Part of Whistleblower Medtronic Spinal Device Suit Can Proceed: 9th Circuit
The 9th Circuit Court of Appeals has affirmed in part and reversed in part a California federal court’s decision dismissing a whistleblower’s False Claims Act suit alleging that Medtronic fraudulently obtained FDA clearance for several medical devices used in spinal fusion surgeries, unlawfully marketed the devices for off-label and contraindicated use, and illegally compensated doctors to use them.
The appeals court upheld the dismissal of all claims relating to off-label and contraindicated use and anti-kickback statute violations and part of the fraud-on-FDA claim. The court said the whistleblower divided the Medtronic devices into two groups — those that allegedly could not be used for their labeled intended use and could only be used for their contraindicated use in the cervical spine (contraindicated-only devices) and those that could be used for their stated intended use but were contraindicated for use in the cervical spine (extra-use devices).
The district court had dismissed the fraud-on-FDA theory for failure to state a claim, the appeals court said, and ruled that the district court was correct that the materiality element could not be met for the extra-use devices because the federal government allows reimbursement for off-label and even contraindicated uses.
But, the 9th Circuit said, the whistleblower alleged that the contraindicated-only devices were not properly cleared for any use and so could not be used for their labeled intended use and are thus not substantially similar to the predicate device, and can only be used for their contraindicated use.
“Relator (the whistleblower) claims that Medtronic knew that their cervical vertebral body replacements posed different questions of safety to its previously approved devices, and if Medtronic disclosed that the devices were intended for use in the cervical spine, then FDA may have required Class 3 approval,” the appeals court decision says. “These considerations — intended use, similarity to the predicate device, and different questions about safety — are precisely those that FDA considers in granting Class 2 certification.”
While Medtronic argued that the False Claims Act is not the proper vehicle for a fraud-on-FDA claim, as stated by some courts, the 9th Circuit cited one of its previous decisions that allowed such a claim and reversed the district court dismissal for claims based on contraindicated-only devices.