BOSTON - (Mealey's) Finding that two whistle-blowers' False Claims Act (FCA) allegations failed to meet federal pleading requirements for fraud, a Massachusetts federal judge on July 27 dismissed claims that Medtronic Inc. promoted biliary stents for off-label use (United States of America, et al., ex rel. Tricia Nowak and Enda Dodd v. Medtronic, Inc., Nos. 1:08-cv-10368 and 1:09-cv-11625, D. Mass.).
U.S. Judge Douglas P. Woodlock of the District of Massachusetts ruled that the lawsuit's central allegations of fraud under the FCA failed to assert either intent or at least one instance of demonstrable fraud, falling short of Federal Rule of Civil Procedure 9(b)'s heightened requirements for pleading fraud with particularity.
"Nowak points to several cases in which district courts have found Rule 9(b) compliance based upon a detailed alleged scheme of fraud but no - or few - specifically alleged claims," Judge Woodlock said, citing United States ex rel. Wall v. Vista Hospice Care, Inc. (- F. Supp. 2d -, 2011 [N.D. Tex. Mar 9, 2011][enhanced version available to lexis.com subscribers]). "However, even in cases employing this extrapolation approach, the successful relators have identified a nucleus of specific allegedly fraudulent or false claims, or 'specific, verifiable cases.'"
"Indeed, it appears that in all cases in which a court has found Rule 9(b) satisfied under this extrapolation approach, the relators alleged at least some specific false claims," the judge said.
Judge Woodlock preserved relator Tricia Nowak's claim for retaliatory firing.
Nowak, a sales representative in Medtronic's endovascular sales group from May 2005 until her termination on Aug. 7, 2009, and Enda Dodd, a senior research manager for peripheral vascular products, alleged that Medtronic submitted false certifications to the U.S. Food and Drug Administration that the stents were for intended use in the bile ducts when in reality the company intended them for use in the peripheral vasculature. Biliary stents are subjected to a less rigorous regulatory process than stents intended for the peripheral vasculature, the judge said, adding that such off-label use has become "standard of care" despite the greater stresses and failure rate in the vascular setting. The New York Times has estimated that off-label uses of biliary stents constitute 90 percent of the biliary-stent market, Judge Woodlock said.
The company then promoted off-label vascular use of the stents, the relators allege, thus causing any claims for state or federal reimbursement to be fraudulent.
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