First Circuit Imposes Higher “But-for” Causation Standard for False Claims Act Liability Based on Alleged Anti-Kickback Statute Violations, Widening Circuit Split

On February 18, 2025, the U.S. Court of Appeals for the First Circuit added its voice to a growing chorus of appellate courts to elevate the standard of proof required to show a violation of the federal False Claims Act in connection with an alleged violation of the federal Anti-Kickback Statute.

The decision marks a significant win for companies and individuals in the healthcare industry who perennially face, and therefore seek to limit, potential exposure under the Anti-Kickback Statute. This issue may soon find its way to the Supreme Court of the United States given the increasing prevalence of cases where the government and whistleblowers allege that False Claims Act violations are predicated on violations of the broad but nebulous Anti-Kickback Statute. 

The Anti-Kickback Statute prohibits, among other things, soliciting or receiving any remuneration in exchange for referring patients under federal healthcare programs. A 2010 amendment provides that any claim for payment under federal healthcare programs, like Medicare and Medicaid, “resulting from” a violation of the Anti-Kickback Statute is also a false or fraudulent claim for purposes of the False Claims Act, 31 U.S.C. §§ 3729-33. The First Circuit, in United States v. Regeneron Pharmaceuticals, Inc., confronted what it means for a claim to “result from” a violation of the Anti-Kickback Statute. Is it enough that a claim followed an illegal kickback? Or must the government show that the claim would not have been submitted but for the kickback?

The First Circuit’s Decision

In the First Circuit case, the government alleged that Regeneron induced prescriptions of a drug by covering copayments for it, thereby steering patients away from cheaper alternatives. For purposes of the appeal, the parties agreed that, if true, this would constitute a violation of the Anti-Kickback Statute. The government also alleged that the Medicare reimbursement that doctors sought for those prescribed drugs “resulted from” this Anti-Kickback Statute violation—regardless of whether doctors would have prescribed the drug and claimed reimbursement without the copay subsidy. 

Regeneron argued the government’s position strained logic and that an Anti-Kickback Statute violation had to be a “but-for cause” of the challenged Medicare claim. If a doctor would have purchased (and sought reimbursement for) the drug anyway, Regeneron argued, then the ensuing Medicare claim did not “result from” Regeneron’s violation of the Anti-Kickback Statute because Medicare would have paid it regardless.

The First Circuit sided with Regeneron and joined the U.S. Court of Appeals for the Sixth Circuit and the U.S. Court of Appeals for the Eighth Circuit in more narrowly interpreting the Anti-Kickback Statute’s application. It found “no convincing ‘textual or contextual’ reason to deviate from the default presumption” that the words “resulting from” required but-for causation. A federal district court in Massachusetts set a similarly higher standard. Only the U.S. Court of Appeals for the Third Circuit has come out the other way, holding that there need only be “some connection between a kickback and a subsequent reimbursement claim.”

Impact for Healthcare Companies and Corporate Defendants

Because of the vagaries of the Anti-Kickback Statute and its application, the government and whistleblowers use violations of it as a predicate for False Claims Act claims. As a result, the Regeneron decision is likely to be felt far beyond the First Circuit. 

First, the decision elevates the standard of causation required to turn an alleged kickback into a per se False Claims Act violation. The government, in district courts governed by Regeneron and similar holdings, must now marshal far more evidence to prove that, without an Anti-Kickback Statute violation, a claim would not have occurred. This is a far taller order than simply showing “some connection” between the two.

Second, Regeneron could affect the sheer number of False Claims Act actions resulting from alleged Anti-Kickback Statute violations. The False Claims Act results in a significant number of actions, settlements, and awards every year. In the most recent fiscal year, settlements and judgments under the False Claims Act exceeded $2.9 billion from 558 actions, the second highest total in history. Whistleblowers also filed 979 qui tam lawsuits, the highest ever. Even a small dent in these figures could have large monetary repercussions.

Third, the ruling adds to a now-lopsided 3-1 circuit split favoring defendants. And it becomes harder for the remaining circuit courts to adopt the government’s favored position when an increasing number of sister circuits reject it. The issue also presents a prototypical question of statutory interpretation over which the circuit courts disagree—precisely the type of question ripe for Supreme Court review. 

Of course, healthcare providers must remain vigilant not to run afoul of other provisions. For instance, false claim certifications that underlying services conformed to Medicare or Medicaid laws and regulations will remain under scrutiny. And neither Regeneron nor similar rulings cast doubt on companies’ potential False Claims Act liability for claims that were, in fact, caused by Anti-Kickback Statute violations. 

Even so, defendants have another arrow in their quiver to fight False Claims Act cases predicated on violations of the Anti-Kickback Statute.