United States District Court, S.D. Mississippi, Northern Division
United States of America ex rel. Joanne Hartwig, Plaintiff,
MEDTRONIC, INC.; MEDTRONIC SOFAMOR DANEK USA., INC.; THOMAS A. ZDEBLICK, M.D.; TAZ CONSULTING, INC.; CURTIS A. DICKMAN, M.D.; VANTAGE CONSULTING, INC.; ADAM LEWIS, M.D.; TAZ LLC; LEWIS MEDICAL SERVICES, PLLC; LEWIS PROPERTIES, LLC; JACKSON NEUROSURGERY CLINIC, PLLC; AND JOHN DOE DEFENDANTS 1-5000, Defendants.
MEMORANDUM OPINION AND ORDER
CARLTON W. REEVES, District Judge.
Before the Court is a series of motions including a Motion to Strike Amended Complaint and Motion to Stay Proceedings, Docket No. 65; and Motions to Dismiss Relator's Amended Complaint. Docket Nos. 66, 69, 72. Because other material outside the pleadings was presented to and not excluded by the Court, each of the motions to dismiss were treated as motions for summary judgment under Fed.R.Civ.P. 56. After careful consideration of the briefs, the arguments of the parties and a hearing on the motions, the motion to strike is DENIED; the motion to stay proceedings is deemed MOOT; and the Defendants' motion to dismiss the amended complaint are due to be GRANTED.
A. Factual Background 
This case arises out of a qui tam action brought by relator Joanne Hartwig on behalf of the United States ("Relator"). Medtronic, a company that produces medical devices, had developed products that they believed would have wide usage in spinal cord surgeries. The Relator alleges that Medtronic developed a scheme to market both its INFUSE and Pyramid products for use in contexts not approved by the U.S. Food and Drug Administration (FDA). In or about January 2002, the FDA granted Medtronic's premarket approval application for Pyramid, an "anterior plate fixation system." The FDA had limited the application of Pyramid to a certain type of spinal surgery ("the lumbrosacral level below the bifurcation of the vascular structures, " or the L5-S1). Around July 2002, the FDA approved Medtronic's premarket application forI INFUSE, a series of bone graft products. The approval was limited to the application of the device from the L4-S1 levels. In addition, the FDA required Medtronic to conduct certain studies and testing before releasing INFUSE on the market.
Dr. Thomas Zdeblick, an orthopedic surgeon and professor at the University of Wisconsin, invented LT-CAGE, the only device approved to act as the delivery vehicle for the INFUSE bone graft into the body. He drafted a scholarly article about LT-CAGE and rhBMP, a bone growth protein that serves the active ingredient in Medtronic's INFUSE products. He submitted it for publication in Spine, the leading peer-reviewed medical magazine on issues related to the spine. U.S. Department of Health and Human Services ("HHS") regulations required that he make certain disclosures in the article, including the products' connection to Medtronic. In a "Point of View" response, Dr. John O'Brien of London raised the possibility that there were long-term problems associated with the product and suggested that vascularization, a more simple process for fusing parts of the spine or vertebrae, might have the same level of effectiveness. According to the Relator, if O'Brien's alternative proved to be equivalent or better, it would render Zdeblick and Medtronic's INFUSE products "useless and unnecessary."
In 2002, Zdeblick became editor-in-chief of the Journal of Spinal Disorders. He replaced two doctors who had served as longtime co-editors of the magazine before him. He renamed the journal Journal of Spinal Disorders and Techniques ("JSDT") and repurposed the journal from publishing only scientific articles with strict oversight to articles with "[s]horter clinical follow-up" and technical descriptions about new techniques for clinicians in practice. In October 2002, under Zdeblick's leadership, the journal published an article co-authored in part by Dr. Curtis Dickman, who had developed the Pyramid plate and who was supported financially by Medtronic. Dickman had assisted in the approval process for INFUSE. Dickman had also submitted a letter to an FDA advisory panel in which he represented the importance of approving BMP, the key ingredient in INFUSE. The October 2002 article on INFUSE failed to disclose the authors' financial ties to Medtronic, despite industry standards requiring such acknowledgment.
The Relator claims that Medtronic made designs to have its INFUSE product supplant the use of the gold standard procedure for spinal bone grafts-the use of autogenous bone, or bone taken from the patient's hip-and they used fraudulent statements and Federal funds to do so. The JSDT published the article touting INFUSE as the new gold standard; the article failed to disclose the ties to Medtronic, Zdeblick's financial interest in the product, and the possible complications. It did not engage or counter any comparative studies using simple plaster of Paris, as suggested by Dr. O'Brien. In a second article, Zdeblick touted the use of LT-CAGE, his specific invention and companion to INFUSE, and rhBMP-2. That article, Hartwig alleges, also failed to disclose the connection to Medtronic and served as a "covert advertisement" for the product. The article acknowledged Medtronic Sofamor Danek "for their help in data collection and statistical analyses, " but did not reveal Medtronic's ties or direct financial interests to the "monumental" conclusions in the article.
The Relator argues that failure to report these "clear conflicts of interests on the part of those holding positions of trust both within the medical community and over patients was part of the Defendants' fraudulent enterprise.... [U]nchecked by appropriate peer-review, the Defendants were able to systemically accomplish their goals."
In 2002, around the time Zdeblick took over JSDT and the FDA's approval of Medtronic's premarket applications for INFUSE and Pyramid, Relator Hartwig's doctor, Dr. Adam Lewis, opened his practice under a series of new names in Mississippi. After a spinal cord surgery that resulted in complications, Hartwig filed a medical malpractice suit against Dr. Lewis; a jury found in her favor and awarded compensatory damages in May 2011. During discovery in that case, the Relator contends that Lewis lied about his financial interest with Medtronic. During the trial, he disclosed that he knew and had worked with Dickman on the development of the Medtronic Pyramid plate. In discovery in a separate civil action in federal district court in Texas, Medtronic admitted that Dr. Lewis had served as a consultant on the Pyramid plate. The Relator argues that Medtronic's conduct violates the federal anti-kickback law, particularly its prohibition against physicians' use of products in which Medtronic pays them royalties.
The Relator argues that Dr. Lewis and the defendants experimented on their patients by using the Pyramid plate and INFUSE products without advising the patients or gaining their informed consent. The goals were: 1) to cover for sham agreements, in which information gathered from using Medtronic products on their patients could be "passed off as justification for the Defendant physicians' real contributions." (e.g. Medtronic paid $23 million to Zdeblick for INFUSE, but used the information gathered from Zdeblick's contracting doctors, including Lewis, to justify payment for a different product); and 2) to perform unauthorized uses of Medtronic products on human subjects without their consent to expand their approved use by showing successful "off-label" uses. Defendants expanded the Pyramid plate's use from L5-S1 only in 2002 to a higher number in 2007, under the name of Pyramid .
Hartwig testified in her medical malpractice suit that Dr. Lewis told her that her 2005 surgery would be like her 2001 surgery on a similar part of her spine. She contends that Lewis used a Pyramid plate at L3-L4 at a time when that practice was an off-label use. He then reported his "successful experience" with this off-label use (despite a lawsuit that eventually resulted in a verdict for Hartwig). In turn, Dickman and Zdeblick were paid by Medtronic for "consulting/research."
Overall, Relator Hartwig's complaint outlines a "scheme to launder payments" from Medtronic to Dr. Lewis, via Dr. Dickman and Dr. Zdeblick. Am. Compl. ¶¶ 69, 79, 83, 86. The alleged connection appears to be the existence of a Mississippi corporation with the same business address as Dr. Lewis that also happens to have the same initials as Dr. Zdeblick. Compl. ¶ 86. Elsewhere in her complaint, however, the Relator identifies two different occasions during discovery and at her medical malpractice trial where Dr. Lewis testified that he had never received funds from Medtronic. Am. Compl. ¶¶ 60-62. In addition, Medtronic's online disclosure of payments to physicians does not report any payments to Dr. Lewis either. Am. Compl. ¶¶ 81-82. The Relator alleges that Medtronic violated the False Claims Act ("FCA") (31 U.S.C. §§ 3729(a)(1), (a)(2), and (a)(3) (2006)) by allegedly conspiring with the physician defendants to disseminate favorable peer-reviewed journal articles regarding INFUSE and to perform experimental procedures with the Pyramid Plate. Am. Compl. ¶¶ 30-58, 66. The Relator also asserts that Medtronic paid kickbacks to the physician defendants which resulted in false claims for payment through false certifications of compliance with the AKS. Am. Compl. ¶¶ 57-58, 65, 67, 69-70, 76, 78-87, 90, 92.
The counts in the amended complaint are as follows:
Counts I-III: Violations of the False Claims Act, 31 U.S.C. § 3729 et seq.
Count IV: Violations of 42 U.S.C. § 1320a-7b (provisions governing required disclosures for federal and state health care programs)
Count V: "Civil Penalties or Awards Arising from Criminal Conduct... including but not limited to those relative to 18 U.S.C. §§ 1341, 1342, 1352, 1356, and 1357, covering Mail Fraud, Wire Fraud, Travel to Effect the Scheme, Money Laundering, and Use of Dirty Money, to effectuate the fraudulent scheme."
Count VI: Violations of 45 C.F.R. 46 et seq. (the "Common Rule")
Count VII: Violations of Settlement Agreement Between Medtronic and HHS
Count VIII: Unjust Enrichment
B. Procedural History
On July 8, 2011, Hartwig filed a complaint against the following defendants: 1) Medtronic and its related entities (Medtronic Sofamor Danek USA, Inc.; Medtronic, Inc.) (collectively "Medtronic"); 2) Dr. Thomas A. Zdeblick and his related entities (Thomas A. Zdeblick, individually; TAZ Consulting, Inc.) (collectively, "Zdeblick"); 3) Dr. Adam Lewis and his related entities (Adam Lewis, individually; Lewis Medical Services, PLLC; Lewis Properties, LLC; TAZ, LLC; Jackson Neurosurgery Clinic, PLLC) (collectively, "Lewis"); 4) Dr. Curtis A. Dickman (Curtis A. Dickman, individually; Vantage Consulting, Inc.) (collectively, "Dickman") and 5) John Doe Defendants 1-5000. Docket No. 1. The United States declined to intervene in the action. Docket No. 8. The Lewis defendants filed an answer to the complaint on September 25, 2012. Docket Nos. 22-23. On November 26, 2012, Dickman, Zdeblick, and Medtronic all filed motions to dismiss the original complaint. Docket Nos. 44, 45, 48. Zdeblick and Dickman joined in Medtronic's motion and memorandum. Docket Nos. 50, 51. Lewis also joined in the motions filed by all three of the other defendants. Dockets No. 56, 57, 58. On December 18, 2012, the Relator filed a Second Amended Complaint. Docket No. 61. Lewis moved to strike the amended complaint or stay proceedings. Docket. No. 65. Each of the Defendants moved to dismiss the Second Amended Complaint. Dockets No. 66, 68, 69, 72. Dickman and Lewis joined in Medtronic's motion to dismiss and memorandum. Docket No. 74, 76. Lewis also joined in Zdeblick's motion and memorandum. Docket No. 75. The Relator filed a response in opposition to Medtronic's motion to dismiss the amended complaint. Docket No. 81. Dickman, Lewis, and Medtronic filed replies in support of their motions to dismiss. Docket Nos. 83, 84, 86, respectively. The Defendants also joined in Medtronic's reply to the Relator's response, Docket Nos. 87, 88, 90, and Dickman joined in Lewis's reply. Docket No. 89.
In the Relator's amended complaint, she effectively seeks to cure deficiencies in the original complaint. For the reasons below, the Defendants are ...