Federal Court Explains “Willfulness” Excludes Good Faith Acts Under the Criminal Anti-Kickback Statute

The federal Anti-Kickback Statute (“AKS”) is a criminal law that forbids knowingly and intentionally offering or receiving “remuneration” to encourage or reward patient referrals or business related to items or services covered by federal health care programs, such as Medicare or Medicaid. Remuneration refers to anything of value, not just cash, and can include things like free rent, luxury hotel stays and meals, or excessive payments for roles like medical directorships or consulting, in exchange for referrals.

On March 12, 2024, the U.S. Court of Appeals for the Second Circuit issued its decision in United States ex rel. Hart v. McKesson Corp.,[1] holding that “to act ‘willfully’ under the AKS’s [(Anti-Kickback Statute’s)] criminal provisions, a defendant must act knowing that his conduct is unlawful, even if he is not aware of the AKS specifically[,]” and that a complainant must plausibly allege that the defendant was aware that their conduct was illegal.[2]

The decision in Hart expressly protects providers and companies who, while in technical violation of the AKS, were conducting their actions in good faith and without any knowledge that it was illegal conduct.[3] The same standard applies to providers who are generally aware of the AKS, but still act in violation of the statute, albeit in good faith. The court posed the following hypothetical:

Suppose that a pharmaceutical company creates a free 24/7 customer support hotline to allow providers to ask questions about the company’s products. Even if the company is generally aware of the AKS’s prohibition on kickbacks, the company still could create the hotline out of a good-faith desire to help doctors treat their patients more effectively, without knowing that the hotline violated the AKS or any other law. In such circumstances, one could hardly say that the company acted with the ‘vicious will’ that ‘our criminal law seeks to punish.’ But under Hart’s proposed definition, the company could suffer criminal penalties anyway if the hotline was deemed prohibited remuneration. [4]

Rejecting a broad, two-factor, analysis proposed by the Hart decision, the Second Circuit makes clear that “a defendant’s knowledge of his general legal obligations is not enough if he does not also know that his actions violate those obligations.”[5]

Notably, the Supreme Court chose to deny Hart’s request to hear the case, leaving the Second Circuit decision as the final word and as persuasive authority for other courts nationwide to utilize.[6]

What Hart Means For The Healthcare Industry

Further protections for healthcare providers and companies are solidified by the Hart decision. Seeking to prevent provider liability and criminalization as a result of innocent conduct, the Hart decision expressly limits liability to actions undertaken with the knowledge that the specific conduct engaged in is illegal.[7] The Second Circuit also states “that Congress understood that the precise contours of the AKS would evolve over time,” leaving the door open for further case law on the subject.[8]

Those in the healthcare industry should continue to monitor decisions on the AKS nationwide as they may choose to adopt the Hart interpretation in additional circuits, and defendants in AKS suits may choose to raise this legal interpretation to avoid liability.

For more information, please contact David R. Ross, Esq., Shareholder, at dross@olaw.com or at (518) 312-0167.

Ms. Olivia Vecchio, Law Clerk, contributed to this article.

[1] United States ex rel. Hart v. McKesson Corp., 96 F.4th 145 (2d Cir. 2024),
[2] Id. at 159 (emphasis added).
[3] Id. at 158.
[4] Id.
[5] Id.
[6] United States ex rel. Hart v. McKesson Corp., No. 23-1293, 2024 U.S. LEXIS 4027 (Oct. 7, 2024).
[7] Hart at 158.
[8] Id. at 155.