Federal enforcement of the False Claims Act (FCA) within the healthcare and pharmaceutical sectors is undergoing a significant evolution, with the ongoing case involving Regeneron Pharmaceuticals at the forefront of these developments. The government alleges that Regeneron illegally subsidized copayments for Medicare beneficiaries through substantial donations to third-party foundations. These foundations, in turn, offered copay assistance designed to steer patients toward Eylea, Regeneron’s high-cost specialty drug, rather than more affordable alternatives. This practice, the government contends, constitutes a violation of the Anti-Kickback Statute (AKS) and gives rise to FCA liability.
A pivotal ruling by the First Circuit Court of Appeals established that FCA plaintiffs pursuing cases based on AKS violations must demonstrate “actual causality,” typically in the form of “but-for” causation. However, the government is now attempting to circumvent this requirement, arguing that a direct causal link between the alleged AKS violation and financial harm to government programs isn’t necessary. Recent filings in the United States District Court for the District of Massachusetts offer a detailed look at the government’s evolving legal strategy and provide crucial compliance lessons for pharmaceutical manufacturers, healthcare providers, and integrated health systems.
Government’s Summary Judgment Strategy: A Focus on Representation
In its October 2025 summary judgment brief, the Department of Justice (DOJ) seeks to resolve key legal issues before proceeding to trial. The government’s primary argument centers on the assertion that every Medicare Part B claim submitted for Eylea between 2013 and 2014 inherently represented compliance with the AKS. This representation, the DOJ argues, is embedded within the CMS-1500 claim forms, electronic data interchange (EDI) enrollment forms, and Medicare provider enrollment agreements – all of which mandate adherence to federal law, including the AKS.
The DOJ emphasizes that providers make these compliance representations both during initial program enrollment and with each subsequent claim submission. Citing established First Circuit precedent, the government contends that these certifications are material and central to the government’s decision to authorize payment. Importantly, the government isn’t seeking a determination on whether Regeneron actually violated the AKS; that question is reserved for the jury. Instead, the DOJ aims to establish that each claim “represented” compliance, satisfying the foundational element of FCA falsity under both express and implied certification theories.
Beyond “But-For” Causation: A Shift in FCA Liability
The summary judgment motion marks a notable departure in the understanding of causation within FCA cases stemming from false certification. Traditionally, the government needed to prove “but-for” causation – demonstrating that a false claim wouldn’t have been submitted without the alleged kickback. However, a 2010 amendment to the AKS introduced language stating that a claim including items or services “resulting from” an AKS violation constitutes a false claim under the FCA. This amendment, while impactful, was held by the First Circuit to apply specifically to cases where the AKS violation directly results in a false claim, and does not impact cases based on false certification.
As the Regeneron court clarified, liability arises not from the AKS violation itself, but from the false representation of AKS compliance. This distinction is critical: false-certification claims, therefore, do not require proof of causation. The government now argues it need only demonstrate that Regeneron’s contributions to the Chronic Disease Fund (CDF) – a foundation providing copay assistance – “naturally and foreseeably” led to the submission of claims with false compliance certifications. This represents a move toward a broader “proximate cause” standard.
This shift is significant. The DOJ must now demonstrate that Regeneron’s CDF contributions were a substantial factor in causing the claims to be submitted, rather than the sole cause. This approach aligns with First Circuit authority and addresses the complexities of proving direct causation in intricate healthcare arrangements.
However, even with this lowered bar for establishing liability, proving damages remains a challenge. FCA plaintiffs must still demonstrate that the misrepresentations directly and proximately caused the government’s losses, not merely as a “but-for” cause. The Seventh Circuit, adopting the standard used by other circuits, defines proximate cause as requiring both “cause in fact” – demonstrating the defendant’s conduct was a substantial factor in the injury – and “legal cause” – establishing that the injury was a foreseeable result of the defendant’s actions.
The Importance of Materiality in FCA Cases
The government’s brief also addresses the crucial element of materiality – the requirement that a misrepresentation “tends to influence” government payment decisions. A key trade-off exists between false claim and false certification cases. In a false claim case, plaintiffs must prove but-for causation, but there’s no materiality requirement. Conversely, in a false certification case, plaintiffs must demonstrate that the defendant’s certification of AKS compliance was material to the government’s payment decision.
The DOJ argues that AKS compliance is routinely enforced and considered a condition of Medicare payment. Drawing on Supreme Court and First Circuit precedent, as well as a history of FCA enforcement related to AKS violations, the government contends that noncompliance is material as a matter of law. This implies that any claim tainted by a kickback – even without proven but-for causation – could trigger FCA liability.
Allegations and Defenses in the Regeneron Case
The government alleges that Regeneron channeled tens of millions of dollars through the CDF with the explicit goal of increasing Eylea claims. The brief claims Regeneron employees actively sought Eylea-specific data, used return-on-investment (ROI) analysis to determine contribution amounts, and even concealed relevant information during internal audits – a narrative intended to support findings of willful intent. Regeneron maintains that its donations to the CDF were lawful, did not influence prescribing decisions, and that its drug pricing adhered to industry guidelines.
Implications for the Healthcare Industry
If the court sides with the government, this ruling will significantly lower the bar for FCA liability in AKS cases. Companies could be held liable if their actions foreseeably lead to false claims, even without direct proof of causation. Courts will likely focus more on the content and materiality of certifications made on claims than on disentangling the precise effects of alleged kickbacks or pricing practices.
This necessitates that healthcare companies, pharmaceutical manufacturers, providers, and other entities involved with federal health programs meticulously ensure that all business practices, certifications, supporting documentation, and compliance measures are not only accurate but also withstand scrutiny under a “foreseeability” review. The government’s message is clear: compliance with the AKS and all federal requirements is not merely a formality – it is fundamental to every claim submitted.
What steps are healthcare organizations taking to proactively address these evolving compliance challenges? And how will this shift in causation standards impact the future of patient assistance programs?
Frequently Asked Questions
What is the False Claims Act (FCA) and why is it relevant to healthcare?
The False Claims Act is a federal law that prohibits individuals and companies from knowingly submitting false claims to the government. In healthcare, this often involves allegations of fraud related to Medicare and Medicaid billing.
What is the Anti-Kickback Statute (AKS) and how does it relate to the FCA?
The AKS prohibits offering or receiving remuneration in exchange for referrals or recommendations. Violations of the AKS can lead to FCA liability if those violations result in false claims being submitted to the government.
How has the First Circuit’s ruling in the Regeneron case changed FCA enforcement?
The First Circuit clarified that in FCA cases based on AKS violations, plaintiffs must prove “actual causation,” typically “but-for” causation. However, the government is now attempting to establish liability based on a lower “proximate cause” standard in false certification cases.
What is the difference between “but-for” causation and “proximate” causation in FCA cases?
“But-for” causation requires proving that a false claim would not have been submitted without the alleged kickback. “Proximate” causation requires demonstrating that the alleged conduct was a substantial factor in causing the claim to be submitted, even if it wasn’t the sole cause.
Why is materiality important in FCA cases?
Materiality refers to whether a misrepresentation is likely to influence the government’s payment decision. In false certification cases, plaintiffs must prove that the defendant’s certification of AKS compliance was material to the government’s payment decision.
Disclaimer: This article provides general information and should not be considered legal advice. Consult with a qualified attorney for advice on specific legal issues.
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