Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States ex rel. D'Agostino v. Ev3, Inc.

United States District Court, D. Massachusetts

September 30, 2014

UNITED STATES OF AMERICA, STATES OF CALIFORNIA, CONNECTICUT, DELAWARE, FLORIDA, GEORGIA, HAWAII, ILLINOIS, INDIANA, LOUISIANA, MARYLAND, MICHIGAN, MINNESOTA, MONTANA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, OKLAHOMA, RHODE ISLAND, TENNESSEE, TEXAS and WISCONSIN, COMMONWEALTHS OF MASSACHUSETTS and VIRGINIA, and the DISTRICT OF COLUMBIA ex rel. JEFFREY D'AGOSTINO
v.
EV3, INC., MICRO THERAPEUTICS, INC., JOHN HARDIN, and BRETT WALL

MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION TO DISMISS

RICHARD G. STEARNS, District Judge.

In this now three-year-old qui tam action, plaintiff/relator Jeffrey D'Agostino, a former medical device salesman for defendant EV3, Inc., alleges that EV3, Micro Therapeutics, Inc. (MTI), John Hardin, and Brett Wall violated the federal False Claims Act (FCA), 31 U.S.C. § 3729 et seq., as well as the False Claims Acts of twenty-six states and the District of Columbia.[1] According to the Third Amended Complaint (TAC), defendants knowingly caused the submission of false claims for reimbursement in violation of FCA § 3729(a)(1)(A) (Count I), and knowingly made, or caused to be made, false records or statements that were material to the false reimbursement claims in violation of FCA § 3729(a)(1)(B) (Count II), all the while conspiring to commit these acts in violation of FCA § 3729(a)(1)(C) (Count IV). The TAC makes parallel allegations under the various state and District of Columbia analogs to the FCA (Counts V-XXXI).[2] For reasons that will be explained, defendants' motions to dismiss the TAC with prejudice will be allowed.

BACKGROUND

EV3 manufactures the two medical devices implicated in the TAC, the Onyx Liquid Embolic System (Onyx) and the Axium Detachable Coil System (Axium). Both Onyx and Axium were developed by MTI (which later merged with EV3).[3] Defendant Brett Wall held executive sales and marketing positions at EV3, MTI, Boston Scientific, and Covidien (the current parent company of EV3). Wall was actively involved in the marketing of Onyx and Axium. Defendant John Hardin was the Vice President of Sales and Global Marketing for Onyx at EV3.[4] D'Agostino served as the Territory Manager for EV3 in the eastern United States between 2005 and 2010.

A. Onyx

Onyx is a synthetic liquid that, when introduced by a catheter, forms a solid mass (embolus) inside a patient blocking the flow of blood. The FDA approved Onyx in July of 2005 for use in the presurgical treatment of a vascular defect in the brain known as brain arteriovenous malformation (BAVM). The market for the on-label use of Onyx is very small; there are only an estimated 3, 000 cases of BAVM treated annually in the United States.

1. Misleading the FDA in the Onyx Approval Process

In broad terms, D'Agostino alleges that MTI misled the FDA during the Onyx approval process by proposing an overly narrow indication for its use, while concealing the true scope of its marketing strategy, and failing to report relevant safety information. D'Agostino alleges that, but for MTI's fraud, Onyx would not have been approved for any use by the FDA.

The factual allegations, distilled from the legal conclusions in which they are embedded, are as follows.[5] According to the TAC, the FDA advisory panel appointed to review the safety and efficacy of Onyx expressed concern that the device (despite MTI's assurances) might be marketed for the off-label treatment of other types of vascular disease, or might be left permanently in the BAVM patient if follow-up surgery was not performed.[6] In response to the panel's reservations, the TAC alleges that MTI gave false assurances that it would institute a program to train surgeons in the proper use of Onyx.[7] The TAC alleges that when EV3 later sought to expand the scope of the FDA's approval to include the use of Onyx in the treatment of vascular defects in the "the periphery" (that is, in the vasculature outside the brain or below the neck), the FDA denied the request because of insufficient supporting medical evidence. Notwithstanding the FDA's refusal, MTI (and EV3) continued to promote the use of Onyx for peripheral indications and neurointerventional indications other than the presurgical treatment of BAVM.[8]

At some point, MTI licensed the right to fabricate the liquid material from which Onyx is manufactured to Enteric Medical Technologies, Inc., another medical devices company. After acquiring Enteric, Boston Scientific used the material to manufacture Enteryx, which was approved by the FDA in April of 2003 for the treatment of gastroesophageal reflux disease (GERD). Enteryx is injected into the musculature below the esophagus where it solidifies to create a partial barrier preventing the reflux of stomach acid. According to the TAC, in some cases physicians injecting Enteryx missed the esophageal musculature, risking potentially fatal complications.[9] D'Agostino argues that because of the intimate associations among EV3, Enteric, Boston Scientific, MTI, and Covidien (fostered by the hiring of senior executives by one company from another), EV3 bears responsibility for failing to alert the FDA during the Onyx approval process to problems being encountered by physicians using Enteryx: EV3 "was representing to the FDA that Onyx was safe [while] the same molecule, in the form of Enteryx, was killing people." TAC ¶ 82.

2. Training Program Used to Drive Off-Label Sales

The TAC describes a surgical training program in which, after a physician was trained in the use of Onyx, EV3 would supply Onyx to any hospital facility at which the physician had admitting privileges. These included facilities that had no surgeons on staff with practices requiring the on-label use of Onyx. The TAC further alleges that EV3 paid physicians to conduct Onyx training for other physicians, which sometimes included training in off-label uses. Because vascular "holes" in areas below the neck (the periphery) are typically much larger than those in the brain, more Onyx is required to plug them, thus making off-label uses more lucrative for EV3. This recognition, according to the TAC, led EV3 to ramp up the dissemination to physicians of information promoting Onyx's off-label use. An example given by the TAC is a 2008 EV3 national sales meeting at which National Marketing Manager (and former defendant) Vitas Sipelis discussed case reports involving the use of Onyx in peripheral vasculature surgical interventions, while at the same time urging sales staff to "[g]et users to think about additional [off-label] applications (i.e., [dural areteriovenous fistulas] DAVFs)." TAC ¶ 120.

3. Filing of False Claims

Inpatient and outpatient hospital treatment procedures for eligible patients are paid by Medicare subject to the condition that the treatment is certified to be medically reasonable and necessary.[10] Reimbursement is at the rates established by the Diagnosis Related Group (DRG) or the Ambulatory Payment Classification, as appropriate. Although the cost of a medical device is not billed directly to Medicare, the hospital ultimately recovers the cost of the device indirectly by way of the fixed aggregate reimbursement rates. Where the actual cost of a particular procedure exceeds the fixed limit, the hospital is permitted to bill Medicare for the additional cost (a so-called "outlier payment").

D'Agostino maintains that all off-label uses of Onyx were "affirmatively unsafe, ineffective, and hazardous to patient health, "[11] and that consequently, all "claims which fall into this category were false under the FCA." Id. ¶ 181. While Medicare is prohibited from reimbursing hospitals or physicians for unapproved devices (unless they are part of an FDA-authorized clinical trial), see 42 C.F.R § 411.15(o), D'Agostino acknowledges that Onyx was FDA-approved (and therefore Medicare eligible). Nonetheless, D'Agostino argues that because defendants fraudulently induced the FDA to grant approval for Onyx, all off-label reimbursement claims were tainted as a result. As suggested in the TAC, "[h]ad the FDA known what MTI was planning, it probably would not have granted approval." TAC ¶ 189 (emphasis added).[12]

B. Axium

Axium is an embolization coil attached to a delivery pusher equipped with a manual detacher. A surgeon threads the coil into the position at which he or she wishes to promote the formation of an embolus, and then detaches the coil and removes the pusher. First marketed in 2007, Axium was developed with ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.