On March 28, the Sixth Circuit issued an important decision on the meanings of “remuneration” and “causation” under the Anti-Kickback Statute (AKS), holding that remuneration “covers just payments and other transfers of value” and not “any act that may be valuable to another,” and that to establish False Claims Act (FCA) liability based on AKS violations, a relator or the government must prove a causal link between the alleged kickback scheme and the alleged false claim.

The Sixth Circuit joins other recent courts that have reined in broad AKS theories pursued by relators and the government.

The qui tam action, U.S. ex rel. Martin v. Hathaway, was filed by an ophthalmologist who alleged that the defendant hospital rescinded its offer of employment to her after another ophthalmologist threatened to take his referrals away from the hospital if it hired the relator and promised to continue, and even increase, his referrals to the hospital if it did not. The lawsuit alleged that the hospital’s decision not to hire the relator in return for the other ophthalmologist’s promise to continue referring patients violated the AKS, resulting in FCA violations for later claims tied to the other ophthalmologist’s referrals. The U.S. District Court for the Western District of Michigan granted the hospital’s motion to dismiss the complaint, which the Sixth Circuit upheld on appeal.

• Remuneration. The AKS penalizes offering or paying “remuneration” in return for referrals. The Sixth Circuit framed the issue as whether “remuneration” “covers just payments and other transfers of value or any act that may be valuable to another.” Interpreting the language of the AKS, the Sixth Circuit held that “remuneration” “covers just payments and other transfers of value.” As a result, it found the allegations insufficient to plead an AKS violation because the hospital’s decision not to hire the relator did not entail a payment or transfer of value to the other ophthalmologist, even if it may have benefitted him.

• Causation. The Sixth Circuit held that the 2010 amendments to the AKS—which provided that claims “resulting from” violations of the AKS may be actionable under the FCA—require a relator or the government to prove a causal link between the alleged kickback scheme and the allegedly false claim.  In reaching this conclusion, the Sixth Circuit joined the Eighth Circuit, which held last year in Cairns that FCA claims based on alleged AKS violations require proof of “but-for” causation. That is, the FCA plaintiff must prove that the claim for reimbursement would not have occurred without the alleged remuneration. 

The Sixth Circuit closed by offering the following perspective on the AKS: “All in all, reading causation too loosely or remuneration too broadly appear as opposite sides of the same problem. Much of the workaday practice of medicine might fall within an expansive interpretation of the Anti-Kickback Statute. Worse still, the statute does little to protect doctors of good intent, sweeping in the vice-ridden and virtuous alike.” The Sixth Circuit contrasted the “the workaday practice of medicine” with “genuine corruption” that would violate the AKS.