United States of America, et al., Ex Rel. Adam Hart, Plaintiffs-Appellants v. McKesson Corporation, McKesson Specialty Distribution LLC, McKesson Specialty Care Distribution Corporation, Defendants-Appellees* Before: Lynch and Park, C.JJ., and Williams, D.JJ.** Adam Hart brought a qui tam action under the federal False Claims Act (the “FCA”) and the FCA analogues of several states and the District of Columbia against a pharmaceutical distributor, McKesson. Hart alleged that McKesson provided two business management tools to its customers without charge, in exchange for those customers’ commitments to purchase drugs from McKesson, conduct that he argues violated the federal anti-kickback statute (the “AKS”) and several analogous state anti-kickback statutes. The district court (Abrams, J.) dismissed Hart’s FCA claim because it concluded that Hart failed to allege sufficient facts to suggest that McKesson acted “willfully,” as required under the AKS. It dismissed the remaining claims under the state FCA analogues on the ground that those claims were premised solely on a violation of the federal AKS. We hold that the district court correctly concluded that to act “willfully” under the federal AKS, a defendant must act knowing that its conduct is in some way unlawful, and that Hart failed to plead sufficient facts to meet that standard. We also hold, however, that the district court erred in concluding that Hart’s remaining claims were premised solely on a violation of the federal AKS. Accordingly, we AFFIRM the district court’s dismissal of Hart’s federal FCA claim, VACATE the dismissal of the remaining claims, and REMAND for further proceedings. GERARD LYNCH, C.J. In this qui tam action, Adam Hart sued McKesson Corporation, McKesson Specialty Distribution LLC, and McKesson Specialty Care Distribution Corporation (together, “McKesson”) under the federal False Claims Act (the “FCA”), 31 U.S.C. §3729 et seq., and the FCA analogues of 27 states and the District of Columbia. Hart, a former McKesson Business Development Executive, alleges that McKesson, a pharmaceutical wholesaler, offered its customers free access to two valuable business management tools to induce those customers to purchase drugs from McKesson. He argues that McKesson’s use of the tools operated as a kickback under the federal Anti-Kickback Statute (the “AKS”), 42 U.S.C. §1320a-7b, and similar anti-kickback laws of various states and the District of Columbia. The United States District Court for the Southern District of New York (Ronnie Abrams, J.) dismissed Hart’s federal claim, concluding that Hart had failed to allege that McKesson acted with the requisite scienter under the AKS. It dismissed his remaining claims on the ground that they were all premised on a violation of the federal AKS. As explained below, we agree with the district court that to violate the federal AKS, a defendant must act knowing that its conduct is, in some way, unlawful, and that Hart failed to allege facts sufficient to satisfy that standard. We disagree, however, with the district court’s conclusion that Hart’s claims under the FCA analogues of several states and the District of Columbia were premised solely on a violation of the federal AKS. Accordingly, we AFFIRM the district court’s dismissal of Hart’s federal claim, VACATE the dismissal of Hart’s remaining claims, and REMAND for further proceedings consistent with this opinion. BACKGROUND I. Factual Background1 McKesson is a large wholesale pharmaceutical distributor that sells products across the United States. It provides drugs and other medical supplies to various health care providers, including oncology providers. McKesson includes two divisions that serve oncology customers — the U.S. Oncology Network (“USON”), which offers tools and services to member health care practices in exchange for management fees, and the Open Market Division, which operates as a traditional drug wholesaler that purchases drugs from manufacturers and sells them at a markup to health care practices. Oncology practices often obtain specialty drugs from wholesalers like McKesson. When an oncology practice buys a specialty drug from a wholesaler, it bills its patient’s insurer for the cost of the drug. Medicare and Medicaid are federally funded health insurance programs that are major payors for oncology drugs procured in that fashion. Those programs reimburse health care providers for such drugs at standardized rates set by Medicare. Because the reimbursement rates do not change based on what a given provider paid for the drugs, each provider bears the risk that the reimbursement rate for a given drug will fall below its costs. If the reimbursement rate exceeds a provider’s costs, however, the provider can profit from the difference. McKesson offers two tools (the “Business Management Tools”) to help providers maximize their profits and mitigate the risk that the reimbursement rate will fall below the actual cost they paid for drugs. The first tool, the Margin Analyzer, evaluates sets of “therapeutically interchangeable” drugs by comparing McKesson’s price for each drug to publicly available Medicare reimbursement rates for that drug. App’x 277-78,
