October 5, 2023

“Greenfield Fraught with Problems”: District of Massachusetts Holds But-For Causation Required in False Claims Act Cases Based on Kickbacks

On September 27, 2023, the Chief Judge of the District of Massachusetts decided that the standard in False Claims Act (“FCA”) cases premised on alleged violations of the Anti-Kickback Statute (“AKS”) is but-for causation. Breaking with the oft-cited 2018 Third Circuit case, United States ex rel. Greenfield v. Medco Health Solutions and prior District of Massachusetts decisions, the Court aligned with the standard more recently applied by the Eighth and Sixth Circuits.


In 2010, Congress amended the AKS to provide that any Medicare claim that includes items or services “resulting from” a violation of the AKS constitutes a false or fraudulent claim for purposes of the False Claims Act.  42 U.S.C.§ 1320 a-7b(g). The resulting question, which has perplexed courts and litigants for years, is, what does “resulting from” mean?

The first court to try to answer the question was the District of New Jersey in 2013 in Greenfield v. Medco. On appeal, affirming the District Court’s conclusion that Relator failed to show a sufficient connection between the alleged kickback and the reimbursement claim, the Third Circuit explored the legislative history of both the FCA and AKS. The Third Circuit found that a “link,” or “some connection” between a kickback and a subsequent reimbursement claim was required. The Court rejected the “taint” theory proposed by Relator, which would render every claim for reimbursement false if a kickback had been paid. The Court also rejected a but-for causation standard as “too exacting,” and instead concluded that the necessary causal link exists when “a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient” – frequently now referred to as the “exposure” standard. Recently, however, courts started to question and depart from Greenfield’s exposure standard. The Eighth Circuit, in United States ex rel. Cairns v. D.S. Med. LLC (2022), and Sixth Circuit, in United States ex rel. Martin v. Hathaway (2023) (cert. denied), both declined to adopt the Greenfield standard, instead utilizing a textual statutory analysis to conclude that the phrase “resulting from” means but-for causation. But until now, within the First Circuit – a hot bed of False Claims Act litigation and enforcement actions in the healthcare industry – courts had applied the Greenfield interpretation.

United States v. Regeneron

United States v. Regeneron is one of two closely-watched FCA cases pending in the District of Massachusetts that involve allegations that pharmaceutical manufacturers used charities to funnel copay assistance to patients taking the manufacturers’ medications in violation of the AKS. On summary judgment, Regeneron argued, among other things, that the government cannot show that its donations resulted in the submission of any false Medicare claim and contended that the but-for causation standard should apply. While the government acknowledged that it had the burden of proving some form of causal connection, it advocated that the Greenfield standard should apply, and that to prove a causal link, the government needed to “establish only that the claims at issue were exposed to illegal remuneration.”

Relying on prior decisions in the District of Massachusetts (United States ex rel. Bawduniak v. Biogen Idec Inc. and United States v. Teva Pharmas. USA, Inc.) and the First Circuit (Guilfoile v. Shields), the government argued that it did not matter whether, absent the alleged kickbacks, the patients still would have taken the medication. Instead, according to the government, the relevant question is whether Regeneron intended to induce patients to purchase Regeneron’s product, Eylea. The government further argued that because the Court had, when denying Regeneron’s motion to dismiss two years ago, cited Greenfield, Guilfoile, and Bawduniak with approval in concluding that because the complaint plausibly alleged that the copay assistance system “involved the payment of kickbacks or remuneration to patients” and “some of those kickback-tainted prescriptions then led to Medicare claims for Eylea” the rejection of the but-for causation standard had become the law of this case.

Before addressing the causation standard, the Court considered the government’s law of the case argument and concluded that the it was not bound by its own earlier decision because the opinion addressed the causation issue only “at a relatively superficial level” and was not informed by the Eighth Circuit's decision in Cairns or Sixth Circuit’s decision in Martin, both of which had not been decided yet.

Turning to the analysis of the causation issue, the Court concluded that the Greenfield standard is “frought with problems” because it is both divorced from basic principles of statutory interpretation and long-standing common-law principles of causation. The Court employed a simple hypothetical to illustrate that the term “exposed” as used in the Greenfield standard is unclear and impossible to distinguish from the rejected “taint” standard. The Court also explained that the Greenfield standard, applied to its logical conclusion, could result in cases where an AKS violation could lead to liability even if all prescribing physicians were unaware of the violation and the violation did not cause a single additional referral. Under those circumstances, it is unclear how such an inducement could “result in” false claims.

Instead, the Court employed the statutory construction analysis set forth in Cairns and Martin and concluded that the “resulting from” language requires a finding that the but-for causation standard applies. As the Court in Martin explained, the ordinary meaning of “resulting from” is but-for causation, and the legislative history does not overcome the ordinary meaning of the text.

The Court’s decision and analysis, coupled with the prior decisions in the Eighth and Sixth Circuits could have a significant impact in establishing but-for causation as the majority standard in FCA cases based on the AKS – a huge win for defendants who have long sought to present evidence to rebut causation, but have been hindered by the Greenfield exposure standard.