United States ex rel. Witkin v. Medtronic, Inc.

• Decision Date: 23 May 2016
• Docket Number: CIVIL ACTION NO. 11-10790-DPW
• Citation: 189 F.Supp.3d 259
• Parties: United States of America, et al, ex rel. Adam Witkin, Plaintiffs, v. Medtronic, Inc., and Medtronic Minimed, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

189 F.Supp.3d 259

United States of America, et al, ex rel. Adam Witkin, Plaintiffs,

v.Medtronic, Inc., and Medtronic Minimed, Inc., Defendants.

CIVIL ACTION NO. 11-10790-DPW

United States District Court, D. Massachusetts.

Signed May 23, 2016

Christopher Weld, Jr., David H. Rich, Todd & Weld, Gregg D. Shapiro, Office of the United States Attorney, Boston, MA, Frederick M. Morgan, Jr., Jennifer M. Verkamp, Morgan Verkamp LLC, Cincinnati, OH, Peter W. Chatfield, Phillips & Cohen LLP, Washington, DC, for Plaintiffs.

Samantha Barrett Badlam, Ropes & Gray LLP, Washington, DC, James P. Dowden, Ropes and Gray, Michael K. Fee, Latham & Watkins LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, UNITED STATES DISTRICT JUDGE

Relator Adam Witkin brings this qui tam action against Medtronic, Inc.—and its wholly-owned subsidiary Medtronic MiniMed, Inc. (collectively, "Medtronic")-as a relator on behalf of the United States, 26 individual states and the District of Columbia. He alleges violations of the federal False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. , as well as violations of the FCAs of those states and the District of Columbia. Witkin also seeks relief under federal and state law for allegedly retaliatory discharge. Medtronic moves to dismiss the complaint for failure to state a claim.

I. BACKGROUND

A. Overview of the Allegations

Medtronic sells a variety of products for the treatment and management of diabetes

. Sec. Am. Compl. ¶ 73. An estimated 26 million Americans have diabetes, a condition in which the body is not able to regulate levels of glucose in the blood. Id. ¶ 61. Less than 10% of diabetes patients suffer from Type 1 diabetes, an autoimmune disease in which the body does not produce enough insulin to move glucose from the blood to the cells. Id. ¶¶ 62-63. More than 90% of diabetes patients have Type 2 diabetes, a condition in which the body has developed a resistance making insulin inefficient at moving glucose from the blood to the cells. Id. ¶¶ 63-64.

Among the products Medtronic sells are insulin

pumps allowing the continuous delivery of insulin, Sec. Am. Compl. ¶¶ 68-70, 74. These pumps serve as an alternative to multiple daily injections of insulin. Id. ¶ 67-68. Medtronic also sells "continuous glucose monitoring" devices. Id. ¶¶ 71, 74. The monitoring device is inserted under the patient's skin with a needle. Id. ¶ 71. Medtronic sells one for professional use called the "iPro," id. ¶ 123. A patient is fitted with an iPro device in a physician's office and sent home to collect glucose data over several days, after which the data can be interpreted for treatment recommendations. Id ¶ 124. Medtronic also sells an integrated diabetes management system in which an insulin pump is paired with a glucose monitoring device. Id. ¶ 78.

Witkin was employed with Medtronic's diabetes division from November 2004 until his termination on February 28, 2011. Sec. Am. Compl. ¶ 45. He sold Medtronic medical devices for the treatment and management of diabetes in his capacity as a Territory Manager and Senior Territory Manager in Oregon. Id. Witkin alleges that, in the course of his employment, he learned about fraudulent behavior by Medtronic that resulted in false claims to government health care programs, including Medicare, Medicaid, CHAMPUS/TRICARE, and CHAMPVA. Id. ¶¶ 92-96.

Many of Witkin's allegations involve Medtronic's efforts to expand insulin

pump use among Type 2 diabetes patients. Insulin pumps historically were used by Type 1 diabetes patients, id. ¶ 69, and a small set of Type 2 diabetes patients with extreme forms of insulin resistance, id. ¶ 7. Expanding pump use among Type 2 patients more generally was, Witkin alleges, central to Medtronic's national sales strategy. Id. ¶¶ 121. Pump therapy also allowed patients to receive more complete insurance coverage for their diabetes care, due to differences in reimbursement for insulin when purchased independently and when used in conjunction with a pump. See id. ¶ 149.

More specifically, Witkin alleges that Medtronic paid kickbacks and other illegal remuneration to physicians to induce them to prescribe Medtronic insulin pumps to their patients. Sec. Am. Compl. ¶¶ 121-309. He also alleges that Medtronic helped Type 2 patients falsify their qualifications for insulin pump therapy, resulting in claims to government payors for reimbursement of ineligible and unnecessary pumps. Id. ¶¶ 493-551.

According to Witkin, Medtronic also fraudulently promoted its insulin

pumps for uses not approved by the U.S. Food and Drug Administration ("off-label" uses). For example, Medtronic allegedly misrepresented the safety and efficacy of using high-concentration "U-500" insulin with its pump, when the pump was approved only for use with lower-concentration "U-100" insulin. Sec. Am. Compl. ¶¶ 310-423. The resulting claims for reimbursement as to the pump and the insulin were thereby false.

Witkin further alleges that Medtronic used false representations to promote off-label use of its adult diabetes management systems by pediatric patients, id. ¶¶ 424-91. An earlier complaint also alleged that Medtronic used fraudulent practices to induce unnecessary orders for insulin pump upgrades and replacements, First Am. Compl. ¶¶ 428-76, although these claims were voluntarily dismissed on May 30, 2013 and have not been reasserted in the Second Amended Complaint.

Count I seeks to hold Medtronic liable under the FCA, based on fraudulent conduct which caused or was material to false claims made to federal health care programs, and based on its avoidance of obligations to repay the government by failing to report overpayments received as a result of false claims. Count II seeks to hold Medtronic liable under false claims statutes of the 26 named states and the District of Columbia (collectively, the "state FCAs"). Count III seeks damages under California and Illinois insurance fraud statutes. Cal. Ins. Code § 1871.7 ; 740 Ill. Comp. Stat. § 92.

In Count IV, Witkin alleges that his termination in February 2011 constituted illegal retaliation for his efforts to investigate and stop Medtronic's FCA violations, in violation of the federal FCA, 31 U.S.C. § 3730(h). See Sec. Am. Compl. ¶¶ 562-94. Witkin also seeks relief for his allegedly wrongful termination under Oregon's whistleblower protection law, Or. Rev. Stat. Ann. § 659A.199 (Count V), and the common law of Oregon and California (Count VI).

B. Procedural History

Witkin filed this action on May 5, 2011. The complaint was kept under seal until the United States declined to intervene in the action. Cf. 31 U.S.C. § 3730(b)(2). The states, too, have declined to intervene.

Medtronic moved to dismiss Witkin's initial complaint on January 7, 2013. Witkin responded by filing an Amended Complaint on February 11, 2013. Medtronic thereafter filed a motion to dismiss for failure to state a claim. Witkin opposed the motion. In doing so, he also conditionally sought leave to amend the complaint by representing that he could "provide additional factual detail" if necessary. I granted leave to amend and the operative Second Amended Complaint was filed on August 1, 2013. Medtronic has again moved to dismiss for failure to state a claim.

At this point, I note that I am unlikely to grant any additional requests to amend the complaint in this matter. Of course, "Amendments may be permitted ... even after a dismissal for failure to state a claim, and leave to amend is ‘freely given when justice so requires.’ " Palmer v. Champion Mortgage , 465 F.3d 24, 30–31 (1st Cir.2006) (quoting Fed. R. Civ. P. 15(a) ). But it is also true that in "appropriate circumstances," including "undue delay, bad faith, futility, and the absence of due diligence on the movant's part," leave to amend may be denied. Id. The "balance of pertinent considerations" in deciding whether to allow an amendment requires an inquiry into the totality of the circumstances. Id. One important consideration is judicial economy. "[T]rial courts, in the responsible exercise of their case management functions, may refuse to allow plaintiffs an endless number of trips to the well," particularly where they have already "afforded the plaintiffs an ample opportunity to put their best foot forward." Aponte – Torres v. Univ. o f Puerto Rico , 445 F.3d 50, 58 (1st Cir.2006). This action is now on its second amended complaint—one significantly expanded from relator's original submission—and I have already informed relator that this second amended complaint was to be his best, and final, effort at stating his claims. Accordingly, I expect that there is nothing left for relator to add that would not futilely result in another dismissal, at the expense of defendants and the legal system generally. He will not be permitted, absent circumstances unforeseen at this juncture, to try to reformulate his allegations, yet again, to avoid their legal deficiencies.

II. LEGAL FRAMEWORK

In order to survive a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation and internal quotation marks omitted). Dismissal for failure to state a claim is appropriate when the pleadings fail to set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Berner v. Delahanty , 129 F.3d 20, 25 (1st Cir.1997) (quoting Gooley v. Mobil Oil Corp. , 851 F.2d 513, 515 (1st Cir.1988) (internal quotation marks omitted)). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show [n]’—‘that the pleader is entitled to relief.’ " Maldonado v. Fontanes , 568 F.3d 263, 269 (1st Cir.2009) (quoting Iqbal , 556 U.S. at 679, 129...