Eighth Circuit Requires “But-For” Causation in FCA Cases Based on Anti-Kickback Statute



Eye on Enforcement

The Eighth Circuit split with the Third Circuit over the appropriate causation standard in False Claims Act (FCA) cases involving alleged violations of the Anti-Kickback Statute (AKS), holding that the 2010 amendments to the AKS created a “but-for causal requirement” (United States ex rel. Cairns v. D.S. Medical, LLC).

In 2010, Congress amended the AKS to specifically provide that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim” under the False Claims Act (42 U.S.C. § 1320a-7b(g)). 

Reviewing an FCA verdict against a neurosurgeon who chose spinal implants distributed by the company owned by his fiancée, the Eighth Circuit considered whether the district court had properly instructed the jury that in order to prove falsity or fraud under the FCA, the government need only establish that the Medicare or Medicaid claims at issue failed to disclose an AKS violation. 

Reversing the district court, the Eighth Circuit disagreed that to establish fraud or falsity “it is enough for the United States to show that the claim failed to disclose the [AKS] violation.” The district court’s instruction “brushed aside” the causation required by the phrase “resulting from” in the amended AKS. Relying on the Supreme Court’s interpretation of the similar phrase “results from” in the Controlled Substances Act in Burrage v. United States, the Eighth Circuit reasoned that the common and ordinary usage of the phrase “resulting from” requires “actual” or “but-for” causality. Accordingly, the government was required to prove that the FCA defendant “would not have included particular ‘items or services’ absent the illegal kickbacks.”

The Eighth Circuit squarely rejected the government’s argument for an “alternative causal standard,” which would have required the government only to prove that “the illegal kickbacks ‘tainted’ the claim for goods or services,” or that “the anti-kickback violation itself may have been a contributing factor.” The Eighth Circuit also rejected the government’s reliance on pre-2010 case law and legislative history, stating simply that neither of those contextual arguments was enough to “overcome[] the statute’s plain language.”

The Eighth Circuit’s holding in Cairns is directly at odds with the Third Circuit’s decision in United States ex rel. Greenfield v. Medco Health Solutions, Inc., which relied on the legislative history of the 2010 amendment to conclude that a narrow reading of “resulting from” was at odds with the drafters’ intent to strengthen the government’s capability to punish Medicare and Medicaid fraud. We will be closely watching whether courts in other circuits follow the reasoning of Cairns or Greenfield and whether, ultimately, the Supreme Court will step in to resolve the split.