Second Circuit Clarifies Anti-Kickback Statute's Scienter Requirement

On March 12, the U.S. Court of Appeals for the Second Circuit issued an important decision that sheds light on the test for determining scienter under the federal Anti-Kickback Statute (AKS).

• The Second Circuit held that to act "willfully" under the AKS, a defendant "must act knowing that its conduct is in some way unlawful."
• Applying this holding, the Second Circuit affirmed the dismissal of AKS-based False Claims Act (FCA) claims because the relator failed to plead facts showing that the defendant believed its conduct was unlawful.

The Second Circuit reasoned that the AKS is not meant to apply to defendants who acted in a good-faith belief that their conduct was lawful, and its holding may make it more difficult for plaintiffs to bring FCA cases based on alleged violations of the AKS.