ROI Tracking as Mens Rea? Novartis Ruling Reframes AKS Pleading Risk

Is evidence that a company tracked return on investment (ROI) for certain actions and expenses sufficient to prove mens rea and plead a violation of the federal Anti-Kickback Statute (AKS) with the requisite particularity? A recent decision in the U.S. District Court for the Southern District of New York (SDNY) suggests that it is.

On March 30, 2026, a district court judge permitted an embattled qui tam lawsuit against pharmaceutical manufacturer Novartis to proceed to discovery, finding that the relator — Steven Camburn, a former sales employee — had sufficiently stated a False Claims Act (FCA) claim when he alleged that the company had knowingly violated the AKS by maintaining a sham physician speaker program that, he asserted, conveyed kickbacks to doctors for the purposes of improperly boosting prescriptions for a multiple sclerosis drug.

This development in United States ex rel. Camburn v. Novartis Pharms. Corp. comes over a decade and multiple revisions after the relator originally filed suit, concluding a prolonged litigation prologue in which two complaints were dismissed by the district court for failure to satisfy Rule 9(b)’s particularity requirement, a third was superseded by the parties’ own stipulation and ultimately vindicated in part on appeal, and the resulting Third Amended Complaint (TAC) was dismissed in 2022, only to be partially revived by the U.S. Court of Appeals for the Second Circuit and, following remand, allowed to proceed for discovery.

Particularity Requirement Poses a Pleading Hurdle — But Camburn Could Lower the Bar

The FCA imposes civil liability on those who knowingly submit false claims to the government. However, its scienter standard is designed to distinguish knowing misconduct from honest mistakes; the burden of ultimately demonstrating that a defendant acted with “actual knowledge,” “deliberate ignorance,” or “reckless disregard” of the truth (rather than mere negligence) falls on the plaintiff — though at the pleading stage, a plaintiff need only allege facts sufficient to support a plausible inference of scienter. In this case, Camburn initially struggled to substantiate his allegations about Novartis’ allegedly sham speaker program to the degree of particularity required under Rule 9(b), which requires that a plaintiff plead the factual circumstances constituting fraud with sufficient specificity (including alleging a representative sample of fraudulent conduct rather than broad generalizations), with the adequacy of such allegations assessed on a case- and context-specific basis.

Following a defeat in district court, the case was appealed to the Second Circuit, where the court was asked both whether Camburn had adequately stated an AKS-based FCA claim under Rule 9(b)’s heightened pleading standard and what standard governs the pleading of an AKS violation in the first place. The appellate court held that the district court had erred in concluding that no part of the complaint stated a cognizable AKS violation, finding that a few of Camburn’s allegations were put forth with adequate particularity and gave rise to a strong inference of an AKS violation. The court noted that Camburn needed only to allege that “at least one purpose” of the remuneration was to induce prescriptions — the relator would not be required to allege a cause-and-effect relationship between the payments and the physicians’ prescribing habits. Applying that standard, the court affirmed the dismissal of most of Camburn’s allegations but vacated and remanded with respect to three narrow categories tied to Novartis’ speaker program: events with no legitimate attendees, excessive compensation paid for canceled events, and the selection and retention of certain speakers deliberately to induce a higher volume of prescriptions.

In short, the Second Circuit’s holding — adopted as a matter of first impression in the Circuit, and consistent with the approach taken by other federal circuits to have addressed the question — clarified the threshold Camburn needed to meet on the substantive legal question of AKS intent. By formally endorsing the at-least-one-purpose rule, the court also reinforced that the pleading of the underlying facts still had to satisfy Rule 9(b)’s heightened particularity standard.

On remand, the district court concluded that the relator had, in fact, sufficiently stated the FCA claim per the three flagged categories. Additionally, the court determined that Camburn had sufficiently pled scienter when he alleged that Novartis had known that its speaker payments violated the AKS, as the relator had provided evidence that the company meticulously tracked the number of relevant prescriptions issued by each speaker — and made a determination on whether payments to those speakers delivered a positive ROI.

Litigation Implications for Health Care Organizations

The decision to allow the qui tam lawsuit to proceed for discovery is notable, even if only for the fact that it took Camburn the better part of a decade — and four iterations of his complaint — to file a pleading that could progress beyond the motion-to-dismiss stage. One could wonder whether a case continually revised after multiple dismissals and permitted to proceed only after the Second Circuit vacated the district court’s dismissal in part and remanded for further consideration might be overexamined.

But for health care providers, payors, and pharmaceutical manufacturers like Novartis, the most notable aspect of the Camburn decision is the district court’s treatment of Novartis’ internal tracking of physician prescription volumes and speaker payment performance — including assessments of whether those payments generated a positive ROI — as corroborating evidence of scienter. Importantly, the court reached this conclusion voluntarily; neither party had contested the scienter element. Moreover, while ROI tracking was one factor in a broader analysis rather than a freestanding test for mens rea, the court’s willingness to treat standard marketing analytics as indicative of “knowing” misconduct raises a legitimate concern that comparable business practices could be used to support similar FCA claims at the pleading stage in the future.

It would be unreasonable to expect businesses to stop tracking marketing ROI. But there is a real possibility that the precedent set by Camburn, however overexamined it may be, could increase the risk that similar FCA cases filed against health care organizations alleged to have engaged in kickback arrangements may not be dismissed so easily at the pleading stage. We will continue to monitor developments in Camburn and other relevant cases. For further details or clarification on what this development could mean for your organization's compliance posture, speaker program policies, or exposure to qui tam litigation, please contact any author of this alert or your preferred Crowell & Moring lawyer.