But-For Causation and Particularized Pleading Under the FCA & AKS:
A Commentary on Flanagan v. Fresenius Medical Care Holdings, Inc., No. 23-1305 (1st Cir. 2025)

1. Introduction

The United States Court of Appeals for the First Circuit has once again tightened the screws on would-be whistle-blowers by confirming that, in False Claims Act (FCA) suits predicated on alleged violations of the Anti-Kickback Statute (AKS), a relator must plead with particularity that the alleged kickbacks were the but-for cause of specific false claims for payment. In Flanagan v. Fresenius Medical Care Holdings, Inc., the Court reaffirmed the “resulting-from” causation rule it had announced only months earlier in United States v. Regeneron Pharmaceuticals, Inc., 128 F.4th 324 (1st Cir. 2025), and made clear that compliance with that standard must be visible on the face of the complaint to survive a Rule 12(b)(6)/Rule 9(b) motion.

The appeal arose from a decade-long qui tam battle in which former Fresenius employee Martin Flanagan alleged an elaborate national kickback scheme designed to secure dialysis referrals. The district court dismissed his first amended complaint for lack of particularity and later refused leave to amend again, citing undue delay and prejudice. The First Circuit affirmed both rulings, cementing three practical lessons:

1. Relators must allege—but-for—causation for each claim “resulting from” an AKS violation.
2. Conclusory allegations that every claim submitted by a defendant is tainted will not satisfy Rule 9(b).
3. Waiting to perfect a complaint until after multiple dismissal rounds constitutes undue delay justifying denial of further amendments.

2. Summary of the Judgment

The First Circuit conducted de novo review of the district court’s Rule 12(b)(6) dismissal. It held:

• Causation Pleading: Because the complaint relied heavily on the “resulting-from” clause of 42 U.S.C. § 1320a-7b(g), the relator had to allege that kickbacks were the but-for cause of specified reimbursement claims. Allegations centered on one physician’s referrals (Dr. Tilles) did not bridge the causal gap; there was no factual basis to infer that the referrals would not have occurred absent the alleged remuneration.
• False Certification Theory: The relator’s alternative theory under 31 U.S.C. § 3729(a)(1)(B) (false records or statements) also failed. The complaint did not identify with particularity any actual certification, cost report, or hour-report entry that was false, nor did it connect such statements to government payment decisions.
• Leave to Amend: The request for a second amendment—after nine years of litigation and three dismissal motions—was properly denied for undue delay and prejudice. The court condemned the “wait-and-see” strategy of holding back new factual content until after a dismissal ruling.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

• United States v. Regeneron Pharmaceuticals, Inc., 128 F.4th 324 (1st Cir. 2025) – The immediate backbone of the decision. Regeneron interpreted “resulting from” in § 1320a-7b(g) to require but-for causation, aligning the circuit with the Third and Seventh Circuits. Flanagan is the first published application of Regeneron at the pleadings stage, showing courts will scrutinize causation allegations early.
• Ashcroft v. Iqbal, 556 U.S. 662 (2009) & Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) – The Court separated factual from conclusory allegations, reinforcing post-Iqbal/Twombly plausibility screening.
• United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220 (1st Cir. 2004) – Provided the foundational Rule 9(b) framework for FCA claims; relied upon to dismiss for lack of particularity.
• Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016) – Cited for “materiality” concepts and the breadth of the FCA, though not dispositive.
• Comcast Corp. v. National Association of African American-Owned Media, 589 U.S. 327 (2020) – Quoted for general but-for causation pleading principles, imported into FCA/AKS context.
• Other FCA gate-keeping cases – Ge, Nargol, Lovell – Raised statutory bars (public disclosure, first-to-file) that, although not the focus of the appeal, contextualized the Court’s dismissal posture.

3.2 Court’s Legal Reasoning

1. But-For Standard is Binding. Because Regeneron is circuit precedent, allegations had to meet the but-for test. The Court rejected Flanagan’s attempt to rely on “intent” to induce referrals standing alone.
2. Pleading Particular Claims. The Court reiterated that a relator must do more than describe a fraudulent scheme; he must allege representative claims or otherwise “set forth specific details of at least one false claim.” No Medicare claim numbers, dates, amounts, or patient identifiers were offered.
3. False Certification versus Resulting-From Theories. For false-certification liability under § 3729(a)(1)(B), it is not enough to allege that cost reports must contain AKS certifications; the relator must identify actual false statements and show they were material to payment. The complaint did not say what Fresenius actually reported.
4. Rule 15 Discretion. In refusing leave to amend, the district judge relied on (i) nine-year pendency, (ii) three prior dismissal motions raising the same defects, (iii) relator’s unexplained delay in seeking claims data, and (iv) prejudice from further litigation costs. The First Circuit found these reasons “well within” the district court’s discretion.

3.3 Expected Impact on Future Litigation

• Pleading Stage Filtering. First Circuit district courts now have a green light to dismiss AKS-based FCA claims that do not spell out how each challenged claim would not have been submitted but for the kickback. Expect more Rule 9(b) dismissals and heightened discovery disputes over claims data.
• Relator Strategy Shift. Plaintiffs will need early access to claims datasets and referring-physician analytics before filing (or amending) complaints. Collaboration with government investigators—even in declined cases—may become more critical.
• Healthcare Compliance. Providers should document legitimate bases for physician contracts, track medical-director hours, and maintain fair-market-value analyses. Well-kept records can defeat inferences of causation at the pleadings stage.
• Limit on Serial Amendments. The decision underscores that protracted pleading cycles will not be tolerated where defects were raised multiple times. Relators must “get it right” early.

4. Complex Concepts Simplified

• False Claims Act (FCA): A Civil War-era statute allowing treble damages against those who knowingly submit—or cause submission of—false claims to the federal government. It contains a “qui tam” mechanism letting private whistle-blowers sue on the government’s behalf.
• Anti-Kickback Statute (AKS): A criminal statute prohibiting remuneration intended to induce or reward referrals for items/services funded by federal healthcare programs. A violation can also support civil FCA liability.
• But-For Causation: A causal standard requiring a plaintiff to show the harm (here, the claim for payment) would not have occurred without the defendant’s wrongful act (the kickback).
• Rule 9(b) Particularity: The Federal Rule of Civil Procedure that demands fraud allegations state the “who, what, when, where, and how” of the misconduct.
• Public-Disclosure & First-to-File Bars: FCA provisions that bar suits based on publicly disclosed information or if another related action was filed earlier. Though central at the district court, the First Circuit bypassed these grounds after finding Rule 9(b) dispositive.
• Leave to Amend (Rule 15): Courts “freely” grant amendments when justice requires, but may deny if the moving party delayed unduly, acted in bad faith, caused prejudice, or proposed a futile amendment.

5. Conclusion

Flanagan v. Fresenius is less about creating a new doctrinal rule than about operationalizing Regeneron's but-for causation requirement and showcasing the First Circuit’s intolerance for vague or speculative FCA pleadings. The decision sends a clear message:

• Relators must connect the dots from each inducement to each claim with concrete facts.
• Broad narratives of corporate wrongdoing, no matter how lengthy, do not substitute for the “particularized allegations of claims for payment” Rule 9(b) demands.
• Strategic delay in pleading essential facts risks foreclosure of further amendments.

As FCA jurisprudence tightens around causation and particularity, counsel for both whistle-blowers and healthcare providers must adapt. Relators should marshal data and analytics before filing; defendants should preserve accurate compliance documentation. In short, Flanagan fortifies the gate at the courthouse door, making detailed causal pleading the price of admission in AKS-based FCA litigation within the First Circuit.