Medtronic Inc. (NYSE:MDT) won a partial victory in a Bay State federal court after Judge Douglas Woodlock dismissed two of the three counts filed against it in a whistleblower lawsuit alleging the deliberate off-label promotion of biliary stents.
The lawsuit, filed in under seal in 2008 in the U.S. District Court for Massachusetts, alleges that Medtronic promoted the use of the stents to treat obstructions in peripheral blood vessels. The biliary stents faced a lower regulatory hurdle because they’re designed for use in cancer patients who are not expected to survive for long. Although physicians are allowed to use devices for off-label treatments, the companies that make them are barred from promoting or encouraging such practices.
Two former Medtronic employees, Tricia Nowak and Enda Dodd, filed the qui tam suit on behalf of the U.S. government, 22 states and the District of Columbia. The suit also accuses the company of retaliating against and ultimately firing the pair after they objected to the alleged off-label promotion. Nowak worked for Medtronic as a sales rep in its endovascular business from 2005 until August of last year, according to court documents. Dodd worked as a senior research manager manager for the company for three years starting in 2003.
Nowak was allegedly fired after registering her objections to the alleged off-label promotion scheme, for failing to meet the company’s sales quota requirements, despite her reportedly "stellar" sales record with Medtronic.
But Woodlock found that Dodd, by virtue of the termination agreement he signed before filing his lawsuit, lacked any standing to sue under the False Claims Act. Nowak’s suit (their lawsuits were combined in February 2010) passed that bar, but Woodlock dismissed her FCA claims on the grounds that she failed to specify the time, place, and content of an alleged false representation, as required under the FCA:
"[I]n cases where the defendant directly presents the claim to the government, the plaintiff must provide details identifying particular false claims submitted, including who filed the claims, the content of the claims, when such claims were submitted, where such claims were submitted, and how much it sought in payment," according to court documents.
"Although the Nowak allegations are similar to these extrapolation cases, they do not identify ‘the physicians targeted,’ but rather allege that any purchaser of the biliary stents was a purported target of the fraudulent scheme," Woodlock wrote, according to the documents. "Nor does she identify a definite and limited time during which the false claims were filed. Moreover, Nowak fails to allege the submission of any claim for a use of Medtronic’s biliary stents that was not ‘medically necessary.’ She thus has not alleged any fraudulent or false claim with particularity. With no fraudulent or false claim, there is no fraud actionable under the FCA."
But Woodlock refused to dismiss Nowak’s claim that Medtronic wrongly fired her in violation of the FCA’s anti-retaliation provisions.
"Nowak does not specifically allege that Medtronic established a pretext to terminate her and ultimately terminated her because she filed an FCA claim. It is equally plausible that Medtronic fired her because she refused to sell biliary stents for off-label uses, which she had been informed was part of her job, or because she complained too much," Woodlock wrote. "However, Nowak alleges that she was consistently one of the top six to thirteen sales representatives for Medtronic nationwide, including after she had refused to sell biliary stents for off label uses. Just one month before Medtronic received the subpoena for documents, Nowak was praised for her continued excellent sales. However, in February 2009, she was placed on probation in the middle of the quarter. The inferences are sufficient, at this stage in the case, to constitute an adequate pleading that Medtronic fired Nowak ‘at least in part’ because of her ‘protected activity.’"
In January 2010, another qui tam lawsuit filed in the U.S. District Court for Northern Texas accused Boston Scientific (NYSE:BSX), Abbott (NYSE:ABT) and Johnson & Johnson (NYSE:JNJ) of engaging in similar schemes to sell biliary stents for peripheral vascular conditions. That practice is also the subject of a federal investigation being run out of the Boston offices of the Dept. of Justice.