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United States ex rel. Lokosky v. Acclarent, Inc.

United States District Court, D. Massachusetts

September 20, 2017

UNITED STATES OF AMERICA ex rel. MELAYNA LOKOSKY, Plaintiffs,
v.
ACCLARENT, INC., ETHICON, INC. and JOHNSON & JOHNSON, Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS (DKT. NO. 61)

          DONALD L. CABELL, U.S.M.J.

         Melayna Lokosky began working for Acclarent, Incorporated (Acclarent) in 2007 as a sales representative. One of the products Acclarent sold was a sinus related device known as the Relieva Stratus MicroFlow Spacer (the “Spacer”). The plaintiff alleges that Acclarent engaged in practices which ultimately induced third parties to file false claims for payment for the Spacer with government programs like Medicare and Medicaid, and eventually terminated her for complaining about it. Following the previous dismissal of certain claims, the complaint asserts a claim for retaliatory termination pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3730(h), and a common law claim for wrongful termination in violation of public policy. The defendants move to dismiss the complaint for failure to state a claim. (Dkt. No. 61). The plaintiff opposes the motion. (Dkt. No. 74). For the reasons discussed below, I find that the complaint states valid claims against Acclarent but not against Ethicon, Inc. (Ethicon) or Johnson & Johnson. Accordingly, the motion to dismiss is granted in part and denied in part.

         I. RELEVANT BACKGROUND[1]

         According to the complaint, Acclarent, in order to receive clearance for the Spacer, misrepresented to the FDA its intended use and its similarity to previously cleared products. (Compl. ¶ 12). More specifically, the FDA cleared the Spacer as an inert, non-drug delivering spacer to be placed in a patient's sinuses for no more than 14 days as a healing aid, but Acclarent's intended use for the device was to deliver the steroid Kenalog-40 in an unproven and off-label manner for 30 days or longer. (Id.). Kenalog-40 was never approved for use in the paranasal sinuses or for topical delivery through a sinus spacer. (Compl. ¶ 34). In fact, Acclarent knew the Spacer provided no additional benefits when used with the steroid Kenalog-40, and consequently hid this data from the FDA. (Compl. ¶ 13). Had Acclarent been truthful with the FDA, the Spacer never would have been approved for the market. (Id.).

         But, because Acclarent was not truthful, the FDA approved the Spacer. (Compl. ¶ 14). Once it was cleared, Acclarent never marketed the Spacer for its intended use. Instead, Acclarent instructed doctors to use the Spacer with off-label Kenalog-40 for more than 14 days. (Id.). By concealing the intended combination of the Spacer and Kenalog-40, and then uniformly marketing that off-label combination to hospitals and physicians, Acclarent caused the Spacer to be misbranded, and thus ineligible for federal reimbursement. (Compl. ¶ 15).

         In 2009, Johnson & Johnson announced that its subsidiary, Ethicon, was acquiring Acclarent. (Compl. ¶ 17). Johnson & Johnson immediately became concerned about the off-label marketing of the Spacer and announced two months later that it would cease all active marketing of the product due to regulatory concerns. (Id.). Johnson & Johnson also announced that they would destroy all promotional material for the Spacer. (Compl. ¶ 64). Despite this announcement, Johnson & Johnson still manufactured, sold, and distributed the product. (Compl. ¶ 17).

         Furthermore, Acclarent trained its sales representatives to tell doctors that the Spacer was specifically designed for use with Kenalog-40. (Compl. ¶ 39). Acclarent employees knew that saline solution would leak out of the Spacer in a matter of hours or days, rendering pointless the insertion of the Spacer for 14 days. (Id.). This same problem applied to other drugs of similar viscosity, including antibiotics and most forms of corticosteroids. (Id.). The exception was Kenalog-40, whose viscosity was intended to maximize the time the drug remained in the injection area. (Id.). Use of the Spacer with Kenalog-40 is the only use that Acclarent has ever investigated in living human beings, and is the only use described in articles published in medical journals. (Compl. ¶ 40-41). The Acclarent sales force sold the device to physicians by insisting that it be used with Kenalog-40. The plaintiff learned from other sales representatives that physicians did not use the device with saline and that this was representative of the way physicians used the device around the country. (Compl. ¶ 56).

         The plaintiff joined Acclarent in June 2007 and was an experienced medical device sales representative. (Compl. ¶ 65). She was one of the first sales representatives trained to sell the Spacer, and was one of the top sellers of the Spacer before the defendants stopped promoting the product in March 2010. (Id.). When the defendants stopped promoting the Spacer, sales representatives were told that their sales quotas would be adjusted to account for the lack of these sales, but in reality this did not occur and sales representatives were unable to meet their sales goals. (Compl. ¶ 66). As a result, sales managers began to put pressure on sales representatives to promote the Spacer as they had done before. (Compl. ¶ 67).

         After the defendants announced that they would no longer promote the Spacer, the plaintiff was uncomfortable with its off-label promotion and was relieved to no longer have to sell it. (Compl. ¶ 68). But, in July 2010, one of the plaintiff's supervisors told her that the company needed to return to selling the Spacer. (Compl. ¶ 69). The plaintiff informed her supervisor that she did not think it was right to sell the product off-label and that she did not want to do it. (Id.). The supervisor told her to sell it anyway. (Id.).

         In August 2010 the plaintiff conspicuously posed questions at a conference in the presence of in-house regulatory personnel about how to handle inquiries from physicians about the Spacer. (Compl. ¶ 70). Due to the plaintiff's questions, the regulators decided to stay at the conference an additional day, which in turn prevented the sales group from realizing its plan to use the time to discuss in private their plans to renew promotion of the Spacer. (Id.). Acclarent subsequently put the plaintiff on an unrealistic performance plan within 30 days of the sales meeting, and terminated her on or about January 4, 2011. (Compl. ¶ 71).

         II. LEGAL STANDARD

         Under Rule 12(b)(6) courts must apply the notice pleading requirements of Rule 8(a)(2). Educadores Puertorriquenos en Accion v. Hernandez, 367 F.3d 61, 66-67 (1st Cir. 2004). Under Rule 8(a)(2), a complaint need only include a short and plain statement of the claim showing that the pleader is entitled to relief and giving the defendant fair notice of the grounds for the plaintiff's claim. Conley v. Gibson, 355 U.S. 41, 47 (1957). Therefore, “a Court confronted with a Rule 12(b)(6) motion ‘may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'” Educadores Puertorriquenos en Accion, 367 F.3d at 66 (citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).

         To show that one is entitled to relief, the plaintiff must provide “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully, ” and is met when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). A court must “accept as true all well-pleaded facts set forth in the complaint and draw all reasonable inferences therefrom in the pleader's favor.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting Artuso v. Vertex Pharmaceuticals, Inc., 637 F.3d 1, 5 (1st Cir. 2011)). However, the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. at 678 (quoting Twombly, 550 U.S. at 555).

         III. ...


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