20 December 2019

Court Orders DOJ to Articulate Factual Basis for Allegation that AKS Violations Caused the Submission of False Claims

Earlier this month, a federal judge in Minnesota held that DOJ was required to articulate the factual basis for its allegation that Defendants’ claims for payment resulted from kickbacks, rejecting the argument that such information was irrelevant based on a legal presumption of causation.  The Government alleges that defendants Precision Lens and Paul Ehlen provided kickbacks to physicians, including “lavish hunting, fishing and golf trips, private plane flights, frequent-flyer miles and other items of value,” to induce them to use products that Defendants supplied.  The Government further alleges that these kickbacks violated the Anti-Kickback Statute (AKS), causing the submission of false claims to the Government.

Defendants served a notice of deposition on the Government demanding, in relevant part, testimony concerning the facts and methodologies informing the Government’s conclusion that Defendants’ alleged kickbacks caused the submission of false claims.  In particular, Defendants sought information underlying the Government’s conclusion that (1) “particular surgeries occurred because of a kickback” and (2) “a particular physician would not have chosen to use Defendants’ product but for the kickback.”  The Government refused to produce a witness or any other information on those topics, arguing that Defendants’ causation inquiry was inconsistent with and irrelevant to the legal standard for determining whether false claims were caused by a violation of the AKS.  According to the Government, once Defendants’ alleged kickbacks occurred, all claims submitted within a year of those kickbacks were presumptively tainted.

The magistrate judge overruled DOJ’s objections.  Specifically, the magistrate judge ruled that the Government had to provide a written statement addressing (1) whether it was “aware of any evidence of actual causation,” and (2) why it had “chosen a taint period of one year.”  The magistrate judge further ruled that, if the Government was aware of any evidence regarding actual causation, Defendants would be allowed to depose a witness on that topic.  The Government objected to the magistrate judge’s ruling to the district judge, who affirmed.  The Court held that it was not necessary to determine the proper causation standard for the purposes of discovery.  Indeed, as the Court noted, information is discoverable even if it is not ultimately dispositive or admissible in evidence.  Accordingly, the Court held that because the AKS has a causation element, and Defendants’ inquiry into the factual basis (if any) for the Government’s allegation could lead to relevant information, the magistrate judge’s ruling was not clearly erroneous or contrary to law.

A copy of the Court’s ruling can be found here.

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