Health Law Advisor

What may have seemed like an out-of-the-blue question to the casual observer was no surprise to those who represent individuals and entities in the health care and life sciences industries: U.S. Attorney General (AG) nominee Pam Bondi was asked to share her thoughts on the constitutionality of the False Claims Act (FCA) and its qui tam provisions during her January 15, 2025, confirmation hearings.

Senator Chuck Grassley (R-IA) prefaced his questioning by noting that the FCA is “central to fighting government waste and fraud.” And since 1986—when Grassley authored amendments that modernized and strengthened the Civil War-era statute—he has been a fierce defender. Since the 1986 amendments, the FCA has brought in $78 billion for the federal government, with more than $2.9 billion recovered in fiscal year (FY) 2024. 

“Most of that is due to patriotic whistleblowers who found the fraud and brought the cases forward at their own risk,” Grassley said.

On January 6, 2025, the U.S. District Court for the District of Massachusetts granted a defendant laboratory’s motion for summary judgment in a False Claims Act (FCA)/Anti-Kickback Statute (AKS) case brought by a physician objecting to the lab’s testing practices and its use of independent contractors paid on commission. Judge Patti B. Saris held that plaintiffs in FCA cases must establish that “but for” the payment of illegal remuneration in violation of the AKS, the claim would not have been submitted. Applying the “but-for” standard, Judge Saris dismissed OMNI Healthcare Inc. v. MD Spine Solutions LLC, et al. because the record did not support that the independent contractor status of some of the lab’s sales representatives or their conduct unduly influenced any provider’s decision to purchase the product.

Adoption of “But-For” Causation in FCA Cases

There is a circuit split regarding whether FCA plaintiffs must prove that “but for” the AKS violation, a claim would not have been submitted. Requiring “but-for” causation poses a significantly greater burden for plaintiffs seeking to advance FCA claims because they must show the kickback actually affected what good, item, or service was provided.

In the U.S. Courts of Appeals for the Sixth and Eighth Circuits, the heightened “but-for” causation must be established. The Third Circuit has adopted a less rigorous standard, requiring only a showing that at least one of the claims sought reimbursement for medical care that was provided in violation of the AKS. Plaintiffs in circuits with no clear precedent often argue for the application of the more plaintiff-friendly standards of the Third Circuit and use that ambiguity as leverage in negotiating settlement agreements.

Building on attempts in recent years to strengthen the Department of Justice’s (DOJ’s) white collar criminal enforcement, on September 15, 2022, Deputy Attorney General Lisa Monaco announced revisions to DOJ’s corporate criminal enforcement policies. The new policies, and those that are in development, further attempt to put pressure on companies to implement effective compliance policies and to self-report if there are problems. Notably, the new DOJ policies set forth changes to existing DOJ policies through a “combination of carrots and sticks – with a mix of incentives and deterrence,” with the goal of “giving general counsels and chief compliance officers the tools they need to make a business case for responsible corporate behavior” through seven key areas: