Health Law Advisor

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.

On December 27, 2024, the U.S. Court of Appeals for the Second Circuit held in U.S. ex rel. Camburn v. Novartis Pharmaceuticals Corporation that a relator adequately pleads a False Claims Act (“FCA”) cause of action premised on violation of the Anti-Kickback Statute (“AKS”) by alleging, with sufficient particularity under Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”), that at least one purpose (rather than the sole or primary purpose) of the alleged kickback scheme was to induce the purchase of federally reimbursable health care products or services.^[1] In doing so, the Second Circuit joins seven other Circuit Courts—the First, Third, Fourth, Fifth, Seventh, Ninth, and Tenth Circuits—in adopting the “at least one purpose” rule. This ruling lowers the bar in the Second Circuit for relators pleading AKS-based FCA claims. 

Interplay Between FCA and AKS Violations

Under the AKS, “a claim that includes items or services resulting from a violation [of the AKS] … constitutes a false or fraudulent claim” under the FCA.^[2]

The AKS prohibits persons from, among other things, “knowingly and willfully” soliciting or receiving “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

On March 22, 2023, the U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) updated its Frequently Asked Questions (“FAQs”), drafting 13  FAQs aimed at easing the transition from COVID-era flexibilities to the end of the Public Health Emergency (“PHE”) on May 11, 2023. These FAQs arrive on the tail of OIG’s March 10, 2023 COVID-19 Public Health Emergency policy statement, which announced that the expiration of the PHE in May also marks the end of flexibilities extended during the crisis.  The updated FAQs offer a glimpse into how OIG investigations and enforcement might play out after the end of the PHE.  These FAQs address subjects including “General Questions Regarding Certain Fraud and Abuse Authorities,” the “Application of Certain Fraud and Abuse Authorities to Certain Types of Arrangements,” and “Compliance Considerations.”  

The vast majority of the principles articulated in the updated FAQs will undoubtedly be familiar to many.  Generally speaking, the updated FAQs restate or clarify longstanding OIG policy.  The updated FAQs are more than reiteration, however; they offer condensed policy and explanation in a single location, and demonstrate that for the most part, investigations and enforcement may return to the pre-PHE status quo. 

It has been four years since Congress enacted the Eliminating Kickbacks in Recovery Act (“EKRA”), codified at 18 U.S.C. § 220. EKRA initially targeted patient brokering and kickback schemes within the addiction treatment and recovery spaces. However, since EKRA was expansively drafted to also apply to clinical laboratories (it applies to improper referrals for any “service”, regardless of the payor), public as well as private insurance plans and even self-pay patients fall within the reach of the statute.

In this episode of the Diagnosing Health Care Podcast:  The Centers for Medicare & Medicaid Services ("CMS") and the Office of Inspector General ("OIG") of the Department of Health and Human Services have at last published their long-awaited companion final rules advancing value-based care. The rules present significant changes to the regulatory framework of the federal physician self-referral law (commonly referred to as the “Stark Law”) and to the federal health care program’s Anti-Kickback Statute, or “AKS.”

Epstein Becker Green attorneys Anjali ...

The Office of Inspector General (“OIG”) for the Department of Health and Human Services recently issued an Advisory Opinion that provides insight into how the agency evaluates arrangements that deal with the integration of technology, medicine, and patient monitoring under the federal Anti-Kickback Statute (“AKS”). In Advisory Opinion No. 19-02, OIG evaluated whether a pharmaceutical manufacturer could temporarily loan a limited-functionality smartphone to financially needy patients enrolled in federal health care programs. OIG concluded that the proposed ...

Clinical laboratories need to review how they compensate sales personnel following the passage of the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) (Section 8122 of the SUPPORT Act) which is effective as of October 24, 2018.  The SUPPORT Act is a combination of more than 70 bills aimed at fighting the opioid epidemic, with EKRA intended to address patient brokering in exchange for kickbacks of individuals with substance abuse disorders.  However, as written, EKRA is far more expansive.

EKRA adds an all payor (public and private) anti-kickback rule to the health care fraud ...

Recent settlement agreements between the United States Department of Justice (the “DOJ”) and two urologist business partners suggests that the government may be focusing increased enforcement efforts on the Stark Law’s “group practice” requirements and the Stark exception for “in-office ancillary services.”  The urologists agreed to pay over $1 million to resolve the allegations.

In early January 2018, the DOJ entered into settlement agreements with Dr. Aytac Apaydin and Stephen Worsham to resolve allegations that the physicians submitted improper claims to ...