United States ex rel. Patriarca v. Siemens Healthcare Diagnostics, Inc.

• Decision Date: 14 March 2018
• Docket Number: 11 Civ. 00181 (BMC)
• Citation: 295 F.Supp.3d 186
• Parties: UNITED STATES of America EX REL. Rey C. PATRIARCA, Plaintiff, v. SIEMENS HEALTHCARE DIAGNOSTICS, INC., Bayer Diagnostics Corporation, Defendants.
• Court: U.S. District Court — Eastern District of New York

295 F.Supp.3d 186

UNITED STATES of America EX REL. Rey C. PATRIARCA, Plaintiff,

v.SIEMENS HEALTHCARE DIAGNOSTICS, INC., Bayer Diagnostics Corporation, Defendants.

11 Civ. 00181 (BMC)

United States District Court, E.D. New York.

Signed March 14, 2018

Daniel R. Miller, Berger & Montague, P.C., Philadelphia, PA, Joy Clairmont, Pro Hac Vice, Shauna B. Itri, Pro Hac Vice, Berger & Montague, P.C., Philadelphia, PA, Holly H. Snow, U.S. Department of Justice, Washington, DC, John Vagelatos, United States Attorneys Office Eastern District of New York, Philip R. Michael, Philip Michael Law Group, New York, NY, for Plaintiff.

Erik Haas, Aileen Marie Fair, Jonathan Henry Hatch, Joshua A. Goldberg, Patterson, Belknap, Webb & Tyler LLP, New York, NY, for Defendants.

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

Plaintiff Rey C. Patriarca ("Relator") brought this action on behalf of the United States against Siemens Healthcare Diagnostics, Inc. and Bayer Diagnostics Corporation (collectively, "Siemens") to recover damages under the False Claims Act ("FCA") for alleged fraudulent conduct from February 2006 through December 2010 (the "Relevant Time Period"). Relator claims that Siemens marketed a test to measure the levels of a certain hormone knowing that the test was flawed, and that countless medical professionals ordered treatments for patients on the basis of the test's inaccurate results. Through Medicare, the United States reimbursed many of these treatments. In response, Siemens argues that the discrepancies about which Relator complains were, in fact, widely known and, in any event, did not undermine the test. Siemens has moved to dismiss Relator's complaint, and for the reasons discussed below, Siemen's motion is granted.

BACKGROUND

I. PTH Testing and Parties

Patients with Chronic Kidney Disease

("CKD") may have high levels of parathyroid hormone ("PTH"), which can lead to bone disease. More than 26 million Americans suffer from CKD. Vitamin D analogs are used to treat high levels of PTH, but overdosing of these analogs can lead to serious health consequences. Accurate diagnosis of PTH levels is therefore critical. Doctors may also order parathyroidectomies in serious cases when PTH levels exceed a certain threshold.¹ Many patients receive care at kidney dialysis centers, and Medicare covers 75% of those patients who do.

At the time he filed the complaint, Relator worked as a District Manager for Scantibodies Clinical Laboratories, Inc. ("Scantibodies"), and was responsible for selling and marketing Scantibodies products to dialysis centers and nephrologists' office. Siemens is a major healthcare company, and in 2006 it purchased assets from Bayer Diagnostics Corporation. One of those assets, the "Siemens Test,"² is used to measure PTH levels.

The Siemens Test is what is known as a "Second Generation" PTH test. Second Generation Tests measure both the whole PTH molecule ("1–84" PTH) and large fragments of the molecule ("7–84" PTH). On the other hand, "Third Generation Tests" are designed to report only the level of whole PTH molecules and omit the fragments. For this reason, Second Generation Tests report PTH levels roughly twice that of Third Generation Tests.

II. History of PTH Testing

In 1987, Nichols Diagnostics ("Nichols") produced a PTH test (the "IRMA Test") that was performed manually and required a several-hour long incubation period. The test was approved by the FDA and became the industry standard.

Five years later, Nichols produced a new, automated test, with a reduced incubation period of just 37 minutes. The new test was "aligned" with the IRMA Test, which means that its PTH measurements

were consistent with the earlier test's results. Nicholas continued to launch improved tests (together, these subsequent tests are "the Nichols Tests"). The overwhelming majority of dialysis centers in the United States used Nichols Tests by the early 2000s.

By this point, many other companies, including Siemens, produced PTH tests that were purportedly aligned with the IRMA test. In 2002, Bayer sought FDA approval for two PTH tests. Bayer represented that the first, the ACS 180 Test, was 98.5% correlated to the IRMA Test (the only difference between the two was that the ACS 180 Test was automated, and the IRMA test was manual), and that the Siemens test was 99.4% correlated to the ACS 180 Test. Accordingly, Bayer argued, the Siemens test was, through the principle of transference, sufficiently correlated to the IRMA Test to warrant a "substantial equivalence" determination by the FDA.³ The FDA agreed, and approved the Siemens test that year.

To determine substantial equivalence, the FDA looks to whether the new device has the "same technological characteristics" as the predicate device, and "does not raise different questions of safety and effectiveness." Such a finding does not necessarily mean that the two devices are the same or return identical results. For its FDA application, Siemens submitted data showing that the Siemens Test was correlated to the ACS 180 Test, which itself was correlated to the IRMA Test, which means that the results from the three tests have a predictable relationship. This is distinct from finding that the tests yield the same results; in fact, they did not, and Siemens did not represent that they did.

Later versions of the Nichols Tests "drifted" upward, consistently overstating patient's PTH levels, leading to medically unnecessary prescriptions and surgeries. After a qui tam action relating to the tests' inaccuracy and a settlement, Nichols withdrew its tests from the market around 2005. The suit was brought by Relator's employer at Scantibodies, Tom Cantor. Competitors—including Siemens—stepped into the space left by the withdrawn Nichols Tests, and aggressively marketed their tests across the country.

III. Siemens Test Drift

In his complaint, Relator alleges that by early 2006—concurrently with it becoming the dominant PTH test in the United States—the Siemens Test had materially "drifted" from the IRMA test.⁴

Relator bases his allegation primarily on roughly 20 separate "parallel" experiments he conducted between 2006 and 2010. In a parallel experiment, different PTH tests are used to analyze the same patient sample. Relator compared the Siemens Test to the PTH test developed by his own company, the "Scantibodies Test," which is a Third Generation Test.⁵ Relator alleges that during the Relevant Time Period, Scantibodies conducted a bi-weekly experiment to confirm that its test remained aligned with the IRMA Test. On average, Relator alleges that the Siemens Test measured a 42% higher amount of PTH than did the Scantibodies Test, and he concluded by transference that the Siemens test was measuring PTH 42% higher than the IRMA test.

Relator also claims that in May and June of 2010, Rubin Dialysis Center ("Rubin"), a dialysis center that sent its blood samples Spectra Laboratories, Inc. ("Spectra"), noticed higher than expected PTH levels. Spectra used the Siemens Test. Rubin then sent samples out to both Spectra and hospitals not using the Siemens Test, and discovered that the Siemens Test generated results indicating higher PTH levels.

Relator similarly describes that in the mid–2000s, Renal Care Group, Inc. ("RCG") (a dialysis chain) used the "Roche Test," which was allegedly "well-aligned with the IRMA Test." In 2006, RCG was acquired by a company that used Spectra for its lab work—and, as discussed above, Spectra used the Siemens Test. Accordingly, former RCG patients were transferred from the Roche Test to the Siemens Test, and their doctors began seeing higher than expected PTH results. Relator claims that Spectra conducted a parallel analysis of the Siemens and Roche tests in 2006, and found that the Siemens Test measured patients' PTH levels 22% higher than the Roche Test. In 2010, Spectra conducted an internal investigation to determine if its laboratory practices played any role in the apparent upward drift of PTH levels. Spectra found that its machinery was working properly.

IV. KDOQI Guidelines

In the early 2000s, doctors and scientists worked with the National Kidney Foundation to develop clinical practice guidelines to manage CKD. The Kidney Disease

Outcomes Quality Initiative ("KDOQI") guidelines were published in 2003, and one of its stated purposes was to inform nephrologists about PTH testing. The guidelines were based on studies involving the IRMA Test. Relator alleges that because of that basis, if a PTH test deviates from the IRMA Test, a doctor making medical decisions in light of the guidelines will be misguided.

Relator claims that during the Relevant Time Period, "the great majority of nephrologists ... followed the KDOQI Guidelines," which recommended that they prescribe Vitamin D injections in response to PTH levels above a certain point, and that they order parathyroidectomies

in response to PTH levels beyond a higher point. Relator points to statements by Dr. Stephen Z. Fadem, a practicing nephrologist, who claims that providers closely relied on the KDOQI PTH Guidelines in making treatment decisions. He also claims that after the Nichols Tests were removed from the market, the Siemens Test was extensively used, and that most clinicians never considered that the test had migrated upward from the IRMA Test. Dr. Fadem states that, "[i]f the [PTH] test fits the clinical picture, it is accepted as a valid measure, with trust placed on the laboratory to assure the machines are properly calibrated and the methodology is correct."

The KDOQI Guidelines also state that they "are not intended to define a standard of care, and should not be construed as one." And, as discussed above, the guidelines point out that Second Generation Tests (such as the Siemens Test) yield absolute results that are roughly double those of Third Generation Tests (such as the Scantibodies Test). Furthermore, the guidelines indicate that PTH levels are one of several data points that clinicians should...