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The recent appellate False Claims Act (“FCA”) decision in Dan Abrams Co. LLC v. Medtronic Inc., ___ F. Appx. ___, 2021 WL 1235845 (9th Cir. April 2, 2021), has us scratching our heads.  It’s like riding a legal roller coaster.  Some parts are really high, and others are really low.

Bexis first ran across this decision while he was completing his law recent law review article on off-label use.  Dan Abrams was the last decision added to the article as the editing process came to a close.  We’ve been intending to discuss the case ever since, so here goes.

Dan Abrams is essentially Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), except for the allegations being purportedly based on the FCA rather than state-law torts – in order to avoid preemption.

Relator alleges that [defendants] and various related entities fraudulently obtained Food and Drug Administration clearance for several devices used in spinal fusion surgeries (Subject Devices), unlawfully marketed them for an off-label and contraindicated use.

2021 WL 1235845, at *1.  That’s Buckman, right down to the type of surgery.  The trial court, correctly, was having none of it.  “[C]laims of fraud are disfavored if made by third parties who seek to second guess a decision by the FDA to certify a device.”  United States ex rel Dan Abrams Co. LLC v. Medtronic, Inc., 2017 WL 4023092, at *7 (C.D. Cal. Sept. 11, 2017).

On appeal, plaintiffs-relators asserted several supposed theories of FCA liability:  (1) Off-label/contraindicated-use; (2) fraud on the FDA; and (3) Anti-Kickback Statute (“AKS’).  The only one that survived was, oddly enough, fraud on the FDA.  As to the first, given what we learned from Bexis’ article about government reimbursements, we were not surprised that that the first theory failed.  Off-label use of medical devices is reimbursable whenever it is “medically necessary and reasonable.”  2017 WL 4023092, at *1.  So, regardless of any alleged issues with these devices’ FDA pedigree, their mere off-label use did not create any false claims.

[T]he federal government does not distinguish between on-label and off-label uses in determining whether to pay for medical devices. Rather, to be reimbursable, a device must (1) have FDA approval/clearance, (2) be “reasonable and necessary,” and (3) meet any other pertinent regulations. . . .  Relator makes no allegations about published studies demonstrating that [the off-label use in question] is medically unsafe or ineffective.  Nor does Relator allege that [this off-label use] is contrary to accepted standards of medical practice.

Id. at *2 (citations and quotation marks omitted) (emphasis added).

The Dan Abrams plaintiff-relators attempted to argue that the off-label use was “contraindicated” (even though safe, effective, and standard of care), but to no avail.

[N]either the federal government nor the judiciary appears to carve out an exception for contraindicated use in discussing off-label uses.  Indeed, the FDCA specifically contemplates that devices may be cleared even if contraindicated uses are expected. . . .  As long as a doctor finds an off-label use to be medically reasonable and necessary, then the off-label use is permitted, even if the particular use is contraindicated on the label.

Id.  There is literally nothing – “no statute, regulation, or administrative manual” – standing for the purported proposition “that a contraindicated use of a device is categorically not reasonable and necessary.”  Id.  That’s as it should be.  The federal government does not regulate medical practice.  If a particular off-label use was against the medical standard of care (which was concededly not the case in Dan Abrams), there can be medical malpractice liability, see Bexis’ law review article, 54 UIC J. Marshall L. Rev. at 12-13, but there is no violation of federal law.

So, let’s review the bidding.  Relators in Dan Abrams are suing over a product use that they do not dispute is:  (1) safe; (2) effective; and (3) in accordance with accepted medical practice.  As far as we’re concerned, they should laughed out of court under any theory (except possibly #3, if kickbacks actually occurred).  The Dan Abrams suit is plainly anti-social in the worst sense – using (at best) legal technicalities to litigate over undisputedly proper medical care, and thus accomplishing nothing except to increase the overall cost of healthcare – to the benefit of nobody but lawyers and litigants, and to the detriment of everyone needing said healthcare.  Dan Abrams demonstrates the evils of parasitic lawyering.

So why didn’t the defendant also prevail on the second theory about fraud on the FDA?  With the use in question being safe, effective, and within the medical standard of care, why should anybody but the FDA care about the intricacies of how the product made it through agency review.  That’s the whole point of Buckman.  The FDA is amply “empowered to investigate suspected fraud” and “has at its disposal a variety of enforcement options that allow it to make a measured response.”  531 U.S. at 349.

[F]raud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives. . . .  Would-be applicants may be discouraged from seeking §510(k) approval of devices with potentially beneficial off-label uses for fear that such use might expose the manufacturer . . . to unpredictable civil liability.  In effect, then, fraud-on-the-FDA claims could cause the [FDA’s] reporting requirements to deter off-label use despite the fact that the FDCA expressly disclaims any intent to directly regulate the practice of medicine, and even though off-label use is generally accepted.

Id. at 350-51 (citations and footnote omitted).  Particularly where, as in Dan Abrams, the off-label use is safe, effective, and medically accepted, one expects that the FDCA’s ban on private enforcement, 21 U.S.C. §337(a), would be most strongly enforced.

Not, unfortunately, in Dan Abrams.  Plaintiffs argued that “since Medicare reimbursement requires FDA clearance, the Subject Devices would have been ineligible for reimbursement but for [defendant’s] fraud.”  2017 WL 4023092, at *3.  Thus, the fraud-on-the-FDA theory seeks to impose liability based on nothing more than these products’ allegedly fraudulent presence in the marketplace – unrelated to their risk/benefit ratio or their medical acceptance.  As to mere off-label use, plaintiffs lost here, as well.  The defendant’s “alleged omission about its intent to market the devices for a contraindicated use was immaterial to the FDA’s clearance.”  Id.

But then Dan Abrams drew a distinction we’ve never seen before between off-label use and “contraindicated use,” buying into the relator’s argument that “Contraindicated-only Devices were not properly cleared for any use.”  Id.  “Relator claims that [defendant] knew that [contraindicated off-label use] posed different questions of safety” – not that anything was actually unsafe – “to its previously approved devices, and if [defendant] disclosed that the devices were intended for use in the cervical spine, then the FDA may have required Class III approval.”  Id.  That supposedly “went to the very essence of the bargain.”  Id. (citation and quotation marks omitted).

But that’s simply wrong.  All off-label uses, contraindicated or otherwise, present “different questions of safety” under the FDCA.  That is the reason why an off-label use doesn’t get cleared in the first place.  See 21 U.S.C. §360c(i)(A)(ii) (defining “substantial equivalence” as “not rais[ing] different questions of safety and effectiveness”).  The fraud on the FDA ruling in Dan Abrams thus turned on a distinction without a regulatory difference.

Perhaps even worse Dan Abrams had no problem with allowing private FCA plaintiffs second-guess FDA approval decisions.

[T]he First Circuit has extended Buckman’s holding [barring private parties from asserting claims that device manufacturers defrauded the FDA] to the FCA context.  [Defendant] invites us to follow suit.  But this court’s [prior] decision . . . forecloses that path.  [There], we noted that other jurisdictions had cautioned against allowing claims under the False Claims Act to wade into the FDA’s regulatory regime.”  Yet we nevertheless allowed the relator’s fraud-on-the-FDA theory to go forward.  We thus affirm the district court for claims based on the Extra-use Devices, but we reverse for claims based on Contraindicated-only Devices.

2017 WL 4023092, at *4 (discussing United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017)) (other citations omitted).

That’s it – we’re bound, by Campie and we have to let the fraud-on-the-FDA claim continue, if only for the contraindication-based claim.  Since Dan Abrams didn’t attempt to repeat, let alone defend, the rationale in Campie, we can’t help but wonder if this panel of judges was embarrassed by Campie and thus decided “the less said, the better” about allowing fraud-on-the-FDA claims under the guise of FCA claims.  It is odd that Dan Abrams discusses the rationale of a decision it doesn’t follow more than that of the decision it does.  That seems passive-aggressive, but that’s the Ninth Circuit for you.

Finally, Dan Abrams also affirmed dismissal of the kickback-based claim.  That was because two of the factual allegations involved statutorily exempt activity, a third allegation nowhere explained how there was a violation, and a fourth allegation was “general” and did “not identify any[one] . . . who actually received payment.”  2017 WL 4023092, at *4.