D'Agostino v. EV3, Inc.
| Decision Date | 23 December 2016 |
| Docket Number | No. 16-1126,16-1126 |
| Citation | 845 F.3d 1 |
| Parties | Jeffrey D'AGOSTINO, Plaintiff, Appellant, State of California; State of Connecticut; District of Columbia; State of Florida; State of Georgia; State of Hawaii; State of Illinois; State of Indiana; State of Louisiana; State of Maryland; Commonwealth of Massachusetts; State of Michigan; State of Montana; State of Nevada; State of New Hampshire; State of New Jersey; State of New Mexico; State of New York; State of North Carolina; State of Oklahoma; State of Rhode Island; State of Tennessee; State of Texas; Commonwealth of Virginia; State of Wisconsin; John Doe; United States; State of Delaware; State of Minnesota, Plaintiffs, v. EV3, INC.; Microtherapeutics, Inc., Defendants, Appellees, John Cubelic; Vitas J. Sipelis; John Hardin ; Brett Wall, Defendants. |
| Court | U.S. Court of Appeals — First Circuit |
Daniel Robert Miller , with whom Susan Schneider Thomas , Philadelphia, PA, Berger & Montague PC , Lynn G. Weissberg , Jonathan Shapiro , and Shapiro, Weissberg & Garin LLP , Boston, MA, were on brief, for appellant.
Joshua S. Levy , with whom Mitchell Stromberg , Rebecca C. Ellis , Boston, MA, Bryan Alexander Pennington , Chicago, IL, Jeremy E. Kanarek , and Ropes & Gray LLP were on brief, for appellees.
Tara S. Morrissey , Attorney, Department of Justice, Civil Division, with whom Michael S. Raab , Attorney, Civil Division, Benjamin C. Mizer , Principal Deputy Assistant Attorney General, Civil Division, and Carmen M. Ortiz , United States Attorney, were on brief, for amicus curiae the United States of America.
Before Howard, Chief Judge, Selya and Kayatta, Circuit Judges.
This qui tam action makes its second appearance before us. Last year, we held that the district court should have evaluated Jeffrey D'Agostino's request for leave to file his fourth amended complaint under the standard set forth in Federal Rule of Civil Procedure 15(a). United States ex rel. D'Agostino v. ev3, Inc.(D'Agostino I), 802 F.3d 188, 193–96 (1st Cir. 2015). On remand, the district court found that D'Agostino's desired amendment failed under that standard because, even as proposed to be amended, the complaint did not allege claims upon which the court could grant relief. United States ex rel. D'Agostino v. ev3, Inc., 153 F.Supp.3d 519, 538 (D. Mass. 2015). For the following reasons, we agree.
Defendant ev3, Inc. ("ev3") discovers, develops, manufactures, and markets medical devices. Defendant Micro Therapeutics, Inc. ("MTI"), ev3's subsidiary since 2006, likewise manufactures and markets medical devices. D'Agostino's original and proposed complaints against these companies focus on two devices, the Onyx Liquid Embolic System ("Onyx") and the Axium Detachable Coil System ("Axium"). We recite the relevant facts concerning each device as they are alleged by D'Agostino in his proposed complaint, assuming them to be true unless they are merely conclusory. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
Onyx is an artificial liquid material developed by MTI to treat malformed blood vessels in the brain. In plain terms, it is injected into blood vessels near the brain, and then forms a mass blocking the flow of blood to facilitate subsequent surgery. In the early 2000s, MTI licensed the Onyx molecule to a company named Enteric. Enteric used the molecule to develop another medical device, Enteryx, which went to market first, after gaining Food and Drug Administration ("FDA") approval in April 2003 for the treatment of gastroesophageal reflux disease
. A series of adverse events involving Enteryx followed, prompting a patient safety alert in October 2004, and culminating in a complete recall of the device in September 2005.
It was during this timeframe—between Enteryx's approval and recall—that MTI sought approval for Onyx. The FDA's regulations require a premarket approval ("PMA") process for medical devices like Onyx. See 21 C.F.R. § 814.1(c). During that process, the device manufacturer supplies the FDA with extensive information regarding the device—including its design, manufacturing, packing, labeling, and testing—to satisfy the agency that the device is safe and effective. Id.§ 814.20. A "sufficiently complete" application proceeds to substantive review. Id.§ 814.42(a). That review is performed by FDA personnel and, at the FDA's election as in this instance, by an advisory panel of outside experts. Id.§ 814.44(a). The panel holds a public meeting to review the PMA before making a recommendation to the FDA. Id.§ 814.44(b). The FDA then considers the PMA application, together with any advisory panel report and recommendation, before issuing a decision on approval. Id.§ 814.44(c).
MTI's PMA application identified a narrow indication for Onyx: "use in the treatment of brain arteriovenous malformations
(‘BAVM's'), when embolization is indicated to minimize blood loss to reduce the BAVM size prior to surgery." While seeking approval, MTI emphasized the narrow scope of the indication as well as the rigorous nature of the training program required for physicians using Onyx. According to the testimony of MTI's Vice President before the FDA advisory panel, that training program would include an instructional session, a hands-on workshop, a case review, and observations. According to another MTI witness, any physician who completed this training would receive the assistance of an experienced proctor the first time he or she used Onyx. The advisory panel members placed great weight on these training requirements, describing them as "critically important" and "a very big component of getting [Onyx] into safe use."
The panel ultimately recommended approval of Onyx. However, several of its members explained that it was a "cautious approval," and others warned that they would advise the FDA to rescind approval if MTI disregarded their suggestions for carefully monitoring Onyx cases.
The FDA adopted the panel's recommendation, granting approval to Onyx in July 2005. The Onyx label authorized by the FDA restricted the device's use to "physicians with neurointerventional training and a thorough knowledge of the pathology to be treated, angiographic techniques, and super-selective embolization." It stated, "Contact your Micro Therapeutics Inc. sales representative for information on training courses."
Enter D'Agostino, a sales representative who worked at ev3 from January 2005 until his termination in January 2010. After ev3 acquired MTI in 2006, D'Agostino became familiar with the manner in which the defendants promoted and sold Onyx. He says that he observed physician trainings that lasted as little as four hours and proctored surgeries that involved off-label procedures. He also alleges that the defendants instituted a "Site Certification Process" whereby they certified and sold Onyx to any site where a single neurosurgeon who had completed their training enjoyed privileges. As a result, he says that Onyx fell into the hands of physicians at those sites with inadequate training or no training at all. Additionally, the defendants encouraged off-label marketing by setting sales quotas for their representatives that anticipated such sales, educating their sales force on "peripheral applications," and providing off-label training to physicians during all-expenses-paid retreats. All in all, it became clear, alleges D'Agostino, that the defendants never intended to honor the commitments that MTI had made to the FDA.
Because clinical trials involving Onyx in the treatment of aneurysms
evinced numerous complications, the defendants in 2007 launched a new medical device, Axium.1 Put simply, Axium provides another means of generating an embolism to facilitate the surgical treatment of anomalies in blood vessels in the brain. Surgeons use the device to place a small, detachable coil at a desired spot to generate a blockage of blood flow to an abnormality such as an aneurysm. Following the initial launch in 2007, the defendants redesigned the device several times in response to reports that it malfunctioned during procedures. They did not, however, recall earlier generations or relabel any devices. Problems persisted, notwithstanding frequent modifications. On top of these design challenges, irregularities during manufacturing resulted in defective lots of the devices that the defendants nonetheless sold. D'Agostino, who also promoted Axium, attended a February 2009 meeting where top brass admonished the sales force to keep quiet about defects in hopes of dodging FDA scrutiny.
Approximately one year later, the defendants terminated D'Agostino's employment. In October 2010, he brought this qui tam action as a "relator" on behalf of the United States under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 –3733, and on behalf of numerous states under similar state statutes. The relevant provisions of the FCA are those imposing liability on anyone who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval," id.§ 3729(a)(1)(A), or "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim," id.§ 3729(a)(1)(B). D'Agostino's proposed complaint accuses ev3 and MTI of violating those provisions in selling Onyx and Axium to hospitals that seek reimbursement from the federal government through, for example, the Centers for Medicare and Medicaid Services ("CMS").
Our opinion in D'Agostino I provides a full recitation of the suit's early procedural history, 802 F.3d at 190–91, which we repeat only briefly here. D'Agostino filed his original complaint under seal in October 2010 and amended the complaint as a matter of course in February 2011. Through two subsequent amendments, both with permission of the court, D'Agostino added several defendants2 and retooled his claims. In October 2013, the United States...
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