The Sixth Circuit Court of Appeals recently issued a key decision interpreting narrowly an important element of the Anti-Kickback Statute (AKS) and the interplay between the AKS and the False Claims Act (FCA).1 The court's decision perpetuates a circuit split, now two to one, on whether the but-for causation must be proven to maintain an FCA action on an AKS-violation theory. While not ripe for Supreme Court review yet, the decision signals that this critical and controversial issue may ultimately need clarification from the high court.
The case at issue, Hathaway, involves a qui tam complaint alleging violations of the AKS and the FCA against a Michigan hospital. The relator, an ophthalmologist, claimed he was denied employment at Oaklawn Hospital because the hospital had a continuing arrangement with a different ophthalmologist who referred patients to the hospital for surgeries. The relator claimed that this amounted to "an illegal fraudulent scheme" under the AKS and that Oaklawn violated the FCA for reimbursement based on the referrals. The relator appealed the dismissal of his complaint. The Sixth Circuit considered two issues on appeal: (1) whether the AKS's prohibition on "remuneration" covers only "payments and other transfers of value or any act that may be valuable to another" and (2) whether but-for causation is required to allege an FCA violation "resulting from" an AKS violation. After deciding for the defendants on both issues, the Sixth Circuit affirmed the...
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