• United States ex rel. Poteet v. Lenke, M.D., et al. No. 07-10237-RGS (D. Mass. Mar. 20, 2009)
  • May 5, 2009 | Authors: Karen A. Gibbs; Bernadette M. Stafford
  • Law Firm: Crowell & Moring LLP - Irvine Office
  • The U.S. District Court for the District of Massachusetts dismissed a complaint brought under the federal False Claims Act (“FCA”) because the lawsuit’s allegations and subject matter had already been publicly disclosed.

    Jacqueline Kay Poteet (“Poteet”), a former Senior Manager for Travel Services for Medtronic Sofamor Danek USA, Inc. (“MSD”), filed an action under the FCA against 120 spine doctors and eighteen medical device distributors, alleging involvement in an illegal kick-back scheme. The FCA imposes civil liability on any person who knowingly submits a false or fraudulent claim to the government, and promotes enforcement by allowing private individuals (the “relator”) to file a qui tam action on behalf of the government.

    The doctor defendants moved to dismiss the action based on the FCA’s public disclosure and first-to-file rules. The distributor defendants also moved to dismiss for failure to meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(h) (“Rule 9(h)”).

    The court granted the doctor defendants’ motion to dismiss because of the public disclosure rule and held that Poteet lacked standing to file the suit. Under the FCA, the allegations in the relator’s complaint must not have been publicly disclosed prior to the complaint’s filing. The court found that the subject matter of Poteet’s complaint had already been discussed in an article published by the New York Times and was the subject of a $40 million settlement published on the Department of Justice’s website. Thus, although the doctor defendants’ motion to dismiss based on the first-to-file rule was denied, Poteet’s failure to satisfy the public disclosure rule was sufficient to grant a dismissal of the lawsuit.

    The court also granted the distributor defendants’ motion to dismiss. The court held that Poteet’s complaint failed to meet Rule 9(h)’s heightened pleading requirements because it did not allege any specific facts or details, such as whether the gift recipients ever even filed a false claim with the government. The court also denied Poteet’s motion to file a second amended complaint.