The U.S. Supreme Court may soon resolve an important legal question that has significant implications for the healthcare industry: What constitutes willful conduct under the federal Anti-Kickback Statute (AKS)?
The Anti-Kickback Statute in Nutshell
The AKS prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce referrals for items or services covered by federal healthcare programs. Violations of the AKS can result in civil liability and criminal penalties.
The Case at Hand: U.S. ex rel. Hart v. McKesson Corp.
The relator’s complaint against McKesson alleged that the company violated the AKS by offering valuable business tools to physician oncology practices as an inducement to purchase McKesson’s oncology drugs. The crux of the legal debate centers on whether McKesson acted “willfully” in providing these tools, which the relator claims were worth approximately $150,000 and offered free of charge in exchange for drug purchase commitments.
The District Court dismissed the False Claims Act allegations, finding that the relator had not adequately alleged sufficient facts to find that McKesson had acted “willfully.” The Second Circuit affirmed the dismissal, concurring that under the Anti-Kickback Statute, a defendant acts “willfully” only if aware that its actions are unlawful.
The Second Circuit refused to follow the relator’s broader interpretation that the “willful” standard could be satisfied if (a) the company offered something of value in connection with the sale of pharmaceuticals reimbursed by the government, and (b) was aware, possibly through general compliance training, that it is illegal to provide inducements for sales. The relator is seeking further review, filing a petition for a writ of certiorari to the United States Supreme Court, posing the question: “To act ‘willfully’ within the meaning of the [AKS], must a defendant know that its conduct violates the law?”
The Circuit Split on “Willfulness”
The case highlights a split among federal appellate courts regarding the interpretation of “willfulness” under the AKS:
The Second and Eleventh Circuits maintain that to act willfully a defendant must know their conduct was unlawful. United States ex rel. Hart v. McKesson Corp., 96 F.4th 145,154 (2d Cir. 2024). United States v. Sosa, 777 F.3d 1279, 1293 (11th Cir. 2015).
The Fifth and Eighth Circuits may have differing standards, potentially requiring only that the defendants knew their conduct was wrong, without necessarily knowing it violated a specific law. United States v. St. Junius, 739 F.3d 193, 210 & n.19 (5th Cir. 2013). However, the law in the Fifth Circuit is somewhat unsettled. A more recent Fifth Circuit case defines “willful” to mean “the act was committed voluntarily or purposely, with the specific intent to do something the law forbids; that is to say, with bad purpose either to disobey or disregard the law.” United States v. Nora, 988 F.3d 823, 830 (5th Cir. 2021).
The Eighth Circuit on the other hand has ruled that a defendant’s conduct is deemed willful if the defendant “knew that his conduct was wrongful.” See United States v. Jain, 93 F.3d 436, 441 (8th Cir. 1996) and United States v. Yielding, 657 F.3d 688, 708 (8th Cir. 2011).
This lack of uniformity across circuits creates uncertainty for healthcare providers and companies operating in multiple jurisdictions.
Our Thoughts
We are of the opinion that the definition of “willful” applied by the Eleventh Circuit (and now the Second Circuit) is the correct standard, if for no other reason because the definitions of “willful” are more consistent in their criminal and AKS applications. In the Eleventh Circuit, the term “willful” under criminal law generally refers to an act committed with a bad purpose or with knowledge that the conduct was unlawful. This definition implies that the defendant acted voluntarily and intentionally, with the specific intent to disobey or disregard the law. United States v. Haun, 494 F.3d 1006, United States v. Wallace, 2016 U.S. Dist. LEXIS 96930, Bryan v. United States, 524 U.S. 184.
Similarly, the term “willful” under 42 U.S.C. § 1320a-7b(b)(2) in the Eleventh Circuit means that the act was committed voluntarily and purposely, with the specific intent to do something the law forbids, that is, with a bad purpose, either to disobey or disregard the law. In the case of United States v. Nerey, the court explained that willful conduct under the Anti-Kickback statute means the act was “committed voluntarily and purposely, with the specific intent to do something the law forbids, that is with a bad purpose, either to disobey or disregard the law.” United States v. Nerey, 877 F.3d 956. This interpretation was reaffirmed in United States v. Tonge, where the court stated that willful conduct means the act was committed voluntarily and purposely, with the specific intent to do something the law forbids. United States v. Tonge, 2021 U.S. App. LEXIS 34641.
Conclusion
The possible Supreme Court review of the “willfulness” standard in AKS cases would be a welcomed clarification of one of the many complex regulations facing the healthcare industry. Whatever the outcome, this case underscores the need for healthcare providers and companies to remain vigilant in their compliance efforts and to stay informed about evolving legal standards in this high-stakes area of law.
