In United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235 (3rd Cir. 2004), the Third Circuit reinstated claims against a manufacturer/distributor, finding that, based on the facts as alleged in the complaint, the defendant could be found liable under the FCA for knowingly assisting in the submission of a false claim. The court reached this conclusion despite the fact that Zimmer had not submitted, reviewed, received, or approved of any of the underlying false claims, and that the hospital system that submitted the claims made an independent decision to do so.

According to Dr. Schmidt's complaint, Zimmer had entered into a five-year contract with Premier Purchasing Partners (Premier) (a group purchasing association) to supply Zimmer's members with orthopedic implants. Premier's members, which included co-defendant Mercy Health System (Mercy), received incentives to help increase Zimmer's market share. These incentives included discounts and bonuses which allegedly were paid in cash and cash equivalents to Mercy and other Premier members.

The plaintiff/relator claimed that the incentives offered by Zimmer and accepted by Mercy and other Premier members violated the antikickback statute, 42 U.S.C. § 1320a-7b, and the Stark law, 42 U.S.C. § 1395nn. Furthermore, because Mercy failed to reveal these incentives on its annual Medicare cost reports (HCFA 2552), the submission of these forms by Mercy (and other Premier members) violated the FCA.

Zimmer moved to have the case dismissed on a 12(b)(6) motion, arguing that, on its face, the complaint failed to allege sufficient facts to support either an antikickback or Stark violation. Furthermore, Zimmer argued that as it had not submitted any claims, it could not be liable under the FCA. The district court, although not addressing whether the complaint contained sufficient allegations to make out an antikickback or Stark violation, agreed that Zimmer could not be liable under the FCA because it had not submitted a claim.

The Third Circuit reversed, finding that the complaint had set forth sufficient facts to support plaintiff's claim that Zimmer's incentive program violated both the antikickback statute and Stark law. Specifically, the court referred to allegations in the complaint which claimed that incentives were paid out in cash and cash equivalents, which was inconsistent with the antikickback statute's safe harbor, and that there was an alleged sharing of remuneration with physicians to increase Zimmer's market share in alleged violation of the Stark law.

Furthermore, the court ruled that the FCA is broad enough to reach those that "knowingly assist" to cause the government to pay claims grounded in fraud and that the complaint contained facts of such conduct on the part of Zimmer. The plaintiff's allegations that "Zimmer created and pursued a marketing scheme that it knew would, if successful, result in the submission by Mercy .of compliance certifications required by Medicare that Zimmer knew would be false," Schmidt, 386 F.3d at 244, were sufficient to show that "Zimmer knowingly caused Mercy's false claims to be filed." Id. The fact that Mercy made its own decision to file a false certification was not, according to the court, a superseding cause of the alleged FCA violation and, therefore, was not inconsistent with its conclusion that Zimmer had caused the filing and could be liable under the FCA.