The Fourth Circuit Joins Other Circuits in Adopting the “One Purpose Test” while Upholding a $114M Jury Verdict

The Fourth Circuit becomes the most recent Circuit Court to adopt the test for the Anti-Kickback Statute 42 U.S.C. § 1320a-7b(b) “that at least one purpose of the remuneration was to induce the referral of services, rather than the primary purpose of the remuneration.” United States v. Mallory, No. 18-1811, –F.3d–, 2021 WL 667084 at *7 (4th Cir. Feb. 22, 2021).

On appeal from a two-week jury trial from the District of South Carolina, which found Defendants Latonya Mallory, Floyd Dent, and Robert Bradford Johnson (collectively “The Defendants”) liable for violating several counts of the False Claims Act (FCA). The Defendants sought to overturn the $114 Million verdict on several grounds, including that the District Court errored by instructing the jury that one purpose of the remuneration was to induce referrals.

The Appeals Court rejected The Defendants’ argument and joined the Third, Fifth, Seventh, Ninth, and Tenth Circuits in finding that if “one purpose” of the remuneration was to induce the referrals then the remuneration violated the AKS.   Id. citing  United States v. Borrasi, 639 F.3d 774, 781–82 (7th Cir. 2011); United States v. McClatchey, 217 F.3d 823, 835 (10th Cir. 2000); United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998); United States v. Kats, 871 F.2d 105, 108 (9th Cir. 1989); United States v. Greber, 760 F.2d 68, 71–72 (3d Cir. 1985).

A unanimous Appeals Court Panel in a published opinion also rejected The Defendants’ other arguments and affirmed the judgment of the District Court in all respects.