• Massachusetts District Court Dismisses Off-Label False Claims Act Case under Public Disclosure Bar and Rule 9(b)
  • April 7, 2009 | Author: Michael E. Paulhus
  • Law Firm: King & Spalding LLP - Atlanta Office
  • On March 20, 2009, in United States ex rel. Poteet v. Lenke, No. 07-10237-RGS, 2009 WL 724940 (D. Mass. Mar. 20, 2009), the District Court of Massachusetts dismissed a False Claims Act (FCA) suit against a number of spine surgeons and medical device distributors for allegedly accepting kickbacks from Medtronic, Inc. and a subsidiary to use the product INFUSE Bone Graft/LT-CAGE® Lumbar Tapered Fusion Device in an off-label manner.

    The court found that the FCA’s public disclosure bar, 31 U.S.C. § 3730(e)(4)(B), stripped the court of jurisdiction because prior civil suits and news reports were sufficient to put the government on notice of the alleged fraud and Relators could not establish that they were original sources of the allegations. Id. at *3-*6. In reaching this conclusion, the court adopted the majority rule on the undecided issue in the First Circuit that an action is “’based upon’ a public disclosure ‘when the supporting allegations are similar to or the same as those that have been publicly disclosed . . . regardless of where the relator obtained his information.” Id. at *5 (citation omitted).

    In the alternative, the court found that Relators’ Amended Complaint failed to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). The Amended Complaint was deficient in numerous respects, including its failure to plead the filing of a false claim or that the alleged kickbacks caused the filing of false claims with Medicare. Id. at *8. Relators also failed to plead core factual elements of the alleged scheme, such as “which distributors were involved in the scheme, and how they were involved.” Id. In short, the court found that the Amended Complaint “contains ‘no factual or statistical evidence to strengthen the inference of fraud beyond possibility.’” Id.