Petition for Writ of Certiorari — United States, ex rel. Shannon Martin, M.D., et al., Petitioners v. Darren Hathaway, M.D., et al.

No. _________

================================================================================================================

In The

Supreme Court of the United States

---------------------------------♦--------------------------------UNITED STATES EX REL.

SHANNON MARTIN, M.D., ET AL.,

Petitioners,

v.

DARREN HATHAWAY, M.D., ET AL.,

Respondents.

---------------------------------♦--------------------------------On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

---------------------------------♦--------------------------------PETITION FOR A WRIT OF CERTIORARI

---------------------------------♦--------------------------------ALAN J. GOCHA

Counsel of Record

FLOYD E. GATES, JR.

CHRISTOPHER J. ZDARSKY

WALTER G. PELTON

BODMAN PLC

99 Monroe Ave. NW, Suite 300

Grand Rapids, MI 49503

(616) 205-4330

agocha@bodmanlaw.com

Counsel for Petitioners

August 11, 2023

================================================================================================================

i

QUESTIONS PRESENTED

The Anti-Kickback Statute (AKS) prohibits solicitation or receipt of “any remuneration (including any

kickback, bribe, or rebate) directly or indirectly, overtly

or covertly, in cash or in kind” in return for referring

an individual to a person for furnishing items or services under a Federal health care program. 42 U.S.C.

§1320a-7b(b)(1)(A).

The False Claims Act (FCA), 31 U.S.C. §3729, et seq.,

establishes criminal and civil penalties for knowingly

presenting, or causing to be presented, a false or fraudulent claim to the government for payment or approval.

FCA liability can attach when a defendant submits a

claim for payment and fails to disclose noncompliance

with a statutory requirement, such as the AKS. In

2010, Congress enacted 42 U.S.C. §1320a-7b(g), which

provides “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].”

The questions presented are:

1.

Does the term “remuneration” under the AntiKickback Statute encompass solicitation or

receipt of any kind of reward or compensation,

or is it limited to payments and other transfers of value?

2.

Does 42 U.S.C. §1320a-7b(g) heighten the

standard for establishing liability under the

False Claims Act for actions predicated on an

Anti-Kickback Statute violation?

ii

PARTIES TO THE PROCEEDINGS

Petitioners Shannon Martin and Douglas Martin

are relators under the False Claims Act for the United

States of America.

Respondents are Darren Hathaway, South Michigan Ophthalmology, P.C., and Ella E.M. Brown Charitable Circle dba Oakland Hospital.

STATEMENT OF RELATED PROCEEDINGS

All proceedings directly related to this petition include:

1.

United States of America ex rel. Martin v.

Hathaway, No. 22-1463 (6th Cir.)

2.

United States of America ex rel. Martin v.

Hathaway, No. 1:19-cv-00915 (W.D. Mich.)

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ................................

i

PARTIES TO THE PROCEEDINGS ...................

ii

STATEMENT OF RELATED PROCEEDINGS ....

ii

TABLE OF CONTENTS ......................................

iii

TABLE OF AUTHORITIES .................................

v

PETITION FOR WRIT OF CERTIORARI ...........

1

OPINIONS BELOW.............................................

4

JURISDICTION ...................................................

4

STATUTORY PROVISIONS INVOLVED ...........

4

STATEMENT OF THE CASE..............................

4

1.

Statutory Background ...............................

4

2.

Factual Background and Procedural

History .......................................................

7

REASONS FOR GRANTING THE PETITION ..... 11

I.

The Sixth Circuit’s Construction of

“Remuneration” is Plainly Contrary to the

Text of the AKS and Defies Congress’s

Intent ......................................................... 11

II.

The Court Should Grant Certiorari to

Resolve a Circuit Split and Correct the

Sixth Circuit’s Atextual Narrowing of the

False Claims Act ........................................ 17

CONCLUSION..................................................... 21

iv

TABLE OF CONTENTS—Continued

Page

APPENDIX

Appendix A: Court of Appeals Opinion and

Judgment (March 28, 2023) ........................... App. 1a

Appendix B: District Court Opinion and Order

(May 11, 2022) .............................................. App. 28a

Appendix C: District Court Judgment (May 11,

2022) ............................................................. App. 52a

Appendix D: Court of Appeals Order Denying

Petition for Rehearing En Banc (May 16,

2023) ............................................................. App. 53a

Appendix E: 31 U.S.C. § 3729 and 42 U.S.C.

§ 1320a-7b .................................................... App. 55a

v

TABLE OF AUTHORITIES

Page

CASES

Advocate Health Care Network v. Stapleton, 581

U.S. 468 (2017) ........................................................13

Bilski v. Kappos, 561 U.S. 593 (2010) .........................13

Handley v. State, 102 P.2d 947 (Okla. Crim. App.

1940) ........................................................................14

Johnson v. City of Shelby, 574 U.S. 10 (2014) ............20

People ex rel. Dickinson v. Van De Carr, 87 A.D.

386 (N.Y. App. Div. 1903) .........................................14

Pfizer, Inc. v. HHS, 42 F.4th 67 (2d Cir. 2022) ............12

Scheidler v. NOW, Inc., 537 U.S. 393 (2003) ...............13

State v. Ellis, 33 N.J.L. 102 (N.J. 1868) ......................14

State v. Fielder, 308 N.W.2d 56 (Iowa 1982) ..............15

State v. Meysenburg, 71 S.W. 229 (Mo. 1902) .............14

United States ex rel. Cairns v. D.S. Med. LLC, 42

F.4th 828 (8th Cir. 2022) ............................... 3, 19, 20

United States ex rel. Fesenmaier v. Cameron-Ehlen Grp., Inc., 2023 U.S. Dist. LEXIS 788 (D.

Minn. Jan. 4, 2023)..................................................20

United States ex rel. Greenfield v. Medco Health

Sols., Inc., 880 F.3d 89 (3d Cir. 2018) ............ 2, 18, 19

United States ex rel. Hutcheson v. Blackstone

Med., Inc., 647 F.3d 377 (1st Cir. 2011) .............. 5, 17

United States ex rel. Kester v. Novartis Pharm.

Corp., 41 F. Supp. 3d 323 (S.D.N.Y. 2014)........... 6, 18

vi

TABLE OF AUTHORITIES—Continued

Page

United States ex rel. McNutt v. Haleyville Med.

Supplies, Inc., 423 F.3d 1256 (11th Cir. 2005) ... 2, 5, 17

United States ex rel. Thomas v. Bailey, 2008 WL

4853630 (E.D. Ark. Nov. 6, 2008) ..............................6

United States ex rel. Wilkins v. United Health

Grp., Inc., 659 F.3d 295 (3d Cir. 2011) .................. 1, 5

United States v. Acme Process Equip. Co., 385

U.S. 138 (1966) ..........................................................1

United States v. Menasche, 348 U.S. 528 (1955) ........13

United States v. Patel, 778 F.3d 607 (7th Cir.

2015) .............................................................. 5, 12, 16

Universal Health Servs. v. United States ex rel.

Escobar, 579 U.S. 176 (2016) .......................... 1, 6, 18

Wis. Cent. Ltd. v. United States, 138 S. Ct. 2067

(2018) .......................................................................12

STATUTES, RULES AND REGULATIONS

15 U.S.C. §78dd-1(a) ...................................................16

18 U.S.C. §201(b)(2) ....................................................16

18 U.S.C. §666(a)(2) ....................................................16

26 U.S.C. §3121(a) .......................................................12

26 U.S.C. §3231(e)(1) ...................................................12

28 U.S.C. §1254(1) .........................................................4

31 U.S.C. §3729 .............................................................4

31 U.S.C. §3729(a)(1) .............................................. 2, 17

vii

TABLE OF AUTHORITIES—Continued

Page

31 U.S.C. §3729(a)(1)(A) ...............................................1

31 U.S.C. §3729(a)(1)(B) ...............................................5

31 U.S.C. §3729(a)(3) .............................................. 2, 17

31 U.S.C. §3730(a) .........................................................1

31 U.S.C. §3730(b)(1) ....................................................1

41 U.S.C. §8701 ...........................................................16

42 U.S.C. §1301(b) .......................................................13

42 U.S.C. §1320a-7a ......................................................6

42 U.S.C. §1320a-7b ......................................................4

42 U.S.C. §1320a-7b(b)(1) .............................................5

42 U.S.C. §1320a-7b(b)(1)(A) ........................................1

42 U.S.C. §1320a-7b(b)(1)(a) .......................................11

42 U.S.C. §1320a-7b(b)(2) .............................................5

42 U.S.C. §1320a-7b(g) ......................... 2, 3, 6, 10, 18-21

Ala. Code §13A-10-121(a) ...........................................15

Cal. Pen. Code §7(6) ....................................................15

False Claims Act ............................ 1-3, 5-7, 9, 10, 17-21

Foreign Corrupt Practices Act....................................16

Idaho Code §18-101(6) ................................................15

Medicare-Medicaid Anti-Fraud and Abuse

Amendments, Pub. L. No. 95-142, §4(a), 91

Stat. 1175, 1180 (1977) ...........................................17

Mich. Comp. Laws §400.601 .........................................9

viii

TABLE OF AUTHORITIES—Continued

Page

N.M. Stat. §30-24-2 .....................................................15

OIG Anti-Kickback Provisions, 56 Fed. Reg.

35,952, 35,958 (July 29, 1991) ................................17

Social Security Amendments of 1972, Pub. L.

No. 92-603, tit. II, §242(b), (c), 86 Stat. 1329,

1419-1420 ................................................................16

OTHER AUTHORITIES

155 Cong. Rec. S10,853 .................................................6

155 Cong. Rec. S10,854 .................................................6

Black Law’s Dictionary 239 (4th ed. 1968) ................14

Press Release, U.S. Dep’t of Just., Justice Department Takes Action Against COVID-19

Fraud (Mar. 26, 2021), https://perma.cc/P7BPAPY5 ..........................................................................6

Press Release, U.S. Dep’t of Just., Justice Department’s False Claims Act Settlements and

Judgments Exceed $5.6 Billion in Fiscal Year

2021 (Feb. 1, 2022), https://perma.cc/6S99KQDK ........................................................................7

The American Heritage Dictionary of the English

Language 164 (1st ed. 1978) ...................................14

1

PETITION FOR WRIT OF CERTIORARI

The FCA imposes liability on anyone 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). FCA actions may be brought by the Attorney General or by a private qui tam relator in the

name of the United States. Id. §3730(a), (b)(1). An FCA

claim can be predicated on a violation of the AKS,

which prohibits medical providers from making referrals “in return for” “remuneration.” 42 U.S.C. §1320a7b(b)(1)(A).

The AKS plays a critical role in protecting against

widespread abuses in the medical industry—ensuring

the government only pays for care unburdened by financial conflicts. Claims resulting from an illegal kickback or bribe are deemed false under the FCA because

“[t]he Government does not get what it bargained for

when a defendant is paid . . . for services tainted by a

kickback.” United States ex rel. Wilkins v. United

Health Grp., Inc., 659 F.3d 295, 314 (3d Cir. 2011), abrogated on other grounds by Universal Health Servs.,

Inc. v. United States, 579 U.S. 176 (2016); see also

United States v. Acme Process Equip. Co., 385 U.S. 138,

146 (1966) (“This public policy requires that the United

States be able to rid itself of a prime contract tainted

by kickbacks.”). The Sixth Circuit’s holding undermines this essential statutory framework in two important ways.

First, the Sixth Circuit’s opinion narrowly construes the term “remuneration” to be limited to either

2

a payment or a change to the value or cost of a service.

Pet. App. 17a. This interpretation reads the term

“bribe” out of the statute and creates an end-around to

liability under the AKS. At least in the Sixth Circuit,

medical providers can trade referrals for economic

gain—at the expense of the government and patients—

so long as there is no direct exchange.

Second, the Sixth Circuit improperly held an AKS

violation can only serve as a predicate act under the

FCA when there is proof of a but-for causal connection

between a false claim and a specific AKS violation. Cf.

Pet. App. 19a. This reasoning conflicts with the text

and purpose of §1320a-7b(g), as well as the AKS and

FCA generally. Courts have long held that FCA actions

may be predicated on AKS violations. See, e.g., United

States ex rel. McNutt v. Haleyville Med. Supplies, Inc.,

423 F.3d 1256, 1259 (11th Cir. 2005) (“The violation of

the regulations and the corresponding submission of

claims for which payment is known by the claimant not

to be owed makes the claims false under sections

3729(a)(1) and (3).”). In 2010, Congress added §1320a7b(g) to the AKS, which provides “a claim that includes

items or services resulting from a violation of this section constitutes a false or fraudulent claim [under the

FCA].” While there is disagreement amongst circuits

as to the proper interpretation of the amendment, the

Sixth Circuit adopted the most restrictive interpretation to date.

The Third Circuit held the 2010 amendment clarified but did not alter existing law. See United States

ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d

3

89, 95 (3d Cir. 2018). The Third Circuit declined to

impose any additional requirements for FCA claims

predicated on AKS violations. Comparably, the Eighth

Circuit held the amendment “create[d] a but-for causal

requirement between an anti-kickback violation and

the ‘items or services’ included in the claim” under

§1320a-7b(g). United States ex rel. Cairns v. D.S. Med.

LLC, 42 F.4th 828, 831 (8th Cir. 2022). Nevertheless,

the Eighth Circuit recognized FCA claims can be

brought under pre-amendment theories. Id. at 837 (remanding case for a new trial).

The Sixth Circuit concurred with the Eighth Circuit as to the interpretation of §1320a-7b(g). The Sixth

Circuit, however, went significantly further—imposing

a but-for cause requirement for all FCA actions predicated on AKS violations. In the Sixth Circuit’s opinion,

“[w]hen it comes to violations of the [AKS], only submitted claims ‘resulting from’ the violation are covered

by the [FCA].” Pet. App. 19a (emphasis added). If this

notion is ratified, medical providers can accept a bribe

in violation of the AKS but still avoid liability under

the FCA so long as the government cannot prove an

explicit connection between an illicit item or service

with a particular bribe.

The government’s ability to protect itself from

false health care claims will vary drastically by jurisdiction until this Court intervenes to provide clarity to

the rule. This Court should grant certiorari and reverse.

---------------------------------♦---------------------------------

4

OPINIONS BELOW

The Sixth Circuit’s opinion is reported at 63 F.4th

1043 and reproduced at Pet. App. 1a-26a. The Sixth

Circuit’s order denying rehearing en banc is unreported and is reproduced at Pet. App. 53a-54a. The district court’s opinion and order is unreported and

reproduced at Pet. App. 28a-51a.

---------------------------------♦---------------------------------

JURISDICTION

The Sixth Circuit issued its opinion on March 28,

2023. Pet. App. 1a-26a. Petitioner filed a timely petition

for rehearing en banc, which was denied on May 16,

2023. Pet. App. 53a-54a. This Court has jurisdiction

under 28 U.S.C. §1254(1).

---------------------------------♦---------------------------------

STATUTORY PROVISIONS INVOLVED

The relevant statutory provisions are reproduced

at Pet. App. 55a-58a: 31 U.S.C. §3729 and 42 U.S.C.

§1320a-7b.

---------------------------------♦---------------------------------

STATEMENT OF THE CASE

1.

Statutory Background

1. The AKS imposes criminal liability on any

person who (1) “knowingly and willfully solicits or receives any remuneration (including any kickback,

5

bribe, or rebate) . . . in return for referring an individual to a person for the furnishing or arranging for the

furnishing of any item or service for which payment

may be made in whole or in part under a Federal

health care program”; or (2) “knowingly and willfully

offers or pays any remuneration . . . to any person to

induce such person . . . to refer an individual to a person for the furnishing or arranging for the furnishing

of any item or service for which payment may be made

in whole or in part under a Federal health care program.” 42 U.S.C. §1320a-7b(b)(1), (2).

The AKS protects patients “from doctors whose

medical judgments might be clouded by improper financial considerations.” United States v. Patel, 778

F.3d 607, 612 (7th Cir. 2015). Courts have also recognized that “[t]he Government does not get what it bargained for when a defendant is paid by [Medicare or

Medicaid] for services tainted by a kickback,” whether

or not it can show that a conflict-free provider would

have given the same care. Wilkins, 659 F.3d at 314.

Thus, medical providers who violate the AKS are typically liable under the FCA. See, e.g., id. at 313; United

States ex rel. Hutcheson v. Blackstone Med., Inc., 647

F.3d 377, 392-394 (1st Cir. 2011); McNutt, 423 F.3d at

1259.

Liability can be established in multiple ways. For

instance, when a provider certifies a false statement

expressly stating that it has complied with the AKS. 31

U.S.C. §3729(a)(1)(B). Even without an express certification, a provider can be liable if it “makes specific

representations about the goods or services provided”

6

but “fail[s] to disclose noncompliance with material

statutory, regulatory, or contractual requirements.”

Universal Health, 579 U.S. at 190.

In 2010, Congress amended the AKS, reaffirming

the notion that AKS violations are actionable under

the FCA. The amendment states, “[i]n addition to” the

AKS’s criminal penalties and the remedies available

under §1320a-7a, any “claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of ” the

FCA. 42 U.S.C. §1320a-7b(g). The amendment was

meant to “strengthen[ ] whistleblower actions based on

medical care kickbacks” by overruling a then-recent

decision—United States ex rel. Thomas v. Bailey, 2008

WL 4853630 (E.D. Ark. Nov. 6, 2008)—which held a

hospital’s reimbursement claims for surgeries were

not false, even though the surgeon had violated the

AKS, because the hospital had not itself violated the

AKS or been aware of the surgeon’s violation. 155

Cong. Rec. S10,853 (daily ed. Oct. 28, 2009) (Sen. Kaufman). The amendment makes clear “that all claims resulting from illegal kickbacks are ‘false or fraudulent,’

even when the claims are not submitted directly by the

wrongdoers themselves.” Id.; see 155 Cong. Rec.

S10,854 (Sen. Leahy, making the same point); see also

United States ex rel. Kester v. Novartis Pharm. Corp.,

41 F. Supp. 3d 323, 333 (S.D.N.Y. 2014) (discussing this

legislative history).

2. The FCA “is the government’s primary civil

tool to redress false claims for federal funds and property involving a multitude of government operations

7

and functions.” Press Release, U.S. Dep’t of Just., Justice Department Takes Action Against COVID-19

Fraud (Mar. 26, 2021), https://perma.cc/P7BP-APY5.

The government has recovered over $70 billion since

Congress strengthened the FCA in 1986, including

over $5.6 billion in 2021. See Press Release, U.S. Dep’t

of Just., Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal

Year 2021 (Feb. 1, 2022), https://perma.cc/6S99-KQDK.

Most of these recoveries involve health care fraud—

but the FCA also protects “a multitude of other government operations and functions.” The FCA “helps to

support our military and first responders by ensuring

that government contractors provide equipment that

is safe, effective and cost efficient.” Id. It safeguards

“American businesses and workers by promoting compliance with customs laws, trade agreements, visa requirements and small business protections.” Id. And it

protects “other critical government programs ranging

from the provision of disaster relief funds to nutrition

benefits for needy families.” Id.

2.

Factual Background and Procedural History

1. Respondent Ella E.M. Brown Charitable Circle dba Oaklawn Hospital (Oaklawn) is a hospital located in Marshall, Michigan. Pet. App. 4a. Respondent

South Michigan Ophthalmology, P.C. (South Michigan)

is the only nearby ophthalmology practice. Id. Respondent Dr. Darren Hathaway (Dr. Hathaway) is the

sole owner of South Michigan, and Petitioner Dr.

Shannon Martin (Dr. Martin) was an employee of

8

South Michigan. Id. Dr. Martin’s husband, Petitioner

Douglas Martin, served as the Director of Finance for

Oaklawn. Id.

Oaklawn does not have an ophthalmology practice, and Oaklawn and South Michigan frequently

cross-refer patients. See id. at 4a. In 2018, Hathaway

began negotiating a merger with Lansing Ophthalmology, P.C. (LO)—a merger that would have resulted in

Dr. Martin’s termination. See id. at 4a. In October

2018, Oaklawn extended Dr. Martin an offer of employment contingent on the Board’s approval. Id. After

hearing about the offer, Dr. Hathaway met with Oaklawn’s CEO and several other board members (and

sent a letter) to block Dr. Martin’s hiring. Id. 5a. Dr.

Hathaway stated that the hiring of Dr. Martin would

be the “death knell” for his practice. Id. As leverage,

Dr. Hathaway told Oaklawn that, post-merger, he expected an increased volume of referrals and that he

would “pull out his cases and take them elsewhere” if

Oaklawn hired Dr. Martin. Id. at 5a-6a.

Several board members expressed concern over

the potential loss of business from Dr. Hathaway and

South Michigan, and so the Board inevitably voted to

withdraw Dr. Martin’s offer of employment. Id. at 6a.

Oaklawn’s Chairman of the Board personally called

Dr. Hathaway to inform him of the decision. Id. Another board member texted Hathaway, indicating gratitude for the continued “partnership” and that she was

“looking forward to increased surgical volume.” Id.

South Michigan’s merger with LO fell through, and

Dr. Martin opened her own practice. See id.

9

2. Petitioners filed a qui tam action in the Western District of Michigan under the FCA and Michigan’s Medicaid False Claims Act, Mich. Comp. Laws

§400.601. Id. Petitioners alleged that Respondents engaged in an illegal referral scheme under the FCA and

AKS. See id. The district court dismissed the initial

complaint1 (with leave to amend) because Petitioners

did not specifically identify a false claim submitted to

the government. See id. at 7a. Petitioners filed an

amended complaint identifying 22 claims. See id. Respondents filed another motion to dismiss. See id. The

district court granted the motion, rejecting the federal

cause of action on the merits and declining to exercise

supplemental jurisdiction over the state cause of action. Id.

Petitioners appealed to the Sixth Circuit, and the

Sixth Circuit affirmed. Id. at 27a. Petitioners requested rehearing en banc, which was denied. Id. at

53a. This petition followed.

3. The Sixth Circuit affirmed the district court

decision on two grounds. First, the Sixth Circuit held

that the definition of remuneration under the AKS is

limited to “payments and other transfers of value” and

does not cover the quid-pro-quo exchange of an action—even if having economic value to the referrer—

for a referral. See id. at 9a, 18a. The Sixth Circuit concluded that remuneration narrowly requires either a

1

Technically, the “initial complaint” identified by the Sixth

Circuit was the first amended complaint. However, the distinction

is not relevant to this appeal.

10

payment or change to the value or cost of a service. Id.

at 17a. The Sixth Circuit also found a lack of remuneration because, in its opinion, the decision to withdraw

Dr. Martin’s tentative offer of employment merely preserved the status quo. See id. at 18a.

Second, the Sixth Circuit held “[n]either Oaklawn

nor Dr. Hathaway submitted claims for Medicare or

Medicaid reimbursement for ‘items or services resulting from the violation’ of the [AKS].” Id. at 19a (citing

§1320a-7b(g)). In reaching this conclusion, the Sixth

Circuit joined the Eighth Circuit in holding that the

“resulting from” language in §1320a-7b(g) establishes

a but-for cause barrier to criminal and civil liability.

See id. at 20a. More specifically, it held that, for each

alleged false or fraudulent claim, there must be traceable proof that it would not have been submitted to the

government but-for the solicitation or receipt of remuneration. See id. Unlike the Eighth Circuit, however,

the Sixth Circuit did not distinguish between a

§1320a-7b(g) theory and other theories of liability. See

id. at 19a (“When it comes to violations of the [AKS],

only submitted claims ‘resulting from’ the violation are

covered by the [FCA].” (emphasis added)).

In this case, the Sixth Circuit found that but-for

causation was lacking because, in its opinion, the identified claims would have been submitted regardless of

“whether the underlying business dispute occurred or

not” as “Oaklawn was the only hospital in Marshall,

and South Michigan was the only local ophthalmology

group.” Id. at 21a. “When Oaklawn decided not to establish an internal ophthalmology line at the hospital,

11

the same relationship continued just as it always had.”

Id. at 20a. Notably, under its exacting rule, the Sixth

Circuit did not find it necessary to consider whether

the at-issue referrals would have been made if Dr.

Hathaway made good on his threat to “pull” all work

from Oaklawn.

---------------------------------♦---------------------------------

REASONS FOR GRANTING THE PETITION

I.

The Sixth Circuit’s Construction of “Remuneration” is Plainly Contrary to the Text of

the AKS and Defies Congress’s Intent

1. By limiting the term remuneration under the

AKS to money and transfers of value, the Sixth Circuit

read the term “bribe” out of the statute and violated

well-established canons of statutory interpretation.

This far-reaching and consequential error should be

corrected. The AKS prohibits the knowing or willful solicitation or receipt of “any remuneration (including

any kickback, bribe, or rebate) directly or indirectly,

overtly or covertly, in cash or in kind . . . in return for

referring an individual to a person for the furnishing

or arranging for the furnishing of any item or service

for which payment may be made in whole or in part

under a Federal health care program.” 42 U.S.C.

§1320a-7b(b)(1)(a). The Sixth Circuit’s opinion guts the

AKS by limiting the definition of remuneration to cash

payments and transfers of value (money and assets).

See Pet. App. 9a, 18a. This interpretation fails to give

remuneration its plain and ordinary meaning and conflicts with the text of the AKS.

12

This Court has previously stated: “[o]f course, ‘remuneration’ can encompass any kind of reward or compensation, not just money.” Wis. Cent. Ltd. v. United

States, 138 S. Ct. 2067, 2070 (2018) (Gorsuch, J.). In

consideration for Dr. Hathaway’s continued and increased referrals, Oaklawn rewarded and compensated Dr. Hathaway by withdrawing Dr. Martin’s

tentative offer of employment. The remuneration Oaklawn gave to Dr. Hathaway was more valuable than a

truckload of cash. Indeed, in Dr. Hathaway’s own

words, it would have been the “death knell” for his

practice if Oaklawn hired Dr. Martin. App. Pet. 5a.

There is no question that the remuneration had value

and is precisely the type of transaction the AKS aims

to prevent. Medical referrals should be driven by medical judgment and not by profit motivation. See Patel,

778 F.3d at 612 (recognizing the difficulty of ascertaining what judgments a provider would have made in the

absence of the kickback or bribe).

In Wisconsin Central, the Court held that the

phrase “money remuneration” in the Railroad Retirement Tax Act, see 26 U.S.C. §3231(e)(1), means a currency issued by a recognized authority as a medium of

exchange and does not include stock. 138 S. Ct. at

2070-71. The Court reasoned that—unlike the phrase

“all remuneration” in the Federal Insurance Contributions Act, see 26 U.S.C. §3121(a)—“the adjective

‘money’ modifies the noun ‘remuneration.’ ” Id.

The term “remuneration” in the AKS is not modified by the term “money.” It is used expansively. See

Pfizer, Inc. v. HHS, 42 F.4th 67, 75 (2d Cir. 2022) (“[T]he

13

plain meaning of ‘remuneration’ is clearly broader

than a kickback, bribe, or rebate: ‘Remuneration’

means ‘[p]ayment; compensation, esp[ecially] for a service that someone has performed,’ and the modifier

‘any’ further broadens the scope of the phrase.”). Indeed, by expressly listing “bribe” as a category of remuneration, Congress chose to “includ[e]” it within the

intended scope of the AKS. Cf. 42 U.S.C. §1301(b) (“The

term ‘includes’ and ‘including’ when used in a definition contained in this chapter shall not be deemed to

exclude other things otherwise within the meaning of

them defined.”). Any defensible definition of remuneration under the AKS must, therefore, encapsulate the

term “bribe.”

“The cardinal principle of statutory construction is

to save and not to destroy.” United States v. Menasche,

348 U.S. 528, 538 (1955). Statutes should be construed

“to give effect, if possible, to every clause and word of a

statute. . . .” Id. The surplusage canon also creates a

“presumption that each word Congress uses is there

for a reason.” Advocate Health Care Network v. Stapleton, 581 U.S. 468, 477 (2017). Under well-established

canons of statutory construction, the term “bribe”

should be given its plain and common-law meaning.

See Bilski v. Kappos, 561 U.S. 593, 603 (2010) (“Unless

otherwise defined, words will be interpreted as taking

their ordinary, contemporary, common, meaning.”);

Scheidler v. NOW, Inc., 537 U.S. 393, 402 (2003) (“Absent contrary direction from Congress, [courts] begin

[their] interpretation of statutory language with the

general presumption that a statutory term has its

14

common-law meaning.”). Contemporaneous definitions

of the term “bribe,” in both legal and lay dictionaries,

include the solicitation or receipt of anything of value.

See Black Law’s Dictionary 239 (4th ed. 1968) (“The offering, giving, receiving, or soliciting of any thing of

value to influence action as official or in discharge of

legal or public duty.”); The American Heritage Dictionary of the English Language 164 (1st ed. 1978) (“Anything, such as money, property, or a favor, offered or

given to someone in position of trust to induce him to

act dishonestly.”). These definitions are consistent with

the common law understanding of bribery, which includes the solicitation or receipt of anything of value.

See, e.g., State v. Ellis, 33 N.J.L. 102, 106-107 (N.J.

1868) (“[W]hether the offer of a bribe was before or after the application in due course of proceeding, had

been embodied in an ordinance or resolution is immaterial. The offer of anything of value in corrupt payment or reward for any official act, legislative,

executive, or judicial, to be done, is an indictable offence at the common law.”); State v. Meysenburg, 71

S.W. 229 (Mo. 1902) (“Bribery is the voluntary giving

or receiving of anything of value in corrupt payment

for an official act, done or to be done.”); see also People

ex rel. Dickinson v. Van De Carr, 87 A.D. 386 (N.Y. App.

Div. 1903) (Bribery is defined as “the giving, offering or

receiving of anything of value, or any valuable service,

intended to influence one in the discharge of a legal

duty.”); Handley v. State, 102 P.2d 947, 951 (Okla. Crim.

App. 1940) (“Almost anything may serve as a bribe so

long as it is of sufficient value in the eyes of the person

bribed to influence his official conduct; it is not even

15

necessary that the thing have a value at the time when

it is offered or promised. The acceptance by a public

officer of a promise to take money in the future for influencing his present official act constitutes bribery.”);

State v. Fielder, 308 N.W.2d 56, 58 (Iowa 1982) (defining bribe as “an offer of anything of value or benefit to

induce another act improperly”).

Numerous state statutes also define “bribe” to include “anything of value.” See, e.g., Ala. Code §13A-10121(a) (“A person commits the crime of bribing a witness if he offers, confers or agrees to confer any thing

of value upon a witness or a person he believes will be

called as a witness in any official proceeding. . . .”); Cal.

Pen. Code §7(6) (“The word ‘bribe’ signifies anything of

value or advantage, present or prospective, or any

promise or undertaking to give any, asked, given, or accepted, with a corrupt intent to influence, unlawfully,

the person to whom it is given, in his or her action,

vote, or opinion, in any public or official capacity.”);

Idaho Code §18-101(6) (“The word ‘bribe,’ signifies

anything of value or advantage, present or prospective,

or any promise or it is given, in his action, vote or opinion, in any public or official capacity.”); N.M. Stat.

§30-24-2 (“Demanding or receiving bribe by public officer or public employee consists of any public officer or

public employee soliciting or accepting, directly or indirectly, anything of value, with intent to have his

decision or action on any question, matter, cause, proceeding or appointment influenced thereby, and which

by law is pending or might be brought before him in

his official capacity.”).

16

Unsurprisingly, federal statutes are no different.

Under federal bribery law, a public official accepts a

bribe when she “corruptly . . . receives . . . anything of

value . . . in return for . . . being influenced in the performance of any official act.” 18 U.S.C. §201(b)(2). As it

relates to programs receiving federal funds, bribery includes instances where a person “corruptly gives, offers, or agrees to give anything of value to any person,

with intent to influence or reward an agent of an organization or State, local or Indian tribal government,

or any agency thereof. . . .” 18 U.S.C. §666(a)(2); see also

15 U.S.C. §78dd-1(a) (defining bribe under the Foreign

Corrupt Practices Act to include “anything of value”).

Cf. 41 U.S.C. §8701 (Kickback is defined as “money, fee,

commission, credit, gift, gratuity, thing of value, or

compensation of any kind. . . .”). The Sixth Circuit’s

opinion is simply contrary to the text of the AKS under

any reasonable interpretation.

2. The Sixth Circuit’s reading is also repugnant

to the legislative history of the AKS. The AKS protects

patients “from doctors whose medical judgments

might be clouded by improper financial considerations.” Patel, 778 F.3d at 612. As originally enacted,

the AKS did not refer to “remuneration” and only applied to “kick-back[s],” “bribe[s],” or “rebate[s] of any

fee or charge.” Social Security Amendments of 1972,

Pub. L. No. 92-603, tit. II, §242(b), (c), 86 Stat. 1329,

1419-1420. Congress, however, amended the statute to

expand the scope beyond kickbacks and bribes to “any

remuneration (including any kickback, bribe, or rebate)” that is offered, paid, solicited, or received “directly or indirectly, overtly or covertly, in cash or in

17

kind.” Medicare-Medicaid Anti-Fraud and Abuse

Amendments, Pub. L. No. 95-142, §4(a), 91 Stat. 1175,

1180 (1977). The amendments were intended to

broaden the reach of the AKS, not limit it. See OIG

Anti-Kickback Provisions, 56 Fed. Reg. 35,952, 35,958

(July 29, 1991) (“Congress’s intent in placing the term

‘remuneration’ in the statute in 1977 was to cover the

transferring of anything of value in any form or manner whatsoever.”). Thus, the Sixth Circuit’s narrow

reading of the term “remuneration” cannot be reconciled with the commonly understood meaning of the

term “bribe” or Congress’s intent to expand the scope

of the AKS.

II. The Court Should Grant Certiorari to Resolve a Circuit Split and Correct the Sixth

Circuit’s Atextual Narrowing of the False

Claims Act

1. Courts have long held that AKS violations

give rise to actions under the FCA. See, e.g., McNutt,

423 F.3d at 1259 (Pryor, J.) (“The violation of the regulations and the corresponding submission of claims for

which payment is known by the claimant not to be

owed makes the claims false under sections 3729(a)(1)

and (3).”); Hutcheson, 647 F.3d at 379 (Lynch, C.J.)

(“[I]n alleging that the hospital and physician claims

represented compliance with a material condition of

payment that was not in fact met, [plaintiff ] states a

claim under the FCA that the hospital and physician

claims for payment at issue in this case were materially false or fraudulent.”). The Court recently affirmed

18

this notion in a unanimous opinion. Universal Health

Servs. v. United States ex rel. Escobar, 579 U.S. 176, 181

(2016) (“[FCA] liability can attach when the defendant

submits a claim for payment that makes specific representations about the goods or services provided, but

knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory, or contractual requirement.”).

In 2010, Congress passed an amendment to expressly provide for FCA actions based on AKS violations. 42 U.S.C. §1320a-7b(g) provides, “[i]n addition to

the penalties provided for in this section or section

1128A, a claim that includes items or services resulting from a violation of this section constitutes a false

or fraudulent claim for purposes of subchapter III of

chapter 37 of title 31, United States Code.” The Third

Circuit explained the amendment clarified but did not

alter existing law. United States ex rel. Greenfield v.

Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018). Id.

at 95. The Third Circuit rejected the argument that the

“resulting from” language in the AKS imposes a butfor cause standard for FCA claims. Id. The panel reasoned such an interpretation would produce incongruous results—i.e., where a defendant could be convicted

for criminal conduct under the AKS but insulated from

civil liability under the FCA. Id. at 96. Congress’s clear

intent was “to ensure that all claims resulting from

illegal kickbacks are considered false claims for the

purpose of civil actions under the [FCA].” Id. (emphasis

in original). The Southern District of New York

reached a similar conclusion. United States ex rel.

19

Kester v. Novartis Pharm. Corp., 41 F. Supp. 3d 323,

332 (S.D.N.Y. 2014) (“Congress gave absolutely no indication that it intended to amend the definition of the

word ‘false’ in the FCA, or to limit the FCA’s reach

where kickbacks were concerned.”).

Reaching a contrary result, the Eighth Circuit

concluded §1320a-7b(g) “creates a but-for causal requirement between an anti-kickback violation and the

‘items or services’ included in the claim.” United States

ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 831 (8th

Cir. 2022). The court briefly acknowledged Greenfield,

but took issue with its heavy reliance on legislative

history. Id. at 836. Nevertheless, the Eighth Circuit

emphasized that its ruling was narrow, stating: “[w]e

do not suggest that every case arising under the [FCA]

requires a showing of but-for causation. Rather, when

a plaintiff seeks to establish falsity or fraud through

the 2010 amendment, it must prove that a defendant

would not have included particular ‘items or services’

but for the illegal kickbacks.” Id. The holding in Cairns

was clearly based on the fact that “the government’s

sole theory at trial hinged on the 2010 amendment, the

district court never instructed the jury on but-for causation, and there is no telling what the jury would have

done if it had, we remand for a new trial.” Id. at 837

(emphasis added).

The Sixth Circuit’s opinion went significantly further than the Eighth Circuit’s narrow holding.2

2

The breadth of the Sixth Circuit’s holding is particularly

concerning given that its broad-sweeping reasoning was applied

20

Relying on Cairns, the Sixth Circuit interpreted “resulting from” in the 2010 amendment as requiring butfor causation for all AKS-related FCA claims. Pet. App.

19a (“When it comes to violations of the [AKS], only

submitted claims ‘resulting from’ the violation are covered by the [FCA].” (emphasis added)). The opinion offers no explanation or justification for extending this

standard—something the panel in Cairns was careful

not to do.

The 2010 amendment was never intended to displace pre-amendment law. Indeed, a recent district

court decision within the Eighth Circuit relied on this

important distinction. As explained by the district

court, “[n]othing in the text of the 2010 Amendment

indicates that it was intended to supplant or overrule

existing case law that allowed parties to pursue an

FCA claim based on a violation of the AKS when that

party could demonstrate that the AKS violation was

materially false.” United States ex rel. Fesenmaier v.

Cameron-Ehlen Grp., Inc., 2023 U.S. Dist. LEXIS 788,

at *7 (D. Minn. Jan. 4, 2023).

2. The Sixth Circuit’s opinion erroneously construes §1320a-7b(g). The phrase “resulting from” must

be read in context, not in isolation. Its decision overly

fixates on the phrase “resulting from” without considering the link between the broader scheme and the

at the pleading stage. See Johnson v. City of Shelby, 574 U.S. 10,

12 (2014) (explaining that a plaintiff must plead facts sufficient

to show that her claim has substantive plausibility and that it is

unnecessary to set out a legal theory for the plaintiff ’s claim for

relief ).

21

submitted false claim. A “violation” of the AKS is not

always a singular act and can include a broader

scheme with multiple subparts—e.g., a bribe, a referral, and the furnishing of medical items or services. To

the extent “resulting from” invokes but-for causation,

it should be analyzed in view of the entire violation. In

short, “[a] claim that includes items or services resulting from a [tainted referral] constitutes a false or

fraudulent claim for purposes of [the FCA].” 42 U.S.C.

§1320a-7b(g).

---------------------------------♦---------------------------------

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

ALAN J. GOCHA

Counsel of Record

FLOYD E. GATES, JR.

CHRISTOPHER J. ZDARSKY

WALTER G. PELTON

BODMAN PLC

99 Monroe Ave. NW, Suite 300

Grand Rapids, MI 49503

(616) 205-4330

agocha@bodmanlaw.com

Counsel for Petitioners

August 11, 2023