United States ex rel. George v. Bos. Scientific Corp.

• Decision Date: 27 March 2012
• Docket Number: Civil Action No. H–07–2467.
• Parties: UNITED STATES of America, ex rel. Elaine GEORGE, Plaintiffs, v. BOSTON SCIENTIFIC CORPORATION and Guidant Corporation, Defendants.
• Court: U.S. District Court — Southern District of Texas

864 F.Supp.2d 597

UNITED STATES of America, ex rel. Elaine GEORGE, Plaintiffs,

v.BOSTON SCIENTIFIC CORPORATION and Guidant Corporation, Defendants.

Civil Action No. H–07–2467.

United States District Court,

S.D. Texas,

Houston Division.

March 27, 2012.

Mary Michelle Zingaro, Office of U.S. Attorney, Mitchell R. Kreindler, Kreindler & Associates, Houston, TX, Michele M. Fox, United States Department of Justice, Lori E. Iwan, Iwan Cray Huber Horstman & Van Ausdal L.L.C., Chicago, IL, David W. Sanford, Sanford Wittels et al., Washington, DC, for Plaintiffs.

Frederick Robinson, Lesley C. Reynolds, Fulbright & Jaworski, Washington, DC, Jaclyn A. Hermes, R. Jeffrey Layne, Fulbright & Jaworski L.L.P., Austin, TX, Randall Shirres Richardson, Fulbright Jaworski L.L.P., Houston, TX, for Defendants.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

In this qui tam action, the relator, Elaine George,¹ alleged that the defendants, Boston Scientific Corporation and Guidant Corporation, improperly promoted a medical device for an off-label use, causing physicians and hospitals to submit fraudulent reimbursement claims to Medicare and Medicaid. In her amended complaint, George asserted a violation of the False Claims Act (“Act”), 31 U.S.C. § 3729(a); retaliatory discharge under the Act, id. § 3730(h); and retaliatory discharge under Illinois law. (Docket Entry No. 58). This court granted the defendants' motion to dismiss the amended complaint, but with leave to replead. (Docket Entry No. 81). George has filed a second amended complaint, alleging only retaliatory discharge under the Act. (Docket Entry No. 82, ¶¶ 44–48). The defendants again have moved to dismiss. (Docket Entry No. 87). George has responded, and the defendants have replied. (Docket Entry Nos. 90, 91).

Based on the pleadings; the motion, response, and reply; the record; and the applicable law, this court denies the defendants' motion to dismiss the second amended complaint. A scheduling and status conference is set for April 16, 2012, in Courtroom 11–B, at 5:00 p.m.

The reasons for this ruling are explained below.

I. Background²A. The Parties

Guidant Corporation, headquartered in Indianapolis, designed, developed, and marketed cardiovascular medical products. The product at issue in this case is the FlexView Microwave Surgical Ablation System (“the FlexView device”). (Docket Entry No. 82, ¶ 6). Boston Scientific Corporation, headquartered in Massachusetts, also designs, develops, and markets medical products. In April 2006, Boston Scientific acquired Guidant's Cardiac Rhythm Management and Cardiac Surgery Units, which included the FlexView device. ( Id., ¶¶ 5–6).

In June 2006, during the transition from Guidant to Boston Scientific, Guidant hired Elaine George as a sales representative. ( Id., ¶ 4). George had over sixteen years of experience in the medical-device sales industry and had won awards for her sales work. ( Id., ¶ 26). George was hired as a territory manager for the Cardiac Surgery Division's Midwest region. She worked in central Illinois and throughout Missouri until she was fired in September 2006. ( Id., ¶ 4).

B. The FlexView Device

The FDA approves medical products for specific uses, which are identified in the product label. Using a product for other purposes is “off-label.” The FDA generally prohibits manufacturers from marketing products for off-label uses. The FDA does not restrict hospitals from purchasing, or physicians from prescribing or using, products for off-label uses. To the contrary, off-label use of many medical devices and drugs is an accepted medical practice.³

The FDA approved the FlexView device for use in ablating—removing or destroying—soft tissue and striated, cardiac, and smooth muscle in surgical procedures. According to George's complaints, the defendants trained their sales staff to promote off-label use of the FlexView device to treat atrial fibrillation, a condition in which the heart's atria beats irregularly fast.

C. The Allegations on Retaliation

In July 2006, shortly after she began working for Guidant, George attended Boston Scientific's Initial Training School in Santa Clara, California. (Docket Entry No. 82, ¶¶ 7, 28). At this training (and before, it appears), “George received extensive instructions regarding her responsibility to train doctors to use [the FlexView device] off-label to treat atrial fibrillation[.]” ( Id., ¶ 27). One day of training focused on regulatory restrictions on off-label promotion. George alleges that at a presentation for a number of employees,

Defendants' compliance personnel discussed the dangers to the company associated with illegal off-label marketing. They described federal enforcement actions by the FDA and Department of Justice taken against competitors who had run afoul of the off-label marketing prohibition. They described how the government considered off-label marketing to be fraud and how other companies had incurred liability in the tens of millionsof dollars as a result of their off-label marketing efforts. These presentations made it clear that off-label marketing was a type of fraud against the federal government that should be avoided at all costs.

( Id., ¶ 29). One of the presenters, Charlie Merchant, a Boston Scientific sales trainer, specifically talked about off-label marketing restrictions in a way that led George to believe that the FlexView device could not be legally promoted for use in atrial fibrillation. “During the presentation, Ms. George asked for clarification as to whether there was any use for which BSC's surgical ablation products could be promoted legally.” ( Id., ¶ 30). As soon as George asked her question, Merchant called for a ten-minute break to talk to George. Merchant “reprimanded” George and “warned that such questions could jeopardize her employment status.” ( Id.) He told her to “stop asking questions regarding off-label marketing” of Boston Scientific's surgical-ablation devices. ( Id.)

In August 2006, George attended Boston Scientific's national sales meeting in Beaver Creek, Colorado. At that meeting, Boston Scientific officially launched the FlexView device. A product manager announced that Boston Scientific “was close to obtaining FDA approval” to use the FlexView device in treating atrial fibrillation. ( Id., ¶ 31). The product manager stated that Boston Scientific “was in a ‘race’ against its competitors” to receive such approval. ( Id.) George asked at that presentation whether promoting the FlexView device “would be viewed by the government as an illegal and prohibited off-label promotional activity” before the FDA issued its approval. ( Id., ¶ 31). At a break, George's manager, Meg Zavich, followed her into the bathroom and

reprimanded Ms. George for challenging [Boston Scientific]'s marketing activities and for inquiring about prohibited off-label efforts. Ms. Zavich told her that if she harbored such concerns, she “might not be cut out for the job.” Ms. Zavich said she might have made a mistake in hiring Ms. George and suggested that Ms. George consider resigning her position.

( Id., ¶ 32).

George alleged that during the following weeks, Zavich continuously criticized her. These criticisms led George to complain to Zavich that she was being held to a different standard and asked to perform different functions than other new hires. ( Id., ¶ 33). George complained to Zavich that the “disparate treatment resulted from her challenging the company's off-label promotional activities.” ( Id.). Zavich did not deny that she treated George differently than the other new employees or George's accusation about the reason. “She told Ms. George that it was her prerogative to hold Ms. George to different and higher standards and give her whatever assignments she wanted.” ( Id., ¶ 34). Zavich again suggested that George consider resigning. ( Id.).

At the end of August 2006, before George had finished training, Zavich placed her on a Performance Improvement Plan for poor performance. George objected, without success, to the subjective nature of the plan's goals. ( Id., ¶ 35). Zavich also required George “to reply within 30 minutes to every phone call or page from any account or [Boston Scientific] employee” or face job termination. ( Id., ¶ 36). During George's remaining time at Boston Scientific, Zavich called her several times during the week, including twice in the middle of the night. ( Id.).

George contacted Boston Scientific's Human Resources Department for advice. Following the procedure set out in the Boston Scientific employee manual, George asked the Human Resources representative, “Camaya,” to help with her conflict with Zavich. Camaya refused, explaining that if George discussed the matter further, internally or externally, she would be fired immediately. Camaya suggested that George consider resigning. ( Id., ¶ 37). George alleges that two Boston Scientific senior sales representatives told her that Boston Scientific “was making her an example for the rest of the company” and “warned her that management was out to get her.” ( Id., ¶ 38).

On September 25, 2006, George was told to resign or face termination. On the same day, Merchant (the sales trainer) told another group at a training session “about Ms. George's termination, saying that it should serve as a lesson to keep your mouth shut and do your job.” ( Id., ¶ 40). Boston Scientific sent George an e-mail three days later telling her that she was fired. ( Id.) According to George, Boston Scientific gave false reasons for firing her. One reason was that she had not completed a report on time. George alleges that a supervisor had directed her to wait until Zavich could review the report before submitting it. A second reason was that George had submitted a weekly report late. George alleges that Zavich gave her permission to do so. The third reason was “[a]n incident involving [her] efforts to return ‘trunk stock’ to Charlie Merchant[.]” George alleges that her...