Judge Rejects Dismissal of Medtronic Qui Tam Case

On Wednesday an order denying dismissal was filed in a Central District of California case against Medtronic PLC. The case is a a qui tam action under the False Claims Act, filed by Dr. Kuo Chao on behalf of the United States regarding Medtronic’s “Pipeline” product and reimbursements which Dr. Chao alleges are kickbacks under the statute.

The Pipeline device is used to treat brain aneurysms and their associated symptoms, the complaint explained. Dr. Chao alleges that Medtronic induces doctors to prescribe and order the product in four different ways.

First, Dr. Chao alleges that Medtronic hires doctors to teach other doctors the proper use of the pipeline product, but instead of compensating the teachers at a reasonable rate for their services, the teachers are allegedly overpaid as a direct payment for use of the product on their example patients.

Dr. Chao also alleges that Medtronic has purchased several medical practices at an above market rate where that practice has a high volume of patients using the Pipeline devices. Third, Dr. Chao alleges that Medtronic overpays doctors for completing survey information regarding their use of the Pipeline device in their medical practice. Finally, the relator alleges that Medtronic directly funds fellowships, grants, and research funds with the sole purpose of using more of the Pipeline device.

Medtronic had filed the motion to alleging that the relator had not pled several factors of the anti-kickback statute with sufficient particularity, specifically that the relator had not set forth a negation of the safe harbor provisions of the statute with sufficient particularity.

The court noted that this is not a requirement of an initial pleading, as a pleading does not have to negate an affirmative defense with particularity, only show that it is plausible that the affirmative defense may not apply. The court also held that the United States declining to intervene in the case has no bearing on whether a sufficient claim has been filed.

The plaintiff is represented by Glancy Prongay and Murray. The defendant is represented by Jones Day and Ropes & Gray