United States ex rel. Colquitt v. Abbott Labs., 16-10814

• Decision Date: 31 May 2017
• Docket Number: No. 16-10814,16-10814
• Citation: 858 F.3d 365
• Parties: UNITED STATES of America, EX REL.; Kevin N. COLQUITT, Individually, Plaintiff–Appellant v. ABBOTT LABORATORIES, Individually and as Successor-in-Interest to Guidant Corporation; Abbott Vascular Solutions, Incorporated, formerly known as Guidant Endovascular Solutions, Incorporated, Defendants–Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

858 F.3d 365

UNITED STATES of America, EX REL.; Kevin N. COLQUITT, Individually, Plaintiff–Appellant

v.ABBOTT LABORATORIES, Individually and as Successor-in-Interest to Guidant Corporation; Abbott Vascular Solutions, Incorporated, formerly known as Guidant Endovascular Solutions, Incorporated, Defendants–Appellees

No. 16-10814

United States Court of Appeals, Fifth Circuit.

FILED May 31, 2017

Christopher S. Hamilton, Esq., Andrea Lynn Fitzgerald, Meagan Martin, Standly & Hamilton, L.L.P., Kirsten Marisol Castaneda, Alexander Dubose Jefferson & Townsend, L.L.P., Dallas, TX, Kelly R. Bagby, Esq., Maame Gyamfi, AARP Foundation Litigation, Andrew M. Beato, Stein Mitchell Cipollone Beato & Missner, L.L.P., Washington, DC, for Plaintiff–Appellant.

John Caviness O'Quinn, Kirkland & Ellis, L.L.P., Washington, DC, George W. Bramblett, Jr., Esq., Haynes & Boone, L.L.P., Dallas, TX, James F. Hurst, Andrew Alan Kassof, Esq., Counsel, Daniel Siegfried, Kirkland & Ellis, L.L.P., Chicago, IL, for Defendants–Appellees.

Before STEWART, Chief Judge, and HIGGINBOTHAM and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

Relator Kevin Colquitt lost the qui tam war against his former employer Abbott Laboratories in three battles. He pursued three False Claims Act theories based on claims submitted to Medicare by medical providers engaged in the "off-label" use of Abbott's medical stents. A false inducement claim and a claim predicated on false certification of compliance with the Anti-Kickback Statute failed on a motion to dismiss. A false presentment claim was limited at summary judgment to periods when Colquitt worked for Abbott. The jury found against Colquitt on what was left of his false presentment claim. Colquitt argues that the motion to dismiss and motion for partial summary judgment should not have been granted. He also contends that erroneous evidentiary rulings and mistakes in instructing the jury tainted its verdict. Finding no reversible error, we affirm.

I.

Colquitt was a salesman for Guidant Corporation. He sold stents

, which are little metal or plastic tubes that doctors insert inside the body's natural tubes, like veins, arteries, or bile ducts, to shore them up. These stents

had been approved by the FDA to go into bile ducts, but Guidant was helping and encouraging doctors to use them in blood vessels. Two months before Colquitt left his job, Guidant was bought by Abbott Laboratories, which had a similar practice of promoting biliary stents for vascular use. Colquitt, who learned about the False Claims Act as a night law student, brought this qui tam action against Abbott because he thought that Guidant and Abbott had defrauded Medicare by seeking FDA approval for biliary stents but then encouraging and bribing providers to use them in vascular procedures for which the providers billed Medicare.

Colquitt's theories of fraud start with applications Guidant and Abbott made to the FDA to sell their stents. They applied under a fast track procedure for new medical devices that are substantially equivalent to devices already on the market. See Medtronic, Inc. v. Lohr , 518 U.S. 470, 478, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). To do so, they submitted premarket notifications (usually called "510(k) notifications") to the FDA in which they labeled their new products as biliary, rather than vascular, stents

. For some time, doctors had been using biliary stents, like the new models Abbott and Guidant wanted to release, in vascular procedures. Indeed, the only stents approved for vascular use were considered outmoded and applying biliary stents in vascular work was standard medical practice. Had the companies submitted their stents for FDA approval as vascular stents, they would have been subject to the much more rigorous and lengthy "premarket approval" process, which requires companies to prove their devices' safety and efficacy through clinical studies. See Riegel v. Medtronic, Inc. , 451 F.3d 104, 109 (2d Cir. 2006). Using stents approved for biliary use in vascular procedures is considered "off-label" use.

Colquitt helped Guidant and later Abbott sell these biliary stents

for off-label use to doctors performing vascular procedures, and they taught him the tricks of the trade. He learned how they advertised the stents in journals aimed at vein doctors; he learned about training seminars, discounts, dinners, and other company freebies for doctors. They also tutored him on Medicare billing, and he saw how the companies advised doctors and hospitals on which Medicare codes to use when they performed vascular repairs with the biliary stents.

Colquitt filed a qui tam suit against Abbott, and the government declined to intervene. He alleged that Abbott and Guidant had violated the False Claims Act in three ways:

(1) fraudulent inducement through misrepresentations in obtaining FDA clearance for the stents;

(2) violation of the federal Anti-Kickback Statute, rendering healthcare providers' claims certifying compliance with anti-kickback statutes false; and

(3) false presentment through promotions that caused hospitals to present Medicare claims that he contends were not eligible for payment because off-label use was not safe.

Abbott filed a combined motion to dismiss for failure to state a claim and for lack of subject matter jurisdiction due to public disclosure of the alleged fraudulent scheme.¹ The court granted the motion to dismiss for failure to state a claim as to the Anti-Kickback allegations. It granted the motion to dismiss for want of jurisdiction as to the fraudulent inducement claim, holding that Colquitt's information had been publicly disclosed and that he was not an original source of that information. Colquitt's third theory—false presentment through encouraging doctors to present fraudulent claims to Medicare—survived this motion.

Abbott later filed a motion for partial summary judgment seeking to limit this remaining claim to periods when Colquitt was actually employed by Abbott and restrict it to Guidant's conduct, rather than Abbott's independent conduct outside its role as Guidant's successor in interest. Abbott argued that this limited timeframe was the only period when Colquitt could be an original source for this claim. The district court agreed.

Colquitt's evidence at trial centered on the many ways that Guidant promoted its stents

for off-label use. Abbott's presentation was aimed at an open secret theory: it emphasized that everyone involved—the FDA, Medicare, doctors and hospitals—knew that using biliary stents in vascular work was standard practice and commonly reimbursed by Medicare. It offered testimony from physicians and a former Medicare officer. The jury returned a verdict against Colquitt who unsuccessfully sought a new trial before bringing this appeal.

II.

The district court dismissed Colquitt's Anti-Kickback allegations on the ground that he had failed to satisfy the heightened pleading requirements for fraud claims. See FED. R. CIV. P. 9(b). The Anti-Kickback Statute makes it a crime to pay someone to "refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program." 42 U.S.C. § 1320a-7b(b)(2)(A). If a provider has violated the statute, then claims he or she submits to Medicare may be false claims when the provider certified compliance with the kickback statute in submitting a claim. See United States ex rel. Thompson v. Columbia/HCA Healthcare Corp. , 125 F.3d 899, 902 (5th Cir. 1997).

As the False Claims Act is about fraud, claims asserted under it must comply with Rule 9(b)'s heightened pleading standard. Id. at 903. "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." FED R. CIV. P. 9(b). This requires, at a minimum, that a plaintiff plead the "who, what, when, where, and how" of the alleged fraud. Williams v. WMX Tech., Inc. , 112 F.3d 175, 179 (5th Cir. 1997).

In dismissing Abbott's kickback allegations, the district court faulted Colquitt for not describing "any details of the actual claims made by the physicians or hospitals that allegedly received kickbacks." It found that although Colquitt had identified some specific hospitals and doctors that allegedly received kickbacks, he did not plead that any of these hospitals or doctors signed up to be Medicare providers or submitted certified claims for reimbursement for procedures using Abbott's stents.

This may have been too rigid an application of Rule 9(b). The general rule is that a plaintiff must plead details such as the time and place of the false representations.

United States ex rel. Rafizadeh v. Cont'l Common, Inc. , 553 F.3d 869, 873 (5th Cir. 2008). But United States ex rel. Grubbs v. Kanneganti , 565 F.3d 180 (5th Cir. 2009), sounded a note of caution about its application in qui tam suits: "[T]he ‘time, place, contents, and identity’ standard is not a straitjacket for Rule 9(b). Rather, the rule is context specific and flexible and must remain so to achieve the remedial purpose of the False Claim Act." Id . at 190. The details of particular claims submitted to the government may only be attainable for relators through discovery, which a dismissal on the pleadings forestalls altogether. See id. at 191 ("While Rule 9(b) stands as a hurdle preventing discovery when a complaint fails to sufficiently define its claims, it does not do away with discovery altogether by allowing access to discovery only when the complaint already contains all the information necessary to succeed at trial."). Grubbs thus concluded that "a relator's complaint, if it cannot allege the details of an actually submitted false claim, may nevertheless survive by alleging particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted." Id.

A strong inference that the named hospitals...