Appeals court denies ex-Cyberonics rep’s False Claims Act lawsuit

December 19, 2016 By Brad Perriello Leave a Comment

A federal appeals court last week denied a former Cyberonics sales rep’s bid to reinstate a File Claims Act suit, finding that plaintiff Andrew Hagerty failed to produce enough evidence to back his claims and waited to long to amend his complaint.

Hagerty, who according to court documents worked for Cyberonics between 2010 and 2012, claimed that the company urged its representatives push unnecessary battery replacement procedures for epilepsy patients implanted with its neurostimulation devices. His 2012 suit in the U.S. District Court for Massachusetts, alleging that Cyberonics canned him after he refused to sell the unneeded replacement batteries, was dismissed in February 2013.

Hagerty, whose son was implanted with 1 of the devices to control his epileptic seizures, appealed to the U.S. Court of Appeals for the 1st Circuit, arguing that the Massachusetts court was wrong to grant Cyberonics’ motion for dismissal. Writing Dec. 16 for a 3-judge panel at the appeals court, Judge Norman Stahl found that Hagerty’s allegations were overly broad and that he waited more than a year before trying to file an amended complaint.

“Hagerty does not allege that any particular patient was actually covered by a government program, provides no basis for his estimate of 10,000 unnecessary procedures, and does not link Cyberonics’ revenues to these procedures. Viewed individually or as a whole, Hagerty’s ‘evidence and arguments proceed more by insinuation than any factual or statistical evidence that would strengthen the inference of fraud beyond possibility,'” Stahl wrote. “Cyberonics’ motion to dismiss, filed in June 2014, put Hagerty on notice of the deficiencies in the complaint, and he made no attempt to fix these deficiencies until August 2015.

“Thus, we conclude both that Hagerty did not meet his burden of providing a valid reason for his delay and that the district court did not abuse its discretion in denying his motion for leave to amend,” he wrote.

Cyberonics and Italy’s Sorin Group merged in October 2015 in a $2.7 billion deal that resulted in the creation of LivaNova (NSDQ:LIVN).

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