Abbott (NYSE:ABT) agreed to pony up nearly $5.5 million to settle a class action lawsuit alleging a kickbacks scheme to push the use of its stent products, but admitted no wrongdoing in settling the case.There’s a wrinkle, however, as the plaintiff in another, older lawsuit making similar allegations wants to intervene to stop the settlement, claiming that his 2006 lawsuit against Abbott and several of its medtech peers predates the whistleblower lawsuit filed in September 2009.
Steve Peters and Douglas Gray, former sales reps for the medical device company, sued Abbott under the qui tam provision of the False Claims Act, alleging that the company encouraged doctors to use its biliary stents to treat peripheral artery disease, a use the stents were not cleared for by the FDA, and accusing Abbott of causing damages in excess of $1 billion in allegedly fraudulent Medicare claims.
“Abbott has violated the FCA and other federal statutory and regulatory provisions by promoting the off-label uses of its biliary stents for the purpose of expansion into markets not approved by the FDA or the federal Medicare program. In this regard, the FDA has only approved Abbott’s biliary stents for use in the bile duct, and neither the FDA nor the Medicare program has approved the use of these stents for any other purpose. In addition, the high-pressure medical balloon dilation catheters sold by Abbott for use in placing the biliary stents in the peripheral arteries have never been approved for such use, although defendant has routinely promoted such use in connection with the uses of stents,” according to court documents. “Through a sales force of approximately 200 people, defendant has engaged in a massive nation-wide promotional campaign to encourage physicians and hospitals to use biliary stents in the peripheral arteries without the approval of the Food & Drug Administration required b law, and encouraged the impermissible billing of these unauthorized (“off-label”) uses. Defendant has also paid physicians to train other physicians in the unauthorized use of biliary stents, and provided free training to physicians to enable them to engage in the unauthorized procedures.”
Peters and Gray stand to receive a total of more than $1 million from the settlement with the U.S. Justice Dept., a deal plaintiff Kevin Colquitt wants to spike.
Colquitt sued Abbott, Johnson & Johnson (NYSE:JNJ) and Boston Scientific (NYSE:BSX) in 2006, claiming that all 3 companies “conducted the off-label, unlawful marketing of biliary stents for many years,” according to court documents. The Colquitt lawsuit further accused the defendant companies “and others in the market” of pursuing a common “scheme” to illegally market their biliary stents for peripheral treatments. (Early last year a federal judge in Texas let J&J and Boston Scientific off the hook, but ruled that the case against Abbott would stand.)
Now Colquitt is arguing that Abbott’s settlement with the U.S. District Court for Eastern Tennessee is invalid because his claims against the company were filed 3 years before Peters’ and Gray’s, according to court records.
“Colquitt requests that the court grant him leave to intervene of right in the case at bar to protect his interest in litigating the FCA claims in his 1st-filed complaint against defendant Abbott Laboratories,” according to the documents. “The FCA is clear that a federal court has subject matter jurisdiction only for qui tam claims brought by the relator who 1st files a claim. … As the court where the 1st-filed action was filed, the Northern District of Texas is the sole court with subject matter jurisdiction over the claims asserted in the Peters complaint and the proposed settlement of the Peters action threatens Colquitt’s interest in litigating his 1st-filed complaint.
“Moreover, the release language in paragraph 4 of the settlement agreement in the Peters action could be erroneously construed as releasing Abbott for the conduct alleged in Colquitt’s 1st-filed complaint. The settlement agreement and release, therefore, could impair or impede Colquitt’s ability to protect his interest in litigating the claims in his 1st-filed FCA complaint against the defendant,” according to the records.
Colquitt also argued that the Tennessee court should allow him to permissively intervene, citing another FCA provision.
“[Colquitt] presents common factual and legal questions, because the proposed release includes claims that are the subject of Colquitt’s 1st-filed original complaint. Moreover, allowance of intervention in this circumstance will not unduly delay or prejudice the adjudication of the parties’ rights, as [Colquitt] only seeks declaration of his status as the 1st to file, and to protect his interests in the ongoing litigation in the Northern District of Texas,” according to the documents.
