In recent years, defendants scored a victory in FCA litigation when courts began enforcing the “but for” causation requirement baked into the 2010 amendment to the AKS. That amendment, which added that any claim “resulting from” a kickback would be deemed false for FCA purposes, seemed to raise the government’s burden: DOJ would have to prove that the kickback was the actual cause of the payment claim. The government’s recent, and rather predictable response: if “but for” causation is too high a bar, circumvent the statute that requires it by returning to the pre-2010 playbook and relying on a false certification theory for FCA liability.
The Dual Paths to FCA Liability for AKS Violations
The FCA prohibits the knowing submission of “false or fraudulent claims” to the federal government for payment or approval. For decades, courts have recognized that violations of the AKS may render a claim false for purposes of the FCA, typically through what is known as the “false certification” theory. This theory rests on the premise that the submission of a claim for federal payment either expressly or impliedly represents compliance with legal requirements, including the AKS. If that representation is false and material to the government’s payment decision, FCA liability may attach.
In 2010, Congress amended the AKS to codify this relationship, providing that any claim “resulting from” a violation of the AKS “constitutes a false or fraudulent claim” under the FCA.1 Since that amendment, courts have grappled with the degree of causation the “resulting from” language requires, and, specifically, whether it imposes a heightened “but-for” causation standard.
Earlier this year the U.S. Court of Appeals for the First Circuit addressed this causation question head on. As discussed in a prior Dentons On Call post, the court in United States v. Regeneron Pharmaceuticals2 cemented the notion that the 2010 amendment introduced a distinct liability pathway, creating what is now a dual-track framework for establishing FCA liability in AKS-based cases.
The 2010 Amendment: But-For Causation Required
The 2010 amendment created an express statutory basis for FCA liability, providing that any claim “resulting from” an AKS violation is deemed “false or fraudulent.” Courts, including the First Circuit in Regeneron, have interpreted this language to require proof of but-for causation. In other words, the government must demonstrate that the claim would not have been submitted “but for” the underlying kickback. Key features of this theory include:
- No certification required: A claim may be false solely by virtue of its causal link to an AKS violation, even in the absence of any express or implied representation of compliance.
- No materiality standard: The statute does not require the kickback to have influenced the government’s payment decision.
- But-for causation is required: The government must establish a direct and determinative link between the kickback and the claim.
This approach can impose a significantly higher burden on the government, particularly in complex arrangements involving multiple actors, intermediaries, or attenuated financial flows.
The False Certification Theory (Pre-2010 Approach)
Prior to the 2010 amendment, courts developed an alternative basis for FCA liability grounded in misrepresentation. Under the false certification theory, liability attaches when a provider either expressly or impliedly represents compliance with the AKS in the course of submitting a claim for payment, which representation is false and material. Importantly, this theory does not require a direct causal connection between the kickback and the specific claim; rather, the focus is on whether the misrepresentation of compliance was material to the government’s decision to pay.Key features of this theory include:
- A certification of compliance: Certifying compliance can be either express or implied through the act of submitting a claim.
- Falsity and materiality: The certification must be false, and the misrepresentation must be material to the government’s payment decision.
- Causation: While causation represents a separate element, courts generally conflate it in this approach with materiality. Establish that the alleged falsehood was material to the payment decision and courts typically determine that it caused the government to pay monies it would not have paid absent the alleged falsity.
The Supreme Court’s decision in Universal Health Servs., Inc. v. United States ex rel. Escobar3 affirmed that implied certification can give rise to FCA liability, but also emphasized the importance of materiality as a limiting principle.
In Regeneron, the First Circuit emphasized the difference in the two liability theories: “if the government can show that the illicit kickback was a but-for cause of the submitted claim, then the claim is ‘per se false’ even absent a false certification of AKS compliance.” But here’s the twist: the government now argues it can choose either path, or plead both in the alternative. The availability of two distinct legal theories allows the government to tailor its strategy based on the strengths and weaknesses of the evidence. The false certification theory requires proof of materiality but avoids the causation hurdle, while the 2010 amendment theory bypasses the certification question but requires a more rigorous causal showing.
Navigating the Tension Between Statutory Text and Litigation Practice
Courts have increasingly shown a willingness to permit the government to pivot between these two theories, even late in the litigation process. The court in Regeneron, for example, allowed the DOJ to revive the old theory mid-litigation, permitting the government a second bite at the apple (new motion, new discovery, new theory) with minimal consequence for changing its litigation strategy.
The DOJ’s strategy risks making the 2010 amendment superfluous. If the government can always default to a false certification theory, the amendment’s requirement of but-for causation becomes irrelevant. This violates a core canon of statutory interpretation. Courts generally presume that Congress does not include redundant or unnecessary language in a statute. Yet the government’s litigation posture risks reading the 2010 amendment as merely declaratory of preexisting law, rather than as a substantive change requiring heightened causation. By treating the “resulting from” language as effectively optional, the government arguably undermines the plain meaning of the text and the intent of Congress to impose a more rigorous standard.
What does this mean for defendants? Well, for a brief moment, the causation standard in AKS-FCA cases swung in defendants’ favor. Courts demanded that DOJ prove actual causation between the alleged kickback and the payment claim. That pendulum swing was rare and impactful. But now, DOJ is working to reverse it by pleading around the amendment. The result is a hybrid model where the government claims two competing theories, and courts appear willing to accept both. Defendants are left fighting a two-front war: against the rigorous standard of the 2010 amendment and the looser, older standard of false certification.
