirmed that the “avoids” prong of the FCA’s reverse false claims provision has a materiality requirement. U.S. ex rel. Poehling v. UnitedHealth Group, Inc., No. CV 16-08697-FMO-PVCx (C.D. Cal. Mar. 3, 2025). That prong imposes liability on a person who knowingly and improperly avoids an obligation to pay the Government. 31 U.S.C. § 3729(a)(1)(G). Although the “avoids” prong does not explicitly refer to materiality, the Special Master held that it incorporates the elements of common law fraud—including materiality. The holding is consistent with broader guidance in recent years from the Supreme Court that the FCA should be interpreted consistent with common law principles—which can result in courts imposing constraints on novel theories of liability.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Scott D. Stein
Chicago
sstein@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Joseph T. McNally
Chicago
jmcnally@sidley.com
Another District Court Finds FCA Civil Penalties Unconstitutionally Excessive
Last year, we reported on a rare district court decision from Minnesota finding application of the FCA’s civil penalties unconstitutionally excessive. Last week, a judge in the Northern District of Texas determined that even the minimum amount in FCA penalties, as applied, would have violated the Eighth Amendment’s Excessive Fines Clause. Based on the number of false claims for which the jury found the defendant liable, the minimum penalty mandated by the statute was nearly $300 million—around one hundred times the actual damages. The court instead imposed a reduced penalty of roughly $8 million, about three times the actual single damages, equating to a per-claim civil penalty of approximately $378.18.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Lauren McBride
Chicago
lmcbride@sidley.com
Supreme Court Unanimously Holds that Reimbursement Requests to a Private Corporation Are FCA “Claims” Because the Treasury Provided a Portion of the Money Requested
The U.S. Supreme Court recently issued its opinion in Wisconsin Bell, Inc. v. United States ex rel. Heath, holding that reimbursement requests submitted to the private corporation administering the E-Rate program are FCA “claims,” because the Treasury provided a portion of the pool of funds used to pay the requests. We previously reported on the oral argument before the Court here.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Jane E. Fisher
Chicago
jane.fisher@sidley.com
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