In a recent oral argument, the First Circuit Court hinted at a higher standard for proving cases under the False Claims Act (FCA), particularly those involving the Anti-Kickback Statute. This potential change has significant implications for whistleblowers and the government’s ability to prosecute these cases effectively.
Understanding the False Claims Act and Anti-Kickback Statute
The False Claims Act is a federal law that allows individuals to sue on behalf of the government if they know of companies or individuals defrauding government programs. Whistleblowers, known as relators, can receive a portion of any recovered damages. The Anti-Kickback Statute makes it illegal to offer, pay, solicit, or receive any remuneration to induce referrals of items or services covered by federally funded programs like Medicare and Medicaid.
The Current Debate
At the heart of the current debate is the causation standard that should be applied in FCA cases involving kickbacks. In simpler terms, the question is whether the government must show a direct link between the illegal kickback and the specific claim submitted to the government.
In a recent case, a Massachusetts federal judge ruled that to prove an FCA violation, there must be a direct link (a “but for” causation) between the kickback and the claim. The defendant’s attorney argued: “We didn’t give money to doctors, we gave to a charity that distributed funds on a first-come, first-served basis.”
The government argued that it only needs to show that the claim sought reimbursement for items or services influenced by the kickback. The government’s attorney told the court that:
It defies logic to think that when Congress enacted the 2010 amendment, it meant to say, ‘Actually, if you’re on the take from a manufacturer and do what the manufacturer wants you to do, it is perfectly fine.’
The First Circuit Court of Appeals has now questioned whether the government’s interpretation aligns with Congress’s intent when it amended the Anti-Kickback Statute in 2010. The amendment aimed to broaden the scope of liability, but the exact standard remains a point of contention.
Implications for Whistleblowers
If a higher standard is adopted, whistleblowers may face more significant challenges in proving their cases. Here are some potential impacts:
- Increased Burden of Proof: Whistleblowers would need to demonstrate a direct causal link between the kickback and the claims made to government programs. This could require more detailed evidence and a higher level of documentation.
- Fewer Successful Cases: With a stricter causation standard, some cases that would have previously succeeded might now fail, potentially discouraging whistleblowers from coming forward.
- More robust Defense for Companies: Companies accused of violating the FCA could have a more robust defense, arguing that there was no direct link between the alleged kickback and the claims made.
Conclusion
The potential for a higher bar in proving FCA cases involving the Anti-Kickback Statute highlights the complexities of whistleblower litigation. While it aims to ensure that only valid claims succeed, it could also make it harder for whistleblowers to expose fraud. It remains to be seen how the issue will be resolved, but potential whistleblowers and their attorneys must stay informed and prepared for these challenges.
