The Second Circuit dismissed Hart’s appeal, concluding that “to violate the federal AKS, a defendant must act knowing that its conduct is, in some way, unlawful.”
On June 7, 2024, a petition for writ of certiorari was filed with the Supreme Court of the United States asking that it resolve a critical legal issue pertaining to the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)): “To act ‘willfully’ within the meaning of the … Statute, must a defendant know that its conduct violates the law?”
The petition was filed by a pharmaceutical company in connection with the matter United States ex rel. Adam Hart v. McKesson Corporation.
In Hart, the petitioner, a whistleblower, alleges that a pharmaceutical company bribed certain oncology practices to purchase its cancer treatments. Both lower courts dismissed the petitioner’s Anti-Kickback Statute (AKS) claims on the grounds that the complaint failed to allege that the company knew its alleged conduct was unlawful. The petitioner alleges that the lower courts imposed too rigorous a standard upon him with regard to the intent required to state a claim for a violation of the AKS.
The AKS prohibits “knowingly and willfully” paying or receiving any remuneration in exchange for referring goods or services reimbursable by a federal healthcare program.
Nationally, courts are currently divided as to whether a defendant charged with a violation of the AKS must know that its conduct is unlawful or whether the conduct at issue simply needs to be willful, regardless as to whether the actor also knew that that conduct is unlawful.
The Second Circuit dismissed Hart’s appeal, concluding that “to violate the federal AKS, a defendant must act knowing that its conduct is, in some way, unlawful.” In his petition, however, Hart maintains that conduct violates the AKS if it is committed intentionally and is wrongful on its face. Hart argues that the Second Circuit’s standard “shows too much solicitude for a company that deliberately profiteered off cancer patients but (erroneously) contended that it had followed the letter of the [AKS].” The Second Circuit, on the other hand, reasoned that the AKS’s plain language is expansive, thus giving rise to situations in which it might encompass and punish otherwise-acceptable behavior if courts and agencies also interpret that language expansively.
Should the Supreme Court grant certiorari and hear the matter, it will determine whether violating the AKS requires knowledge that the alleged actions are unlawful, knowledge that alleged actions are wrongful or only that the alleged actions be committed willfully, regardless of whether the defendant knew that such acts are also unlawful.
If the Supreme Court grants the petition, its decision could dramatically impact the healthcare industry. A decision not obligating a plaintiff to establish that the defendant knew that its conduct was unlawful could greatly expand the circumstances in which AKS violations can be alleged, and thus must be closely monitored by entities in this industry and their counsel.
For More Information
If you have any questions about this Alert, please contact Jonathan L. Swichar, Taylor Hertzler, any of the attorneys in our White-Collar Criminal Defense, Corporate Investigations and Regulatory Compliance Group, any of the attorneys in our Health Law Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.