WASHINGTON (Legal Newsline) – Medical device companies confronted with False Claims Act lawsuits may want to give extra consideration to fighting rather than settling in light of an April 7 jury decision in favor of Abbott Laboratories, a former federal prosecutor says.
“A case like this one, where the verdict actually favors the company, it may persuade some companies that they, too, have cases that they can take to a jury and expect to prevail,” former U.S. assistant attorney from New York Sara Lord told Legal Newsline.
In 2006, Kevin Colquitt, a former salesman of stents for medical device manufacturer Guidant, filed a whistleblower lawsuit against Abbott in Dallas federal court on behalf of the U.S. government. It sought up to $1 billion from Abbott, which had purchased Guidant in 2006.
Colquitt claimed the company marketed its bile-duct stents to doctors and hospitals for off-label use in vascular procedures between 2004 and 2006 and provided guidance on how to falsely code the devices when billing to Medicare, which would be considered fraud.
The lawsuit argued that patients, without knowledge or consent, were being given a device that had never gone through clinical testing nor FDA approval for vascular use.
“Whether anyone was harmed by the stents, I don’t know the answer to it. That was not an issue in the case,” said Lord, who is now a partner in litigation, government investigations and health care practices at the law firm Arnall Golden Gregory in Washington, D.C.
Lawyers for Abbott, a publicly traded medical device company with mean annual sales of more than $22.3 billion, successfully argued that the stents were safe, effective and commonly used for vascular procedures, and that Medicare had full knowledge the devices were being used for off-label purposes.
“I think that the jury’s focus on the question of whether or not the practice was common in the industry and whether these stents were actually better for the patients is an important signal to companies that are facing False Claims Act charges – that juries will look at the case broadly and not necessarily focus on technicalities,” Lord said.
As whistleblower, Colquitt would have received 25 to 30 percent of any award derived from the lawsuit. The remaining balance would have gone to the federal government. Yet, the government was notably absent from the trial, declining to intervene in the case.
“Perhaps the government felt the case against Abbott wasn’t particularly strong,” she said.
Another reason could be a lack of federal resources to deal with the case.
“The number of cases in which the government can, as a practical matter, intervene is becoming a smaller percentage of the total number of cases that are filed. So as a result, we are seeing more cases in which the government doesn’t intervene, but the plaintiff chooses to pursue the case anyway,” she said.
Lord explained that the government announces annually its recoveries from False Claims Acts cases for that year and said it is interesting that 2015 was the first year in which recoveries from private-plaintiff cases made up a larger share of the total.
“So I think that we are likely see more cases being pursued by private plaintiffs, but then it will be as much a function of the number of cases as of the strength of those cases,” she said.
In 2010, AARP joined the lawsuit as co-counsel for the plaintiff because the majority of patients who had received the bile-duct stents for vascular purposes were elderly. The organization expressed extreme disappointment over the Texas jury’s decision, Bloomberg.com reported.
The plaintiff’s attorney intends to file an appeal, Lord said, “But obviously, it’s harder to appeal from a jury verdict than from a legal decision rendered by a judge.”