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Federal appeals court rules Medtronic whistleblower suit should proceed

Jim Spencer and Joe Carlson, Star Tribune on

Published in Business News

A federal appeals court has ruled that Medtronic can be sued for allegedly defrauding the U.S. Food and Administration in a long-running dispute over whether the medical device maker deceived regulators to avoid costly safety studies.

According to a federal whistleblower lawsuit filed in California by former Medtronic sales representative Bryan Shapiro, the device maker purposely misled FDA reviewers to believe several "Verte-Stack" branded vertebral-replacement devices are designed for use in the lower spine.

The lawsuit, which Medtronic calls "baseless," says the Minnesota-run medical device company got the FDA to label the devices "contraindicated" for the upper spine, which means they should not be used there. In reality, Shapiro said, the devices were designed for and only usable in the upper spine, where vertebrae are smaller.

Getting the Verte-Stack "vertebral body replacement" devices cleared for use in the lower spine allowed Medtronic to save millions of dollars and months, if not years, of testing to bring a lucrative spine surgery device to market quickly, the suit alleges. Medicare and Medicaid have paid millions for the devices to be used in patients.

On Friday, the Ninth U.S. Circuit Court of Appeals ruled that the Dan Abrams Company — a one-person corporation controlled solely by Shapiro — can sue Medtronic on behalf of the federal and state programs using a "fraud on the FDA" theory of liability under the False Claims Act.

Medtronic lawyers say there's nothing unusual about medical devices being labeled for one purpose and then used for something else — a common practice called "off label" use. The FDA generally doesn't prohibit off-label use, and it's not illegal for Medicare and Medicaid to pay for off-label uses.

 

Medtronic declined to say whether it plans to appeal. It's not clear whether the appeal deadline is 30 days or some other period of time.

"We are confident in the merits of our case and intend to defend ourselves vigorously against the baseless allegations," Medtronic spokesman Ben Petok said in an e-mail.

The case against Medtronic, filed in 2015, has been dismissed three times by the lower courts, with allowances to refile each time. In 2019, Medtronic attorneys convinced a federal district court judge in California to dismiss the "fraud on the FDA" argument on technical grounds in the third amended lawsuit.

On Friday, a three-judge panel of the Ninth U.S. Circuit Court reversed that decision and sent the question back to the trial court. The appeals judges did not revive Shapiro's other claims, including one alleging kickbacks to doctors.

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