Seventh Circuit Rejects Constitutional Challenge to FCA Judgment, Recognizes Circuit Split on Causation Requirement for AKS-Based Claims
In a recent decision, the Seventh Circuit acknowledged—but declined to pick sides in—a circuit split regarding the degree of causation required to establish FCA claims premised on AKS violations. In the same opinion, the Seventh Circuit rejected an Eighth Amendment challenge to the amount of an FCA judgment.
Court Cuts False Claims Act Jury Verdict in Half in Rare Constitutional Decision
On Thursday, a Minnesota district court judge more than halved a $490 million False Claims Act jury verdict against an ophthalmology distributor and its founder for Anti-Kickback Statute (“AKS”) violations, to $217 million, holding the damages were “notably severe” and “grossly disproportional” to the offense, and thus improper under the Excessive Fines Clause.
Court Requires But-For Causation for AKS-FCA Violations But Highlights Potential Defense Challenges from the Supervalu Decision
A recent decision from the District of Minnesota applying the Eighth Circuit’s new but-for causation requirement for connecting violations of the Anti-Kickback Statute (AKS) to FCA violations emphasizes the importance of the circuit split over the correct causation standard, while also highlighting challenges defendants can face post-Supervalu, particularly at the motion to dismiss stage, when arguing that their intent was inconsistent with the FCA’s scienter element. See United States ex rel. Louderback v. Sunovian Pharmaceuticals, Inc., No. 17-cv-1719 (D. Minn. Nov. 27, 2023). (more…)
District of Massachusetts Adopts But-For Causation Test for FCA Claims Premised on AKS Violations
As reported last week here, the Chief Judge of the District of Massachusetts held that a claim “result[s] from” a kickback only if the defendant would not have included particular items or services in the claim but for the kickback. United States v. Regeneron Pharma., Inc., No. 20-11217-FDS (D. Mass. Sept. 27, 2023). In so holding, the court aligned itself with decisions in the Sixth and Eighth Circuits, and rejected the Third Circuit’s looser standard that a false claim “result[s] from” a kickback where a patient was merely “exposed to an illegal recommendation or referral” and a physician submitted a claim “pertaining to that patient.” We have previously reported on this circuit split here and here.
District of Massachusetts Adopts But-For Causation Test for FCA Claims Premised on AKS Violations
On September 27, 2023, the District of Massachusetts, assessing the causation standard linking Anti-Kickback Statute violations to FCA liability, determined that a claim “result[s] from” a kickback only if the defendant would not have included particular items or services in the claim but for the kickback. We have previously written about the circuit split on this issue here and here. We will follow up with an additional post describing the court’s opinion, available here, in greater detail.
Court Certifies Interlocutory Appeal to First Circuit on Causation Standard Connecting AKS Violations and the FCA
Last week a court in the District of Massachusetts took the rare step of allowing an FCA defendant to pursue an interlocutory appeal arising from the summary judgment stage of an FCA case in which DOJ is seeking $10 billion in damages and penalties. The question on appeal asks the First Circuit to take a side in an expanding circuit split on the requisite causation requirement for AKS violations to trigger FCA liability.