Narrowing FCA Cases Based on Kickback Allegations: What Healthcare and Life Sciences Companies Need to Know About the Regeneron Decision

On February 18, 2025, in a closely watched decision, the United States Court of Appeals for the First Circuit in United States v. Regeneron Pharmaceuticals Inc., No. 23-2086, 2025 U.S. App. LEXIS 3667 (1st Cir. Feb. 18, 2025) held that an Anti-Kickback Statute (“AKS”) violation must be the “but-for” cause for submitting a claim to establish False Claims Act (“FCA”) liability. The decision aligns the First Circuit with the Sixth and Eighth Circuits, deepening the jurisdictional split over the proper interpretation of the phrase “resulting from” in the AKS-FCA framework.

The Court’s Decision

The appeal stemmed from allegations that Regeneron unlawfully subsidized Medicare beneficiary copayments through a patient assistance program designed to steer patients toward its eye drug, Eylea, over potential lower-cost therapeutic alternatives. The government has long viewed arrangements in which a manufacturer donates to a third-party charity that, in turn, covers patient copayments to be suspect under the AKS. The government’s FCA theory asserted that the manufacturer’s indirect funding of copayments constituted an unlawful kickback, rendering the corresponding Medicare claims false and actionable. Regeneron countered that any link between its donations and specific claim submissions was too attenuated to establish liability.

The First Circuit was asked to determine the appropriate causation standard for FCA cases based on alleged AKS violations. At issue was the 2010 amendment to the AKS that provided a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].”¹

The First Circuit agreed with Regeneron, holding that to establish FCA liability based on an AKS violation, the government must demonstrate that the alleged kickback was the but-for cause of the claim. That is, there must be a clear cause and effect relationship between the alleged kickback and the submission of a false claim to the government. The adoption of the stricter causation standard represents a split from the Third Circuit’s interpretation that required only that there “be some connection between a kickback and a subsequent reimbursement claim.”² The Regeneron court reasoned that merely demonstrating some link between a kickback and a billed claim is insufficient; instead, the plaintiff must prove that absent the kickback, the government would not have been billed at all. Rejecting the government’s broader proposal, the court emphasized that “resulting from” in the civil context demands a clear causal link. This stricter causation requirement, the court explained, stems from both the statute’s plain language and the distinct objectives of the FCA’s civil remedies compared to the AKS’ criminal provisions.

Takeaways From the Court’s Decision

Kickback-based allegations are a mainstay of FCA enforcement, and the ruling will undoubtedly influence how DOJ and whistleblowers develop cases and allege liability for matters involving alleged AKS violations. While the full impact of the decision is unknown, there is little doubt that the ruling increases the evidentiary burden required to prevail in AKS-based FCA cases. Plaintiffs must now prove that a kickback was the determinative factor in the submission of a claim, not merely a contributing factor. Because the First Circuit is widely regarded as a bellwether of FCA jurisprudence and its decision aligns two other circuit courts, its ruling strengthens the nationwide tilt toward a stricter causation requirement and deepens the existing circuit split over the proper interpretation of “resulting from.”

The decision marks a favorable development for healthcare providers and life sciences companies while posing a new hurdle for the DOJ and whistleblowers. At a minimum, these companies should continue to monitor the FCA landscape to better understand the full ramifications of the decision on related matters. Defendants facing FCA lawsuits in circuits that have adopted the but-for causation standard should consider challenging complaints that fail to sufficiently plead direct causation.

Because the court’s decision intensifies the circuit split over the proper causation standard, there is an increasing possibility that the DOJ will eventually seek Supreme Court review. In the meantime, organizations should review their compliance programs to ensure they are not running afoul of potential FCA claims based on AKS violations, under either the “some connection” or more rigorous “but-for” standard.

[1] See 42 U.S.C. § 1320a-7b(g) (emphasis added).

[2] See United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 100 (3rd Cir. 2018).