Judge Saris of the U.S. District Court for the District of Massachusetts granted summary judgment in favor of the defendants in a qui tam action, ruling that the “but-for” causation standard should be applied when violations of the Anti-Kickback Statute (AKS) form the basis for False Claims Act (FCA) liability claims.
The case centered on allegations that the defendants—clinical laboratory MD Spine Solutions LLC (“MD Labs”) and its owners, Denis Grizelj and Matthew Rutledge—violated the AKS. Between 2017 and 2019, relator OMNI Healthcare, Inc. (“OMNI”), owned by Craig Deligdish, ordered over 600 urinary tract infection (UTI) tests from MD Labs, some of which were billed to government health programs. In 2018, OMNI filed an FCA lawsuit, alleging that MD Labs submitted fraudulent claims for UTI tests. The defendants later settled with the United States and OMNI over claims related to unnecessary presumptive urine drug tests conducted by MD Labs when confirmatory results were already available.
Despite the settlement, OMNI continued to pursue additional claims, alleging that the defendants violated the AKS by making illegal commission-based payments to independent contractor sales representatives. OMNI further contended that these violations led to the submission of false claims for polymerase chain reaction (PCR) UTI testing. However, Judge Saris dismissed these claims at summary judgment, concluding that “no reasonable jury could find on this record that the submission of claims for PCR UTI testing resulted from the alleged AKS violation, i.e., Defendants’ commission-based payments to independent-contractor sales representatives.” Omni Healthcare, Inc. v. MD Spine Sols. LLC, No. 18-CV-12558-PBS, 2025 WL 32676, at 9 (D. Mass. Jan. 6, 2025). Judge Saris found that OMNI had failed to provide evidence showing that the independent contractor status of the sales representatives influenced healthcare providers’ decisions to order PCR UTI tests from MD Labs, emphasizing that the representatives’ role was to influence referrals, regardless of if their status was employee or independent contractor.
This ruling aligns with the prevailing “but-for” causation standard adopted by the Sixth and Eighth Circuits in ongoing litigation over the appropriate causation standard for AKS violations. Judge Saris reasoned that, under 42 U.S.C. § 1320a-7b(g), a claim for payment that includes items or services resulting from an AKS violation constitutes a false or fraudulent claim under the FCA. She emphasized that the “resulting from” language in the statute requires a showing that the AKS violation was a “but-for” cause of the claim. This interpretation is consistent with basic principles of statutory construction and marks a departure from the Third Circuit’s broader standard, which requires only that one of the claims submitted for reimbursement was for services rendered in violation of the AKS. The issue is currently on appeal in the First Circuit.
This decision carries significant implications for future FCA cases, as it reinforces the need for a direct causal link between an AKS violation and a false claim in order to establish liability under the FCA. The “but-for” standard heightens the evidentiary threshold, underscoring the importance of clear and direct evidence when alleging fraudulent conduct under the statute.