In U.S. ex rel. Wilkerson v. Allergan, the U.S. District Court for the Northern District of Illinois (the “Court”) recently ruled that “but-for” causation is required for liability under the False Claims Act (“FCA”) resulting from alleged Anti-Kickback Statute (“AKS”) violations.
This opinion aligns with the First, Sixth and Eighth Circuits, which deviated from the Third Circuit’s lower standard that only requires some “link” between the alleged kickback and false claim for FCA liability. The Seventh Circuit has yet to address this issue.
Background
Under a 2010 amendment to the AKS, a claim that includes items or services “resulting from” an AKS violation constitutes a false or fraudulent claim under the FCA. 42 U.S.C. § 1320a-7b(g). Circuits are split on what constitutes “resulting from” to determine liability. The First, Sixth and Eighth Circuits held that this phrase requires “but-for” causation, a higher standard that states the medical care would not have been provided but for the kickback. The Third Circuit set a lower threshold and held that some “link” between the alleged kickback and the false claim meets the requirement for liability.
Here, Relators Jeffrey Wilkerson and Larry Jackson (“Relators”), former pharmaceutical sales representatives for Allergan USA, Inc. (“Allergan”), claimed Allergan was engaged in a “nationwide scheme” to provide illegal kickbacks to doctors who prescribed high amounts of their drugs. The alleged kickbacks occurred when Allergan paid physicians “cash, food, alcohol, travel expenses,” and other benefits to speak at Allergan’s Speaker Bureau, a speaker series aimed at educating physicians on two of their drugs.
The Relaters further claimed that Allergan’s practices resulted in the submission of false claims to Medicare and Medicaid. In their argument, Relators asked the Court to apply the Third Circuit’s “link” standard.
The Court’s Analysis
The Court denied Relators’ request and held that “but for” causation is required to establish FCA liability that results from alleged AKS violations. It reasoned that the Seventh Circuit, in a recent opinion, stated that “resulting from” requires actual causality. This actual causality requires more than a “link” between the kickback and the false claim.
Relators argued that because prescriptions were written as a result of the kickbacks, Allergan violated the AKS and thus, the FCA. But the Court disagreed. Since the AKS is a criminal statute, the focus is on the intent of Allergan, not the prescriptions written by physicians receiving kickbacks. Ultimately, Relators did not have the facts to back up their assertions. While some physicians’ prescription rates did increase after receiving kickbacks, other physicians’ rates decreased. The Court found that Relators failed to establish a concrete relationship between the payments made to physicians and the prescriptions written. Essentially, Relators needed to present data that controlled for other variables to show that the increase in prescriptions was likely due to Allergan’s payments.
The Court did, however, agree with Relators that cash, food, alcohol, travel and other benefits do constitute remuneration under AKS. But despite passing that hurdle, Relators failed to meet this higher causation requirement. In fact, the Court stated Relators would fail to meet the causation requirement under both standards.
Ultimately, the Court dismissed the nationwide claims against all but two providers, where it found the allegations did create the inference that doctors who received kickbacks wrote prescriptions out of the motivation of that payment.
Practical Takeaways
- But-For Causation: To prove liability under FCA as a result of an AKS violation, more courts are requiring that Relators show a concrete relationship exists between the kickback and the provider’s actions. This requires more than a mere “link” between the two.
- Particularity Matters: Relators must present clear facts and evidence to show violations occurred; they cannot rely on speculative theories. This may require data that controls for other variables to demonstrate the clear relationship.
If you have questions or would like more information about this topic, please contact:
- David Honig at (317) 977-1447 or dhonig@hallrender.com;
- Kennedy Bunch at (317) 977-1420 or kbunch@hallrender.com;
- Caulin McGraw at (317) 977-1421 or cmcgraw@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 give legal advice outside of an attorney-client relationship.
