Health Law Advisor

In the latest in a series of recent cases involving the “but-for” causation standard for Anti-Kickback Statute (“AKS”) claims, Judge Waverly D. Crenshaw in the U.S. District Court for the Middle District of Tennessee has dismissed United States, et al., ex rel. Nolan, et al. v. HCA Healthcare, Inc., 2025 WL 2713747 (M.D. Tenn. Sept. 22, 2025) pursuant to Rules 12(b)(6) and 9(b).

Judge Crenshaw weighed in Nolan whether the relators, co-owners of Pathologists Laboratory P.C. (“PLPC”), had plausibly alleged that: 1) defendant HCA Healthcare Inc. (“HCA”) solicited or received “remuneration” for purposes of an AKS violation; and 2) PLPC or the second lab submitted claims “resulting from” an illegal kickback for purposes of a False Claims Act (FCA). He ultimately determined that the relators had not, in fact, plausibly alleged that HCA either solicited or received “remuneration” for purposes of the AKS.

Many U.S. companies are responding to tariff pressures by rethinking supply lines. In a September 14, 2025, Wall Street Journal article, a major U.S. consumer goods manufacturer accused its competitors of dodging increased tariff costs by under-reporting the value of the goods imported into the United States. Such allegations are likely to incur scrutiny from the Department of Justice’s (DOJ’s) cross-agency Trade Fraud Task Force, which is aimed at investigating such allegations and prosecuting violations of law (see our September 5 blog post). 

In addition to consumer goods, this heightened scrutiny can also impact imported medical goods from everyday disposables to expensive imaging devices. Importers, manufacturers, and all parties involved in international supply chains, including end-users, should take notice: federal agencies and prosecutors have long used data mining to identify trends and to target investigations. Customs value data demonstrating the cost of imported goods is publicly available and can serve as an invaluable tool to help benchmark costs and conduct internal risk assessments.

This Alert explains: (a) what conduct may trigger liability; (b) how DOJ and other federal agencies use data mining to identify targets; (c) key statutes and penalties; (d) the implications of whistleblower complaints; and (e) steps companies should take to reduce risk.

On August 29, 2025, the U.S. Department of Justice (DOJ) announced the creation of a new Trade Fraud Task Force (“Task Force”).

DOJ touts this cross-agency initiative as being designed “to aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties”—promising “robust enforcement against importers and other parties who seek to defraud the United States.”

Created to further the administration’s “America First Trade Policy” announced on January 20, 2025, the Task Force will consist of civil and criminal components of the DOJ along with U.S. Customs and Border Protection and Homeland Security Investigations. It will focus on ensuring compliance with trade laws, including payment of all tariffs and duties (e.g., antidumping and countervailing duties, Section 301 tariffs, and other customs obligations). DOJ promises increased parallel civil and criminal actions under the False Claims Act (FCA), Tariff Act, and federal criminal statutes related to trade fraud and conspiracy.

In 2010, as part of the Affordable Care Act, Congress resolved a highly litigated issue about whether a violation of the Anti-Kickback Statute (AKS) can serve as a basis for liability under the federal False Claims Act (FCA). Specifically, Congress amended the AKS to state that 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].” 

This amendment, however, did not end the debate over the relationship between the AKS and the FCA. Over the last several years, multiple courts have been called upon to interpret what it means for a claim to “result from” a violation of the AKS. Courts across the country are split on the correct standard. On February 18, 2025, the U.S. Court of Appeals for the First Circuit joined the Sixth and Eight Circuits in adopting a stricter “but-for” standard of causation—while the Third Circuit has previously declared that the government must merely prove a causal connection between an illegal kickback and a claim being submitted for reimbursement.

What may have seemed like an out-of-the-blue question to the casual observer was no surprise to those who represent individuals and entities in the health care and life sciences industries: U.S. Attorney General (AG) nominee Pam Bondi was asked to share her thoughts on the constitutionality of the False Claims Act (FCA) and its qui tam provisions during her January 15, 2025, confirmation hearings.

Senator Chuck Grassley (R-IA) prefaced his questioning by noting that the FCA is “central to fighting government waste and fraud.” And since 1986—when Grassley authored amendments that modernized and strengthened the Civil War-era statute—he has been a fierce defender. Since the 1986 amendments, the FCA has brought in $78 billion for the federal government, with more than $2.9 billion recovered in fiscal year (FY) 2024. 

“Most of that is due to patriotic whistleblowers who found the fraud and brought the cases forward at their own risk,” Grassley said.

On January 6, 2025, the U.S. District Court for the District of Massachusetts granted a defendant laboratory’s motion for summary judgment in a False Claims Act (FCA)/Anti-Kickback Statute (AKS) case brought by a physician objecting to the lab’s testing practices and its use of independent contractors paid on commission. Judge Patti B. Saris held that plaintiffs in FCA cases must establish that “but for” the payment of illegal remuneration in violation of the AKS, the claim would not have been submitted. Applying the “but-for” standard, Judge Saris dismissed OMNI Healthcare Inc. v. MD Spine Solutions LLC, et al. because the record did not support that the independent contractor status of some of the lab’s sales representatives or their conduct unduly influenced any provider’s decision to purchase the product.

Adoption of “But-For” Causation in FCA Cases

There is a circuit split regarding whether FCA plaintiffs must prove that “but for” the AKS violation, a claim would not have been submitted. Requiring “but-for” causation poses a significantly greater burden for plaintiffs seeking to advance FCA claims because they must show the kickback actually affected what good, item, or service was provided.

In the U.S. Courts of Appeals for the Sixth and Eighth Circuits, the heightened “but-for” causation must be established. The Third Circuit has adopted a less rigorous standard, requiring only a showing that at least one of the claims sought reimbursement for medical care that was provided in violation of the AKS. Plaintiffs in circuits with no clear precedent often argue for the application of the more plaintiff-friendly standards of the Third Circuit and use that ambiguity as leverage in negotiating settlement agreements.

Building on attempts in recent years to strengthen the Department of Justice’s (DOJ’s) white collar criminal enforcement, on September 15, 2022, Deputy Attorney General Lisa Monaco announced revisions to DOJ’s corporate criminal enforcement policies. The new policies, and those that are in development, further attempt to put pressure on companies to implement effective compliance policies and to self-report if there are problems. Notably, the new DOJ policies set forth changes to existing DOJ policies through a “combination of carrots and sticks – with a mix of incentives and deterrence,” with the goal of “giving general counsels and chief compliance officers the tools they need to make a business case for responsible corporate behavior” through seven key areas: