A federal district court in the Southern District of Texas recently dismissed a qui tam False Claims Act complaint against Medtronic alleging improper off-label marketing. See United States ex rel. Bennett v. Medtronic, Inc., No. H-08-3408 (S.D. Tex. Sept. 30, 2010). Following a recent spate of high-dollar settlements of off-label marketing cases, the court’s decision applies some sensible and much needed pleading requirements on these types of claims.

At issue was a medical device manufactured by Medtronic called the Cardioblate system. The Cardioblate system is approved by the Food and Drug Administration (FDA) to control bleeding and coagulate cardiac tissue during surgery. The relators alleged that Medtronic also promoted the Cardioblate system to treat atrial fibrillation, a use which was not specifically approved by the FDA. Following the United States’ decision not to intervene, the court unsealed the complaint. The unsealed complaint did not allege that Medtronic itself submitted false claims to the government. Nor did it allege specific details of any particular claim submitted to the Medicare or Medicaid program or the identity of any individual or entity that submitted such claims. Rather, it simply alleged that, as a result of Medtronic’s off-label marketing campaign and payment of illegal kickbacks, the Cardioblate system has been widely used for atrial fibrillation, and that the submission of false claims to Medicare was the natural result of this increased utilization.

Medtronic moved to dismiss and the court granted the motion. While the court’s decision is lengthy, there are two key aspects that will be important in other off-label device cases. First, the court concluded that a request for reimbursement for an off-label utilization is not necessarily a false claim. Typically, “off-label” FCA claims deal with drugs, for which, courts have concluded, Medicare and Medicaid will not reimburse if the use is off-label. In contrast, there is no express prohibition against reimbursement for off-label utilization of medical devices. Accordingly, the court reasoned, those claims should be reimbursable, provided they are medically necessary. The court rejected the relators’ argument that off-label uses were per se medically unnecessary simply because they had not been approved by the FDA. The medical necessity determination is a decision made by individual physicians exercising independent medical judgment. Since the relators had not alleged an independent basis to conclude that reimbursement claims were for non-medically necessary uses, the court concluded there was no basis to presume that false claims had in fact been submitted.

Second, the court concluded that the relators had failed to satisfy Rule 9(b) by failing to allege details of any specific false claims or the identities of any specific hospitals or doctors who submitted false claims. Rather than provide these details, the relators simply made allegations regarding Medtronic’s marketing efforts and then pointed to the high number of times the Cardioblate system was used to treat atrial fibrillation. The court held that this was not enough to satisfy Rule 9(b), which requires the who, what, when, where and how of the false claims.

However, the court granted the relators leave to file an amended complaint, which must be filed by October 29, 2010. If relators do file an amended complaint, we will post a link to it here.