Eighth Circuit Splits with Third: Must Show “But-For” Causation

In 2010, Congress amended the Anti-Kickback Statute (the “AKS”) to provide that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim” for purposes of the False Claims Act (the “FCA”). 42 U.S.C. § 1320a-7b(g) (emphasis added). Since that amendment, courts have wrestled with the statute’s “resulting from” requirement, and FCA plaintiffs and defendants alike have attempted to interpret the language to their advantage. Recently, the Eighth Circuit weighed in and determined that FCA claims premised on violations of the AKS require relators and the government to show “but-for” causation between alleged kickbacks and submitted claims. 

In United States ex rel. Cairns v. D.S. Medical LLC, 42 F.4th 828 (8th Cir. 2022), a neurosurgeon, through his medical practice, ordered a high volume of spinal implants from a medical device company wholly owned by his fiancée. The agreement was highly lucrative for both parties, generating substantial commissions for the fiancée and earning generous stock options for the neurosurgeon. Eventually, other physicians grew suspicious of the surgeon’s high implant use, and the couple’s arrangement came under FCA and AKS fire in the form of a qui tam. Soon after, the government filed a complaint in intervention alleging the couples’ agreement constituted a kickback scheme that “tainted” claims submitted to government programs thus violating the FCA. At trial, the court instructed the jury that “it is enough for the United States to show that the claim failed to disclose the [AKS] violation,” and the jury entered a verdict in the government’s favor.

On appeal, however, the Eighth Circuit reversed, criticizing the district court’s decision to “brush[ ] aside” causation. The Court determined that the phrase “resulting from” in the AKS was plain and unambiguous, and therefore required a “but-for” causal relationship between alleged kickbacks and claims for payment. “After all, when a statute is unambiguous, we start and end in the same place: with the words of the statute itself.”  The Eighth Circuit cited the Supreme Court’s decision in Burrage v. United States, 571 U.S. 204, 210-11 (2014), where the Court construed nearly identical “resulting from” language in the Controlled Substances Act as requiring “but-for” causation.  Considering the Burrage opinion and the dictionary definition of “results,” the Eighth Circuit had “little trouble concluding. . . ‘resulting from’ also expresses a ‘but-for causal relationship.’”  Cairns, 42 F.4th at 834. 

While Cairns is a significant win for FCA defendants, the Eighth Circuit’s ruling directly conflicts with the Third Circuit’s more relator-friendly interpretation of the phrase “resulting from.” See United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89 (3d Cir. 2018). In Greenfield, the District Court had granted summary judgment to defendant because the relator had failed to “link its claims for reimbursement to the alleged kickback scheme.” The Third Circuit rejected the District Court’s interpretation of the statute’s “resulting from” language because the district court had “arguably require[ed] a causal relationship” between the alleged kickback scheme and claims for payment, which the Third Circuit determined was “not intended by Congress.” 

To reach this conclusion, the Third Circuit accepted the government’s argument that “but-for” causation would lead to an “incongruous result whereby ‘a defendant could be convicted of criminal conduct under the [Anti-Kickback Statute] for paying kickbacks to induce medical referrals, but would be insulated from civil [False Claims Act] liability for the exact same conduct, absent additional proof that each medical decision was in fact corrupted by the kickbacks.’” This incongruous result, the Third Circuit determined, “counsels requiring something less than proof that the underlying medical care would not have been provided but for a kickback.” 

The Third Circuit supported its interpretation of the “resulting from” language with the legislative history of both the FCA and the AKS, finding “but-for” causation would be “inconsistent with the drafters’ intentions underlying both statutes.” To reach this conclusion, the Third Circuit rejected defendant’s argument that the Supreme Court’s decision in Burrage supported “but-for” causation. 

To date, only the Third and Eighth Circuits have directly addressed this interpretive question and the split is distinct and substantial. For now, AKS-backed FCA claims will be more difficult to prove in the Eighth Circuit, and defendants in other circuits should certainly consider the Cairns opinion as a new line of defense. 

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

Author(s)

As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.