There are still several unsettled legal issues regarding the standards applicable to a False Claims Act (FCA) claim, such as the standard to prove causation when an FCA claim is based on a violation of the Anti-Kickback Statute (AKS). The First Circuit recently weighed in on the issue and held that “but-for” causation is the appropriate causation standard.
In addition, after 14 years of litigation, a jury in the US District Court for the Central District of Illinois found that SuperValu, Inc., is not liable under the FCA. SuperValu will have a significant impact on FCA litigation, similar to that of the US Supreme Court’s materiality decision in Universal Health Servs. v. United States ex rel. Escobar, 579 US 176, 180 (2016).
US Court of Appeals for the First Circuit
In 2010, the Department of Health and Human Services amended the AKS so that a claim for payment by a federal healthcare program that includes items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA. The courts have been faced with the task of interpreting what the words “resulting from” mean when determining whether an AKS violation is a false claim under the FCA.
The Third Circuit currently requires only a mere “link” between an alleged AKS violation and a subsequent claim. The Sixth and Eighth Circuits require a but-for causation. The First Circuit in a recent case sided with the Sixth and Eighth Circuits.
The First Circuit held that there is a “default presumption” that the phrase “resulting from” as used in the 2010 amendment to the AKS imposes a but-for causation standard. The First Circuit based its conclusion on Supreme Court precedent, stating that the Supreme Court has held that a phrase like “resulting from” “imposes. . . a requirement of actual causality.” Accordingly, the Supreme Court has stated that “it is one of the traditional background principles ‘against which Congress legislate[s]’ that a phrase such as ‘result[ing] from’ imposes a requirement of but-for causation.”
It is more likely that the Supreme Court will decide what causation standard applies with the widening split among the circuit courts.
US District Court for the Central District of Illinois
On March 4, 2025, a jury in the US District Court for the Central District of Illinois found that SuperValu’s claims to the federal government and the state of Illinois were “knowingly” false; however, the claims did not cause damages. The dismissal came after the US Supreme Court remanded the matter to the district court after holding that liability in FCA claims turns on whether a defendant subjectively believed the claims were false at the time of submission, thus rejecting the objective standard that most circuits applied.
By way of background, SuperValu offered a price-matching program whereby its pharmacies discounted generic drugs if a customer provided evidence of a cheaper price for certain drugs available at another pharmacy. However, when SuperValu reported its “usual and customary” price to federal and state governments for reimbursement, SuperValu reported the much higher retail price of the drugs and not the discounted price.
After the matter was remanded by the Supreme Court, the jury found that SuperValu knowingly submitted false claims under the subjective standard articulated by the Supreme Court. Nevertheless, the jury seemed to accept SuperValu’s argument that irrespective of what it reported to the federal and state governments, the amount the governments actually paid did not change, and thus there was no loss to the governments. SuperValu argued that the plaintiffs had to prove that the alleged false claims changed the amount the government actually paid and thus caused damages. The jury unanimously found that the plaintiffs had not proved that either the federal or the state governments suffered damages.
The district court case is Schutte et al. v. SuperValu et al., case number 3:11-cv-03290, in the US District Court for the Central District of Illinois.