Eleventh Circuit Reverses Qui Tam Dismissal, Holds Facts Obtained in Discovery Can Be Used to Satisfy Rule 9(b)
The FCA’s qui tam provisions are intended to incentivize individuals who have legitimate information about fraud on the government that would otherwise go undetected to bring those issues forward. Increasingly, “whistleblowers” – including entities established for the sole purpose of seeking qui tam bounties – are filing lawsuits with sweeping but vague allegations and seeking to fill the gaps through discovery. Unfortunately, the Eleventh Circuit recently enabled this conduct in United States ex rel. Sedona Partners LLC v. Able Moving & Storage Inc., No. 22-13340 (11th Cir. July 25, 2025). There, the court reversed a dismissal of a qui tam complaint and held that relators can leverage discovery-based allegations to overcome Rule 9(b).
District Court Recognizes that Even Minimum FCA Civil Penalties Could Be Unconstitutional Under the Excessive Fines Clause
Recently, the Southern District of New York issued a decision imposing FCA penalties that provides further guidance on the circumstances under which such penalties may violate the Eighth Amendment.
First Circuit Affirms Dismissal of Qui Tam for Failing But-For Test Linking AKS Violations to FCA Liability
In U.S. ex rel. Flanagan v. Fresenius Med. Care Holdings, Inc., 23-1305 (1st Cir. June 27, 2025), the First Circuit recently affirmed dismissal of an FCA complaint because it failed to adequately plead that alleged kickbacks were the “but for” cause of claims submitted to the government. As we previously reported here, the First Circuit recently joined the growing majority of circuits requiring that for a claim to “result[] from” a kickback under the FCA, the kickback must be the “but-for” cause of the claim. In Flanagan, the First Circuit affirmed dismissal because the relator had not adequately alleged any referrals that would not have been made had the alleged kickback never been paid. (more…)
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.”
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.
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).
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…)
First Circuit Joins Sixth and Eighth Circuits in Requiring But-For Causation for FCA Claims Premised on AKS Violations
Earlier this week, the First Circuit Court of Appeals in Regeneron held that to show falsity in an FCA action premised on an Anti-Kickback Statute (“AKS”) violation, the violation must have been the but-for cause of the submitted claim. See United States v. Regeneron Pharma., Inc., No. 23-2086, 2025 WL 520466 (1st Cir. Feb. 18, 2025). In so holding, the First Circuit joined a circuit split on the meaning of the 2010 AKS amendment providing that claims “resulting from” AKS violations are false for purposes of the FCA (as previously discussed here). Like the First Circuit, the Sixth and Eighth Circuits require but-for causation (as previously discussed here and here). The Third Circuit, meanwhile, requires merely a “link” between an alleged kickback and a subsequent claim.
Joining Circuit Split, First Circuit Adopts But-For Causal Standard for Establishing FCA Falsity Premised on AKS Violations
In a significant opinion, the First Circuit held yesterday that to establish falsity in an FCA action premised on an Anti-Kickback Statute (AKS) violation, “the government must show that an illicit kickback was the but-for cause of a submitted claim.” That determination hinged on the text of the 2010 AKS amendment, which provides that claims “resulting from” AKS violations are false. With this holding, the First Circuit joins the circuit split on what the “resulting from” language requires. The First, Sixth, and Eighth Circuits have adopted the strict but-for standard, while the Third Circuit opted for a much looser approach. We have previously reported on the split here, here, and here. We will follow up with further analysis of the First Circuit’s opinion.
Supreme Court Mulls the Scope of FCA Liability for Potential “Claims” Submitted to Private Entities Funded by Private Entities
On November 4, 2024, the Supreme Court heard oral argument in United States ex rel. Heath v. Wisconsin Bell. The question presented is whether reimbursement requests submitted to the private corporation administering the E-rate program are FCA “claims.” Under the statute’s definition of “claim,” the answer hinges on whether the Government “provides” the requested money. All funding for the program, established by Congress, comes from private contributions. Yet where private contributors incur debts owed to the corporation, the United States Treasury collects those debts and transmits the funds to the corporation. The Court’s questioning suggests that the Court will conclude that the Government “provides” at least the money that it disburses to the corporation. The Court, however, appeared reluctant to make any determination as to whether the Government “provides” the other money paid to the corporation—all private contributions paid directly to the private corporation.
