Health Law Daily Relator failed to plead with particularity under either an implied or express false certification theory
Monday, March 18, 2019

Relator failed to plead with particularity under either an implied or express false certification theory

By Jeffrey H. Brochin, J.D.

Implied certification theory still imposes the FCA’s rigorous scienter and materiality requirements, and the relator’s claim failed due to his failure to plead those with particularity.

A federal district court in Illinois has ruled that a quality assurance employee for a medication infusion pump company who determined a lack of compliance with FDA recall reporting requirements, failed to plead his False Claims Act (FCA) claim with particularity and failed to identify any specific reimbursement claim or false statement or other fraudulent misrepresentation that the employer made to the government. Furthermore, the alleged violations were not found to be material to any government decision to pay Medicare or Medicaid reimbursement for the medical devices. (U.S. ex rel. Thornton v. Pfizer, Inc., March 14, 2019, Blakey, R.).

Silent recalls. The relator worked for Hospira, Inc., (Hospira) in a quality assurance role from June, 2013 until February, 2017. After the FDA issued a warning letter to Hospira about quality problems at their Costa Rica manufacturing plant which resulted in an import ban, the company entered into a distribution agreement and business relationship with an Israeli manufacturer, Q Core Medical Ltd (Q Core), for its Sapphire Multi-Therapy Volumetric Infusion Pump (Sapphire pump). However, sometime after FDA regulatory clearance for that device in October, 2013, that pump also experienced certain problems, including with its power cords, and then with false malfunction alarms.

The relator alleged that in an effort to avoid further FDA scrutiny, Hospira failed to notify the public and the FDA about the defective power cords and of Q Core and Hospira’s decision to replace the original power cords with new cords. He further claimed that Hospira’s decision to characterize the new power cords as an enhancement rather than a replacement, constituted a silent recall in violation of FDA regulations. He made the same allegations as to subsequent software revisions.

Field Safety Notice (FSN) Recall issue. In 2014, Q Core instructed Hospira to place 57 batches of micro-bore sets "on hold" because it discovered the batches were prone to leaking medication. The relator alleged that because Hospira had already sold and distributed significant quantities of those 57 batches to customers, he, and other Hospira employees, repeatedly informed Q Core that a hold would constitute an expansion of an existing Field Safety Notice (FSN)/Recall. However, Hospira’s Corporate Vice President of Quality for the Device Organization signed off on documentation allowing the micro-bore sets to be either returned to Q Core or destroyed. Hospira never issued an FSN or otherwise informed the public or FDA about the micro-bore sets, which, the relator also claimed was a silent recall in violation of FDA regulations, 21 C.F.R. §§ 7.40, 7.46, 7.49, 803.1, 803.10, 803.20, 803.40, 803.50, 803.53, 806.10. After the company failed to respond satisfactorily to his complaints, he filed the instant FCA action, which the company moved to dismiss.

Implied and express false certification. The court began its analysis by noting that the relator was attempting to prove his allegations under several FCA theories: specifically, that Hospira’s conduct satisfied an implied false certification theory, and an express false certification theory, and that they fraudulently induced third parties to submit false claims. The court then referenced the FCA’s the scienter and materiality requirements as ‘rigorous’, and that ‘knowingly’ means that a person has actual knowledge of information, acts in deliberate ignorance of the truth or falsity of the information, or, acts in reckless disregard of the truth or falsity of the information. And, that the term ‘material’ means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property. Furthermore, a misrepresentation about compliance with a statutory, regulatory, or contractual requirement must be material to the government’s payment decision in order to be actionable under the FCA.

Conditions for implied false certification. Two conditions apply to this theory: first, that the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, that the company’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths. In the absence of any specific misrepresentation on a claim’s face, a relator may identify omitted information that renders the description of a good or product misleading.

Violations not material. The company argued that the relator failed to identify any specific reimbursement claim, nor identify a false statement or other fraudulent misrepresentation that the company made to the government; and, regardless of that fact, the alleged regulatory violations were not material to any government payment decision. The court agreed, finding that although the relator alleged that Hospira violated FDA regulations that govern reporting recalls, removals, corrections, and other adverse events, which in turn caused the government to make payments for claims that otherwise would not have been allowed, he did not plead with sufficient particularity as to identifying any specific reimbursement claim. Absent an allegation of a single claim, the court could not determine whether Hospira’s alleged regulatory violations misrepresented or omitted information about the Sapphire sets under the FCA.

For the foregoing reasons, the court granted the company’s motion to dismiss.

The case is No. 16-cv-7142.

Attorneys: Donald R. Lorenzen, U.S. Attorney's Office, for the United States. Allyson Elena Riemma (McDermott Will & Emery) for Pfizer, Inc.

Companies: Pfizer, Inc.; Hospira, Inc.; Q Core Medical, Ltd.

MainStory: TopStory CaseDecisions CMSNews FCANews FraudNews MDeviceNews SafetyNews IllinoisNews

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