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United States v. Boston Scientific Corp.

United States District Court, D. Minnesota

August 29, 2017




         Relator Steven Higgins brings this qui tam action pursuant to 31 U.S.C. §§ 3730(b)(1) and (c)(3), alleging that Defendant Boston Scientific Corp. (“BSC”) violated the federal False Claims Act, 31 U.S.C. § 3729(a)(1), and the California False Claims Act, Cal. Gov't Code § 12651(a). After the Government and the State of California declined to intervene, Higgins filed an Amended Complaint [Dkt. No. 61], which BSC moves to dismiss. Dkt. No. 63.

         I. Allegations

         The heart of Higgins' allegations is BSC's sale of particular models of Cognis CRT-D and Teligen ICD defibrillators in the United States from August 2008 through July 2009. See, e.g., Am. Compl. ¶¶ 6, 12. The Amended Complaint alleges that BSC, a company that develops, makes, and sells medical devices, caused physicians to make false claims for Medicare and other federal health care program reimbursements by certifying that these defibrillators were reasonable and necessary for the medical procedures in which the devices were implanted. See, e.g., id. ¶¶ 175, 182-83.

         Defibrillators are medical devices that attach to a patient's heart by connectors called “leads” and can deliver shocks from the device's pulse generator to attempt to restore the patient's heartbeats to a healthy rhythm. See Am. Compl. ¶¶ 52-56. The leads are connected to the pulse generator through a “header, ” which is a cap on top of the pulse generator that has openings into which the leads are secured using “set screws, ” which are then covered with “seal plugs.” Id. ¶¶ 54-55. The attachment of the leads to the pulse generator through the header must be secure for the device to deliver shocks as needed. See id.

         Higgins alleges that as part of a so-called “CRM [i.e., Cardiac Rhythm Management] Identity Campaign” in around 2008, BSC introduced redesigned defibrillators under the new branding of Cognis and Teligen. See Am. Compl. ¶¶ 71-77. The Cognis and Teligen defibrillators were designed to be smaller and thinner than competitors' devices, and BSC also marketed them as having an “[i]mproved header, set screws and seal plugs.” Id. ¶¶ 80-81.

         A medical device like a defibrillator, which is classified by the United States Food and Drug Administration (“FDA”) as a Class III device, must receive FDA premarket approval (“PMA”) “to provide reasonable assurance of its safety and effectiveness” before it can be sold in the United States. 21 U.S.C. §§ 360c(a)(1)(C), 360e(c)(1); Am. Compl. ¶ 36. After the device has been approved, if the manufacturer wants to make certain changes to the device, it must submit a PMA supplement for FDA review and approval. 21 C.F.R. § 814.39(a); Am. Compl. ¶ 37. BSC filed a PMA supplement for the Cognis and Teligen defibrillators on December 7, 2007. Am. Compl. ¶ 39.

         In February 2008, BSC began selling its new Cognis and Teligen devices in Europe. Am. Compl. ¶ 83. Higgins alleges that European physicians who began implanting the defibrillators in patients quickly began to experience problems with the devices' set screw/header configuration, and the doctors reported the problems to BSC. Id. at ¶¶ 84-85. In layman's terms, the problems were that the leads were not securely connecting to the header and pulse generator even when doctors followed standard implant protocol, which undermined the devices' ability to reliably provide shocks. See Id. ¶¶ 86-92. BSC allegedly responded to the reports of problems by sending the lead engineer for Cognis and Teligen, Sumi Dahm, to Europe to “investigate and deal with the complaints, ” including by developing “coaching and implant technique changes to the process of attaching the leads to the set screw/header design, ” which were mere “workaround” solutions but not “a real fix” to the design defects in the header/set screw configuration. Id. at ¶ 93.

         Higgins alleges that in light of the problems being reported by European physicians, BSC should have amended its PMA supplement, which was still pending, to “alert the FDA as to the screw/header malfunctions . . . .” Am. Compl. ¶ 94. By failing to amend its PMA supplement, BSC allegedly misled the FDA in its review of the defibrillators and rendered its supplement false and misleading in presenting the devices as safe and effective. Id. ¶¶ 96-97. “Without the additional information about Cognis and Teligen which BSC learned from the European launch, the FDA approved the devices on May 8, 2008 for sale in the United States.” Id. ¶ 98.

         BSC allegedly also concealed the problems being reported in Europe from its United States sales staff-and other insiders, including Higgins, who served on a BSC advisory board- as the company prepared to launch the devices for United States sales in summer 2008. Am. Compl. ¶¶ 100, 103-07. Domestic sales began August 4, 2008, and doctors immediately began implanting Cognis and Teligen defibrillators in patients. Id. ¶ 109. Allegedly within days of launch, BSC began receiving reports from all over the country about malfunctioning with the set screws and header connections. Id. ¶ 110. “Less than three weeks after launch, [] in an effort to avoid a recall of Cognis and Teligen in the wake of a huge volume of reported defects, BSC misleadingly introduced revised implant instructions which suggested that the problems had to do with the implant techniques used by physicians, ” rather than defects with the devices themselves, and published these revised instructions in a “white paper” on August 21, 2008. Id. ¶¶ 111-12 (describing BSC's revised instructions to perform a “tug test”). These instructions “were highly unusual because typically connecting the leads to a cardiac defibrillator is a straightforward, uncomplicated part of implant surgery.” Id. ¶ 116.

         BSC received complaints from doctors across the country about malfunctions related to the header and set screws. See Am. Compl. ¶¶ 118, 121, 136. At a meeting with particular customers to address their complaints, BSC representative Dahm admitted that BSC had been “aware of the malfunctions involving the set screws/headers because the devices had been launched earlier in the year in Europe and similar problems had occurred there and had been reported to BSC.” Am. Compl. ¶ 124 (emphasis omitted); see also Id. ¶ 127 (similar allegations with regard to a second meeting).

         Higgins alleges that BSC implemented an informal policy to deceptively minimize the FDA's awareness of issues with Cognis and Teligen devices. Federal law required BSC to report malfunction complaints to the FDA in adverse event reports also referred to as medical device reports (MDRs). See Am. Compl. ¶¶ 134-35; see also 21 C.F.R. §§ 803.1(a) (referring to medical device reporting requirements), 803.50(a) (requiring the submission of adverse event reports by manufacturers). Instead of reporting all of the complaints it received, at the direction of its Cardiac Rhythm Management President Fred Colen, BSC allegedly adopted an informal policy to submit adverse event reports only if “a patient needed a re-operation because of a faulty device, ” but not if a doctor “had a difficult time with implantation . . . and there were no significant patient complications.” Am. Compl. ¶ 138.

         BSC also began developing revised versions of the Cognis and Teligen defibrillators to fix what it allegedly knew were design defects with the devices' set screw/header configuration. See Am. Compl. ¶ 142. BSC submitted a PMA supplement for FDA approval of the changes to Cognis-but not Teligen-and deceptively referred to the revisions as modifications without disclosing that they were fixing defects in the initial versions of the device. Id. ¶¶ 143-44, 147. “Lacking a full and accurate description of the new Version 2 of the set screw/header, the FDA approved the PMA Supplement on March 18, 2009 without any required action as to the defective Version 1 devices.” Id. ¶ 148.

         BSC began selling “Version 2” of the devices in March 2009 but did not recall or stop selling the allegedly defective original versions, which physicians continued to implant. Am. Compl. ¶¶ 149-52. The company prioritized sending the new, corrected versions to customers who had complained the most. Id. at ¶¶ 153-54.

         Higgins or his peers at the same hospital implanted the devices in at least 14 patients between September 2008 through February 2009 for whom the hospital sought and received Medicare or Medicaid/Medi-Cal reimbursement. See Am. Compl. ¶ 201; id. Ex. A.

         On July 20, 2009, the FDA issued a notice for the Class II recall of the Cognis and Teligen devices “containing the original set screw system.” Am. Compl. ¶ 161 (quoting FDA notice). Allegedly based on BSC's misleading assurances to the FDA that any issues with the devices became apparent within 30 days of implanting, the FDA's recall was limited to devices that had been implanted less than 30 days before the recall. Id. ¶ 162.

         II. Subject ...

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