Medtronic (NYSE:MDT) logged a series of legal wins this week after a federal judge dismissed a whistleblower lawsuit against the medtech titan and the U.S. Supreme Court declined to review a bid over legal fees in a long-running patent spat, upholding Medtronic’s victory from April last year.
In a lawsuit brought against Medtronic, Cavallino Consulting alleged that the medtech company defrauded government hospitals by overcharging them for the speedy delivery of medical equipment, without passing along required discounts.
U.S. district judge David Doty of Minneapolis ruled that the argument brought by Cavallino Consulting did not credibly allege that Medtronic engaged in “a broad and ongoing scheme to defraud,” and the judge pointed out that the complaint didn’t plausibly allege that Medtronic submitted any claims to the government, let alone fraudulent claims.
Doty added that Cavallino Consulting did not explain how it could claim that Medtronic was receiving discounts from carriers, considering it audits hospitals and not medical device-makers.
“Whether and to what extent Medtronic may receive carrier discounts is pure speculation,” Doty wrote.
Even if Medtronic arranged sales with government hospitals and failed to pass along the carrier discounts, the judge noted that is debatable whether that would violate the contract presented to the court.
“Although relator’s interpretation of the expedited delivery provision is not unreasonable, the provision does not clearly require Medtronic to charge government hospitals for expedited shipping costs actually incurred. Absent such clarity, Medtronic could not have ‘knowingly’ submitted a false claim to the government as that term is defined under the FCA,” Doty wrote.
Also this week, the Supreme Court declined to consider a bid by the family of defibrillator pioneer Dr. Michel Mirowski to win legal fees in a long-standing patent royalties spat.
In April last year, a federal appeals court ruled that Mirowski’s estate owed Medtronic $6 million to cover legal fees from the patent fight. Mirowski Family Ventures, which represents Mirowksi’s estate and controls several patents related to ICDs and cardiac resynchronization devices, has been fighting patent infringement cases against Medtronic, Guidant and successor Boston Scientific (NYSE:BSX) for several years.
The spat goes back to the 1970s, when Mirowski out-licensed the patents to Eli Lilly (NYSE:LLY). The patents eventually passed to Lilly subsidiary Guidant in 2004 and then on to Boston Scientific in 2006.
Five years later, a judge from the U.S. District Court for Delaware ruled in favor of Medtronic to invalidate one of the patents. After several rounds of appeals, the judge ordered MFV to cough up $6 million to cover Medtronic’s legal fees.
MFV appealed to the U.S. Court of Appeals for the Federal Circuit, asking the court to overturn the decision. MVF argued that if it was liable for the fees, Boston Scientific and Guidant should also be found liable.
But the Federal Circuit upheld the lower court’s ruling and this week’s decision by the Supreme Court marks another win for Medtronic in the years-long back-and-forth.
