• False Claims Actions Based on Kickbacks
  • April 15, 2013
  • Law Firm: Berger Montague P.C. - Philadelphia Office
  • The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), ("AKS") arose out of congressional concern that payments or things of value  provided to those who can influence healthcare decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to patients.  To protect the Medicare and Medicaid programs from these harms, Congress enacted a prohibition against the payment of kickbacks in any form, See United States v. Greber, 760 F.2d 68, 70-71 (3d. Cir. 1985).

    The AKS prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally-funded medical goods or services. Violation of the statute also can subject the perpetrator to exclusion from participation in federal health care programs and, effective August 6, 1997, civil monetary penalties of $50,000 per violation and three times the amount of remuneration paid. 42 U.S.C. §1320a-7(b)(7) and 42 U.S.C. §1320a-7a(a)(7).

    Courts have held that a person or entity who violates the AKS and submits a claim or causes another to do so has violated the False Claims Act, 31 U.S.C. 3729 et. seq. regardless of what form the claim or statement takes. See United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 243 (3d Cir. 2004); United States ex rel. Conner v. Salina Regional Health Ctr., 543 F.3d 1211, 1223 n.8 (10th Cir. 2008); United States ex rel. McNutt v. Haleyville Medical Supplies, 423 F.3d 1256, 1259-1260 (11th Cir. 2005); and United States v. Rogan, 459 F. Supp. 2d 692, 717 (N.D. Ill. 2006), aff'd, 517 F.3d 449 (7th Cir. 2008).  Moreover, the AKS was  amended to expressly state what these courts had already held, namely, that a violation of the AKS constitutes a "false or fraudulent" claim under the FCA.  42 U.S.C. § 1320(a)-7b(g).

    Many of these courts have reasoned that the claims are false, and thus violate the FCA, because there is a false certification - either express or implied - as to compliance with the AKS each time a claim is submitted.

    To support a false claim, a kickback must be proven by the preponderance of the evidence.

    Defendants often argue that for there to be false claim liability, the claimed kickback, must be proved beyond a reasonable doubt, because the kickback is a criminal offense.  In an amicus brief filed in an on-going false claims case, the United States recently argued that the kickback need only by shown by the preponderance of the evidence.  It noted that under the FCA, liability, no matter the underlying theory, only has to be proved by a preponderance of the evidence. 31 U.S.C. § 3731(d) ("In any action brought under [the FCA], the United States shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence."), US ex. rel.  Pasqua v Kan-Di-Ki, LLC, 2:10-cv-00965 C.D. CA. (March 8, 2013).

    That the government stated its position in a case in which it had not intervened is significant, particularly as it supported a position on burden of proof that would be helpful to whistleblowers in other cases where the false claims asserted are based upon kickbacks.