The First Circuit has issued its long-anticipated opinion in United States v. Regeneron Pharmaceuticals, Inc., clarifying the standard for establishing False Claims Act (“FCA”) liability based on Anti-Kickback Statute (“AKS”) violations. The First Circuit held that an AKS violation must be the “but-for” cause of a claim for it to be considered “false” under the FCA. In reaching this conclusion, the First Circuit sided with the Sixth and Eighth Circuits, positioning all three courts against the Third Circuit, which has held that a mere link between an AKS violation and a claim is sufficient to establish falsity under the FCA.
A copy of the opinion can be found here.
The First Circuit’s Opinion
Regeneron Pharmaceuticals, Inc. manufactures Eylea, a drug used to treat neovascular age-related macular degeneration (a/k/a, wet AMD). Regeneron allegedly donated over $60 million to an independent charity, the Chronic Disease Fund (“CDF”), which provides financial assistance to patients who need Eylea. Regeneron’s contributions to the CDF were allegedly intended to function as an indirect co-pay subsidy for patients, effectively inducing Medicare reimbursements for Eylea prescriptions and thereby violating the AKS.
On summary judgment, the government disputed the need to establish but-for causation between the alleged kickback and the submitted claim. Instead, it maintained that any claim involving a patient who benefited from an illegal payment or referral was tainted and should be considered false for purposes of the FCA. The First Circuit disagreed, relying on Supreme Court precedent interpreting the term “resulting from” as implying a presumptive but-for causation standard. In reaching its conclusion, the First Circuit rejected the government’s arguments in support of the lower “link” standard of causation.
The First Circuit rejected each of the government’s core contentions. First, the government contended that because the AKS imposes criminal liability without requiring proof that a claim was, in fact, influenced by a kickback, the same standard should apply in the civil FCA context. The First Circuit rejected this position, reasoning that FCA liability fundamentally differs from criminal liability and that the 2010 amendment to the AKS explicitly introduced a causation element that the government must meet. The First Circuit emphasized that while criminal liability under the AKS aims to prevent corruption in medical decision-making, the FCA’s focus is on financial recovery for false claims, requiring a more direct causal link. Thus, by requiring but-for causation, the First Circuit aimed to ensure that claims brought under the FCA are truly the product of illegal inducements rather than merely associated with them.
Second, the government contended that Congress enacted the 2010 amendment against a backdrop of case law that had linked AKS violations to FCA liability without requiring proof of but-for causation. The First Circuit, however, found no indication that Congress intended to eliminate the need for causation, concluding that the amendment merely established a new pathway for proving falsity without overriding existing legal principles regarding causation. Absent explicit language in the amendment removing the requirement of causation, the First Circuit declared, the default presumption of but-for causation should apply. It further noted that previous case law interpreting similar statutory language has consistently required a direct causal link, reinforcing the assumption that Congress intended the same standard to govern FCA claims predicated on AKS violations.
Finally, the government attempted to rely on legislative history, pointing to statements made by the sponsor of the 2010 amendment suggesting that the amendment was designed to ensure that all claims “resulting from” AKS violations were false. The First Circuit rejected this argument as well, noting that legislative history cannot override the plain meaning of statutory text. Rather, the First Circuit held, the phrase “resulting from” necessarily implies a but-for causation standard unless Congress explicitly provides otherwise. Here, the First Circuit reasoned that while legislative history can offer insight into congressional intent, it cannot contradict clear statutory language. Additionally, it underscored that a broad interpretation of “resulting from” would risk imposing liability even where an AKS violation had no actual influence on a submitted claim, a result inconsistent with the FCA’s purpose of targeting fraudulent claims.
What’s Next? Deepening Circuit Splits, Potential Supreme Court Intervention, and Lingering Constitutional Questions
As a threshold matter, this opinion raises the bar for the government to establish FCA liability in AKS-related cases, as it now must demonstrate that an illegal kickback was the direct cause of a false claim rather than merely showing an association between the two. Additionally, the ruling deepens an existing circuit split. With the First Circuit joining the Sixth and Eighth Circuits in requiring but-for causation, only the Third Circuit maintains the broader “link” standard. This divergence increases the likelihood that the Supreme Court will take up this issue to resolve the inconsistency among the Circuits. The potential for Supreme Court review and the deepening circuit split highlight just one of the many ways in which the FCA has recently taken on new prominence. This case unfolds against the backdrop of other developments, including the Trump administration’s stated intent to use the FCA to challenge DEI initiatives among government contractors and ongoing constitutional challenges to the FCA’s qui tam provisions. These developments will shape the future landscape of FCA litigation and compliance. Stakeholders should, accordingly, continue to monitor how courts and regulators navigate these evolving issues.
Proskauer’s Health Care Group is monitoring these developments and is ready to advise clients on how additional developments may impact their compliance and litigation strategies.