Medtronic (NYSE:MDT) must face claims of fraud and negligence in a pair of lawsuits filed over its controversial Infuse bone-growth product, a California federal judge ruled yesterday.
Plaintiffs Richard Eidson and Scott and April Bell sued Medtronic in 2013, alleging that the company "embarked on a vigorous campaign to promote off-label uses of Infuse" despite knowing since 1999 "that medical studies had found evidence of severe side effects associated with the off-label use of Infuse, particularly excessive bone growth," according to court documents.
The lawsuits also allege that Medtronic "funded studies and articles by opinion leaders that omitted mentions of the risks of off-label use or understated the incidence of adverse effects" and "failed to report adverse events suffered by patients who used Infuse off-label to the FDA," accusing the company of reporting only 262 of an estimated 50,000-250,000 adverse events by April 2008.
Last week Medtronic agreed to pay $22 million but admit no wrongdoing in a settlement agreement covering roughly 950 product liability cases filed over Infuse. Medtronic said it stands behind Infuse, saying it’s been used in more than 1 million patients, and pledged to "vigorously defend the product and company actions in the remaining cases." There are about 750 lawsuits pending in state and federal courts, involving about 1,200 patients, the company said.
Yesterday, Medtronic moved to dismiss both of the suits from the U.S. District Court for Northern California, arguing in 1 case that the statute of limitations barred the suit brought by the Bells. Judge Lucy Koh disagreed, finding persuasive the couple’s arguments that they had no reason to suspect "that any product defect or failure might have caused [Scott Bell’s] symptoms" until April 2012.
"In April 2012, Scott Bell’s mother saw a lawyer commercial regarding lawsuits involving Medtronic’s Infuse device. She mentioned this to Scott Bell, asking whether that device might have been used in his surgery. Within two weeks, in April 2012, Scott Bell contacted a lawyer in order to find out whether this device had been used in his surgery and might have contributed to his injuries," the couple claimed, according to the documents.
Koh also denied Medtronic’s bid to toss fraud-based claims from both suits, concluding that "fraudulent misrepresentation/fraudulent inducement and negligent misrepresentation claims are not expressly preempted because they impose state tort law duties that parallel federal requirements."
"For example, plaintiffs allege defendants knowingly marketed Infuse in misleading ways, such as by paying kickbacks to ‘opinion leaders’ to directly advocate off-label use of Infuse to other spine surgeons without disclosing their financial relationship with defendants and bankrolling falsified medical studies and articles," Koh wrote. "Accordingly, the court concludes that the state tort law duties underlying plaintiffs’ claims are not ‘different from, or in addition to’ federal requirements, which unquestionably ban fraudulent marketing."
The judge also allowed claims for fraudulent misrepresentation/fraudulent inducement and negligent misrepresentation based on misleading off-label promotion because "such claims are ‘based on state common law tort duties that exist independently from the [Federal Food, Drug, and Cosmetic Act] and not solely by virtue of the FDCA.’"
"Rather, plaintiffs allege that defendants engaged in affirmatively fraudulent conduct when promoting Infuse for off-label use. Defendants are accused not of simply selling a device they know will be used off-label … but of falsifying medical research and making statements via sales representatives and opinion leaders that knowingly understate the dangers of off-label use of Infuse," Koh wrote. "The omissions of which plaintiffs complain are not simply the failure to warn patients of the fact of non-approval by the FDA, but failure to warn patients of known dangers associated with off-label Infuse usage. The main point here is that California common law unquestionably prohibits commercial misrepresentations and omissions such as those alleged here."
And the plaintiffs’ failure-to-warn claims parallel federal regulations and are therefore not preempted, Koh ruled.
"Plaintiffs’ failure to warn claims parallel federal requirements because they demand the same conduct of manufacturers that federal law does – notifying the third party FDA of adverse events, where such notification could suffice to put doctors and patients on notice of the product’s dangers. Thus, plaintiffs’ claims are not expressly preempted," she wrote.
Koh granted 2 of Medtronic’s motions, dismissing with prejudice failure-to-warn claims based on allegations of "overpromotion" and on deceptive off-label promotion.
