Third Circuit Clarifies Required Link Between AKS Violations and the False Claims Act

The Third Circuit’s recent decision in Greenfield ex rel v. Medco Health Systems, Inc. recently clarified the “link” that plaintiffs must show to connect the alleged kickback scheme to the submitted claim.  Greenfield, No. 17-1152 (3d Cir. Jan. 19, 2018).  In affirming summary judgment for the defendant, the Third Circuit held that to create an issue for trial, a plaintiff alleging a violation of the Anti-Kickback Statute (AKS) must present evidence of a claim submitted to the federal healthcare government that was actually exposed to the alleged kickback scheme.

Greenfield, a former area vice president for Accredo, filed a qui tam suit against Accredo (subsidiaries Medco Health Systems, Inc. and Hemophilia Health Services were also named), a specialty pharmacy that provides in-home nursing services and the delivery of clotting medications to hemophiliacs.  Greenfield alleged Accredo violated the AKS (and therefore the FCA) in connection with donations to Hemophilia Services, Inc. (HSI) and Hemophilia Association of New Jersey (HANJ).  During the relevant period, Accredo donated between $200,000-$550,000 annually to HSI and HANJ.  In these years, the HANJ website listed Accredo as a one of four “preferred providers” or “preferred vendors” and recommended that patients work with the approved providers who were known for “constantly supporting the community in numerous ways.”

In 2010, Accredo notified both charities that it would decrease the donation to $175,000 the following year.  In response, HSI encouraged all members to contact Accredo and ask for funding to be restored to the prior levels.  After Accredo received numerous letters from HSI members requesting additional funding, Greenfield was asked to analyze the return on investment for increasing the annual donation back to $350,000.  Shortly after Greenfield issued his report, Accredo increased the donation to $350,000. Greenfield promptly filed suit alleging Anti-Kickback Statute and False Claims Act violations.

Greenfield argued that Accredo would have falsely certified Anti-Kickback Statute compliance when submitting claims for the 24 Accredo patients with federal health insurance, because the form requires an attestation that the parties have complied with the Anti-Kickback Statute.  Accredo responded that Greenfield failed to show a violation on the False Claims Act because he failed to point to any evidence that any federally insured patient purchased prescriptions because of the contributions to HSI/HANJ.

The district court opinion did not rule on whether the charitable contributions represented an illegal kickback and instead granted summary judgment in favor of Accredo, holding that Greenfield had not met the burden of proof to show an actual False Claims Act violation. The district court held that Greenfield had not shown the necessary link between the 24 federally insured customers and the donations and that the claims failed, “[a]bsent some evidence….that those patients chose Accredo because of its donations to HANJ/HSI.” Greenfield appealed, arguing that the court erred in requiring a proof of subjective intent.  The government, which had declined intervention, filed as amicus curiae in support of neither party and argued that the standard adopted by the district court erred in requiring proof that patients chose Accredo because of the referrals and recommendations.

The Third Circuit upheld the district court ruling, but rejected the lower court’s reading of the statute, which “arguably requir[es] a causal relationship” between the claims for reimbursement and the kickback scheme.  In coming to this conclusion, the Court analyzed legislative intent and concluded that through the Anti-Kickback Statute and the False Claims Act the government sought to strengthen the ability to prosecute instances of fraud.  Identifying such fraud can be difficult when the medical needs of a patient are judgment-based, a realization which the Court explains, “counsels requiring something less than proof that the underlying medical care would not have been provided but for a kickback.”  Greenfield did not need to show that the referrals actually caused a patient to use a particular healthcare provider, but the Court rejected liability based on a temporal connection—in which Accredo submitted federal claims while also allegedly paying kickbacks.  The Court also rejected Greenfield’s assertion that the alleged kickbacks tainted all reimbursements as false.  Instead, to succeed Greenfield would have needed to show that at least one of Accredo’s claims was false by demonstrating that at least one of Accredo’s federally insured patients was exposed to a referral or recommendation in violation of the Anti-Kickback Statute.  In Greenfield, the Third Circuit joins with other circuits that have required the plaintiff provide evidence of at least one tainted claim.