The United States Court of Appeals for the Eighth Circuit just gave defendants in False Claims Act (FCA) claims a big win. The win involves how courts determine whether a violation existed when that violation is rooted in allegations of an Anti Kickback Statute (AKS) violation. The court in this case used a “but for” causation standard when analyzing the alleged violation. This court decided that use of this strict interpretation was appropriate — making it harder for the government to build their claim.
What was the case?
The case, United States ex rel. Cairns v. D.S. Medical LLC, involves a deep dive into how the courts determine if a claim is “false or fraudulent” under the language of the FCA. Lawmakers added this language in 2010. One way to show the presence of a false or fraudulent claim is through use of the AKS which makes it illegal to provide payment in exchange for medical services or products. The government focused on the 2010 amendment to this law and argued that it only pays for “conflict-free care.”
To build a successful case the law requires the government show the alleged wrongdoing include items or services that “resulted from” the violation. The court dug into the meaning of “resulted from” to come to a decision and boy did they dig. They even got into a discussion of present-participle forms of the verb versus present-tense versions. We will spare you of that discussion but note that it leads to the conclusion that the textbook definition for the terms is appropriate. The ultimately found it created the but-for requirement noted above.
What does this mean?
It likely means that the strict but-for causation applies when the FCA claim is based on an AKS violation. Basically, in this case the court stated that the government needed to show that the defendant would not have submitted the claims at issue without receiving an illegal kickback.
What happens now?
In this specific case, the court reversed the district court’s ruling because the lower court failed to instruct the jury to apply the but-for standard. The case is now headed back to district court for another round using this strict causation standard.
The court was very clear that the ruling was narrow. It is not meant to shake up the progression of these types of cases. However, in similar situations where a plaintiff is looking to establish fraud through the 2010 amendment, the use of the but for causation standard may be appropriate.
Attorney John Rivas is responsible for this communication.