On October 7, 2024, the United States Supreme Court denied review of a Second Circuit decision limiting the “willfulness” requirement for liability under the federal Anti-Kickback Statute (“AKS”) to knowledge that one’s actions are unlawful. The Second Circuit rejected the argument made by the plaintiff relators in U.S. ex rel. Hart v. McKesson (“Hart“) that the defendant’s contracts, conduct and filings with the United States Securities and Exchange Commission “indicated an awareness of the requirements of the AKS and the general unlawfulness of inducements.” Additionally, the trial court emphasized that the lack of effort in concealing alleged violations indicates a lack of actual knowledge of unlawful conduct required to maintain an AKS claim.
Background
The AKS criminalizes a knowing and willful offer or payment of remuneration to induce certain health care purchases or services that would be covered by a federal health care program. Violations of AKS are punishable by a maximum of 10 years of imprisonment, fines up to $100,000 and exclusion from participating in federal health care programs.
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In seeking cert from the Supreme Court, the relators argued that the Second Circuit’s decision was inconsistent with other circuit decisions that did not require knowledge of unlawfulness; however, the Supreme Court’s denial of the cert petition indicates any perception of any circuit split is immaterial and would not significantly impact government expenditures on health care resources.
Practical Takeaways
- The Supreme Court reinforced the Hart interpretation of “willfulness” as requiring plausible facts to show that defendants were consciously acting unlawfully and in violation of the AKS. Absent actual knowledge, willfulness cannot be imputed on parties based on conduct alone.
- The trial court’s interpretation of a lack of concealment provides a potential strategy against alleged AKS liability.
- While the Supreme Court’s refusal to review the Second Circuit’s interpretation of “willfulness” provides some clarity on the mental state requirement at a federal level, health care entities should remain vigilant in avoiding even the appearance of impropriety, as government investigations and enforcement remain robust.
If you have any questions or would like additional information, please contact:
- Erin Drummy at 317-977-1414 or edrummy@hallrender.com;
- Chandani Patel at (214) 615-2037 or cpatel@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
