The United States brought a two-count Complaint against Defendant, alleging that he violated the False Claims Act (“FCA”), 31 U.S.C. § 3729(a)(1)(A) (Count I), and conspired to violate the FCA, 31 U.S.C. § 3729(a)(1)(C) (Count II), by causing a pharmacy to file fraudulent claims with TRICARE, a federal health program. The Complaint alleges the pharmacy paid kickbacks to a marketing company, who in turn marketed compound medications to patients and then referred those patients to the pharmacy for fulfillment of the prescriptions for those medications. The Complaint further alleges that the pharmacy sought reimbursement for some of those prescriptions from TRICARE, thereby violating the Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b(b), and thus, the FCA. A copy of the Complaint can be found below.
Defendant sought dismissal of the Complaint on the grounds that it was founded on conclusory allegations and improper inferences. More specifically, Defendant contended that the Complaint did not sufficiently plead that he caused the presentment of false claims to TRICARE. The United States argued that the Complaint sufficiently pled that Defendant played a substantial role in causing the kickback scheme and that the submission of claims to TRICARE was a reasonably foreseeable consequence of the scheme.
The District Court agreed with the United States, and on August 4, 2021, the U.S. District Court for the Middle District of Florida, denied the Defendants’ Motion to Dismiss. A copy of the Order can be found below. The District Court found as follows:
The FCA imposes liability upon any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1) (A). Under Section 3729(a)(1)(A), liability exists either where the defendant directly submits the claims, or where the defendant “causes” another to submit the false claim. The provisions of the FCA, considered together, indicate a purpose to reach any person who knowingly assisted in causing the government to pay claims which were grounded in fraud, without regard to whether that person had direct contractual relations with the government.
The FCA defines “knowingly” as “actual knowledge,” “reckless disregard,” or “deliberate ignorance” of truth or falsity, and expressly “require[s] no proof of specific intent to defraud.” 31 U.S.C. § 3729(b) (1). A false claim is “material” if it has a natural tendency to influence, or is capable of influencing, the Government’s payment decision.
A claim that violates the AKS is per se a false or fraudulent claim under the FCA. 42 U.S.C. § 1320a-7b(g). The AKS prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending, or arranging for federally-funded medical services, including services provided under the TRICARE program. 42 U.S.C. § 1320a-7b(b). To prove an underlying violation of the AKS, the Government must show that the defendant acted “knowingly and willfully.” To act knowingly, a defendant must have acted “voluntarily and intentionally and not because of a mistake or by accident.” Willfully means that an act was committed “voluntarily and purposely” with the “intent to do something the law forbids, that is with a bad purpose, either to disobey or disregard the law.” The Government does not need to show that the defendant acted with specific intent to violate the AKS. 42 U.S.C. § 1320a-7b(h). A defendant’s “willfulness” can be (and often is) proven through circumstantial evidence.
The Eleventh Circuit recently adopted proximate causation to determine whether a defendant may be held liable under the FCA for causing the submission of false claims. Ruckh v. Salus Rehab., LLC, 963 F.3d 1089, 1107 (11th Cir. 2020). Causes are proximate where they have a natural and foreseeable tendency to produce the harm in question, directly relate to that harm, and constitute a substantial factor in bringing about the harm. See Staub v. Proctor Hosp., 562 U.S. 411, 419 (2011). A defendant may be found to have caused the submission of a claim if his conduct was (1) a “substantial factor” in inducing the submission of false claims and (2) “if the submission of claims for reimbursement was reasonably foreseeable or anticipated as a natural consequence of defendants’ conduct.” Ruckh, 963 F.3d at 1107 (quoting U.S. ex rel. Schiff v. Marder, 208 F. Supp. 3d 1296, 1312-13 (S.D. Fla. 2016)).
Here, the Complaint’s allegations against Defendant satisfied both elements of the Ruckh proximate causation test. With respect to the first element, the Complaint alleges that Defendant was a substantial factor in bringing about the false claims. As to the second element, the Complaint alleges that the submission of claims to TRICARE as a result of the kickback arrangement was reasonably foreseeable to Defendant. Furthermore, a defendant may be liable for conspiracy under the FCA when he conspired with one or more persons to have a false claim paid by the United States; one or more of the conspirators performed an act to further the conspiracy; and the United States suffered damages. The Complaint, having alleged the agreement, overt acts, and damages, adequately alleged a conspiracy.