Last week Bexis published a Legal Backgrounder for the Washington Legal Foundation, entitled “Recent Rulings Establish New Beachheads For Preemption In Drug And Device Product Liability Litigation.” It discusses several 2018 prescription medical product liability preemption rulings and what they portend for future litigation concerning the most powerful defense that our clients have. If you’re interested, you can read it here.
We’ve blogged a number of times about the Dormant Commerce Clause (“DCC”) as an additional basis for bolstering both preemption and Due Process arguments. Here’s another prescription drug-based example.
The state of New York decided to impose a special tax on opioid manufacturers to finance various responses to the so-called “opioid epidemic.” The tax came in the form of an “a $600 million ‘stewardship fund.’” Healthcare Distribution Alliance v. Zucker, ___ F. Supp.3d ___, 2018 WL 6651682 (S.D.N.Y. Dec. 19, 2018). There was a problem with that, however. What happens with business taxes? They get passed along (like tort verdicts do) in the form of higher retail prices based on increased costs of doing business. So the New York legislature, to paraphrase Dr. Seuss, “got an idea. An awful idea. They got a wonderful, awful idea.” No, they didn’t steal Christmas, but they decided to prohibit the manufacturers subject to the tax from passing it along to consumers:
In the provision defining stewardship payments, the [New York statute] states, “No licensee shall pass the cost of their ratable share amount to a purchaser, including the ultimate user of the opioid, or such licensee shall be subject to penalties pursuant to subdivision ten of this section.” Later, in the penalties provision, the Act notes that “[w]here the ratable share, or any portion thereof, has been passed on to a purchaser by a licensee, the commissioner may impose a penalty not to exceed one million dollars per incident.”
Id. at *3 (quoting N.Y. Pub. Health Law §§3323(2), 3323(10)(c)).
New York, however, is only one state. The taxed manufacturers, by contrast, sell their products nationwide, as authorized by those products’ multiple FDA approvals. New York has no power, and the statute had no mechanism, to enforce the prohibition against passing along the cost of “ratable shares” of tax liability in any place other than New York.
Enter the DCC. What New York did, whether by intent or default, was to pass a tax, to the benefit of in-state “opioid stewardship” programs that would inevitably be paid for solely by opioid consumers in other states, as to whom the statute’s no-pass-through prohibition did not operate.
That arrangement, the court in Healthcare Distribution held, is a burden on interstate commerce that is unconstitutional under the DCC. First, neither New York, nor any other state, can enact extraterritorial burdens on interstate commerce:
The absolute constitutional prohibition on state regulation of commerce occurring beyond the state’s borders is clear. . . . A statute that directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State’s authority and is invalid regardless of whether the statute’s extraterritorial reach was intended by the legislature. The Constitution is concerned with the maintenance of a national market for interstate commerce. Therefore, even if a statute may not in explicit terms seek to regulate interstate commerce, it can do so nonetheless by its practical effect and design.
Id. at *16 (citations and quotation marks omitted). Second, states may not discriminate against interstate commerce – such as by imposing taxes that exempt in-state commerce:
The Dormant Commerce Clause also contains an antidiscrimination principle. . . . [S]tates are aware of the obvious constitutional problems of tariffs. . . . Instead, the cases are filled with state laws that aspire to reap some of the benefits of tariffs by other means. . . . [The DCC] examin[es] whether the challenged action shifts the costs of regulation onto other states, permitting in-state lawmakers to avoid the costs of their political decisions. If a regulation unambiguously discriminates in its effect, it almost always is invalid per se.
Id. (citations and quotation marks omitted)
Imposing burdens solely on interstate commerce is precisely what New York’s tax on opioids – combined with the no-pass-through provision limited to New York – did:
[When the statute’s] provisions are given their clearest meaning, the Dormant Commerce Clause violation is clear. An opioid manufacturer based in Maine that wished to pass on the surcharge it paid on New York transactions by selling opioids at a markup to a pharmacy in New Mexico could face a million-dollar penalty from New York State. While the statute may not in explicit terms seek to regulate interstate commerce, that it does so nonetheless by its practical effect and design” is abundantly clear.
Id. at *17 (citation and quotation marks omitted). That’s the regulatory part. If, however, the statute were construed not to apply to interstate commerce so as to avoid the Scylla of extraterritoriality, it falls directly into the Charybdis of discrimination:
If the [New York statutory] pass-through prohibition applies only to in-state purchasers, New York would clearly reap some of the benefits of tariffs by other means. New York opioid customers would be protected from any price increases in their purchases, and New York would receive a source of funding subsidized by the out-of-state purchasers of opioids. . . . [O]ut-of-state drug purchasers, with no representation in New York’s legislature or executive, would bear the cost of New York’s policy program. This shifting of burdens and benefits is antithetical to the idea of intra-national free trade and demonstrates why the Dormant Commerce Cause exists, i.e., to prohibit discrimination as to “any part of the stream of commerce − from wholesaler to retailer to consumer.
Id. (citations and quotation marks omitted).
There were a lot of other issues that the court in Healthcare Distribution had to plow through between page *3 and *16, but they were all ultimately invalid procedural roadblocks thrown up by New York in order to protect the unconstitutional windfall it was attempting to confer upon itself (and its citizens) at the expense of the rest of the country – justiciability, the Tax Injunction Act, tax comity, abstention, ripeness, and standing. If any of those interest you, be our guest. We’re satisfied with the unconstitutionality of state attempts to tax interstate commerce in prescription drugs.
If you found yourself wanting more information on these cases and their impact – perhaps with a side of CLE credit – we’re pleased to announce that five of your bloggers (Bexis, Eric Alexander, Steven Boranian, Steve McConnell, and Rachel Weil) will be presenting a free 90-minute webinar on “The good, the bad and the ugly: The best and worst drug/medical device decisions of 2018” on Wednesday, January 16 at 12 p.m. EST.
This webinar is presumptively approved for 1.5 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.5 credit under New York’s Approved Jurisdiction Policy.
The program is free and open to anyone interested in tuning in, but you do have to sign up, which you can do here.
This guest post is from long-time friend of the blog Bill Childs, from Bowman & Brooke, who also wishes to thank Elizabeth Haley for research assistance. It’s a reworking of a piece on bogus scholarly literature that Bill previously published here. We thought it was both good and relevant enough that we approached Bill with a request to re-run it as a guest post on the Blog, and he graciously accepted. As always, our guest bloggers are 100% responsible for the content of their posts (and here that disclaimer also extends to B&B and its clients), and deserve all the credit (and any blame).
The Daubert court, in interpreting Rule 702 of the Federal Rules of Evidence, laid out various non-exclusive criteria for consideration in evaluating proposed scientific evidence, one of them peer review. As the Court put it: “The fact of publication (or lack thereof) in a peer reviewed journal…will be a relevant, though not dispositive, consideration in assessing the scientific validity of a particular technique or methodology on which an opinion is premised.” Daubert v. Merrell Dow Pharms., 509 U.S. 579, 594 (1993). Peer review, or the absence thereof, was mentioned repeatedly by the New Jersey Supreme Court in endorsing Daubert in the recent decision in In re: Accutane Litigation, 191 A.3d 560, 586, 592, 594 (N.J. 2018). Among other things, the Court noted that the plaintiffs’ expert had not submitted “his ideas…for peer review or publication,” considering that failure to be a strike against his methodology. Id. at 572.
Compared to other Daubert factors (or those described in the subsequent comments to Rule 702), the presence or absence of peer review may seem more binary than other factors − i.e., easier for a court to evaluate − it’s either there or it’s not, it seems. Not so, either in the traditional sense of peer review or the changing world of things that now get called peer review. Given this perceived simplicity, though, it frequently gets less attention than it deserves. Litigants should think about peer review as being more complex than it appears, and in some specific contexts, additional exploration − whether through discovery into your adversaries’ experts, or early investigation of your own potential experts − may make sense.
Daubert vs. Predator
One fascinating consequence of this consideration of peer review in the Daubert context is the potential for experts publishing litigation-related work in what are called “predatory journals” (sometimes also called “vanity publications).” See Kouassi v. W. Illinois Univ., 2015 WL 2406947, at *10-11 (C.D. Ill. May 19, 2015); Jeffrey Beall, “Predatory Publishing Is Just One of the Consequences of Gold Open Access,” 26 Learned Pub’g 79-84 (2013); John Bohannon, “Who’s Afraid of Peer Review?” 342 Science 60-65 (Oct 4, 2013).
Predatory journals, like the eponymous Predator in the 1987 film and its 2018 reboot, camouflage themselves. They make themselves look not like the Central American jungle background, but like legitimate medical or scientific journals. Their publishers’ websites generally look like legitimate publishers’ websites (if sloppy at times), their PDFs look like “real articles,” and their submission process might even look normal. They’ll even claim to have peer review and editorial boards and all the rest of what you expect from journals. Like the Predator, they even try to manipulate their editorial voices to sound like real journals.
These journals are, however, just aping the façades of real journals. They typically do not have legitimate peer review processes − or possibly any review processes at all. Frequently, if an author pays the exorbitant fees, the submitted article will get published.
Myriad examples exist revealing such journals as frauds. My favorite is probably the publication of a case report of “uromysitisis” an entirely fictional condition − first referenced in Seinfeld as a condition from which Jerry claims to suffer after being arrested for public urination − by the purported journal Urology & Nephrology Open Access Journal. The author of the intentionally nonsensical article − not a urologist, nor a medical doctor at all − wrote about his experience here. After that article’s exposure as an obvious fake, and something that even the most casual of reviewers should have rejected, the article was removed, but the “journal” is still up and publishing on the MedCrave site, described, a bit awkwardly, as “an internationally peer-reviewed open access journal with a strong motto to promote information regarding the improvements and advances in the fields of urology, nephrology and research.” A few years earlier, a computer scientist published an article consisting solely of the phrase “Get me off your [obscenity] mailing list,” with related graphs, repeated for eight pages. That journal remains in existence as well.
Such journals are largely set up to entrap new (and naïve) scholars who are under tremendous pressure to publish for promotion and tenure purposes − but they also can provide an opportunity for dubious expert witnesses to get something published they can cite as “peer reviewed,” especially as courts more and more often note the presence or absence of peer review. It isn’t news to many litigation experts that having peer review for some of their more outlandish assertions can increase the odds of their testimony being admitted. If an expert in fact has published in a predatory journal (and it can be shown that the expert knew or should have known about that fact), that fact should count against the admissibility of the testimony.
Given the camouflage, it is fortunate that there are resources and strategies that can help identify such publications. Retraction Watch, published by the Center for Scientific Integrity and headed by science writer Adam Marcus and physician and writer Ivan Oransky (full disclosure: Ivan and I are friends, based in large part on our shared love for power pop like Fountains of Wayne and western Massachusetts bands like Gentle Hen. He should not be blamed for my Predator references) while not focused solely (or even largely) on predatory journals, is an accessible look at the world of retractions “as a window into the scientific process.” They keep an eye out for interesting developments in the world of predatory journals, and scientific publications generally, and their coverage is what made me suspicious when, in one of my cases, an adversary’s expert’s article was published by a MedCrave journal (home to the Seinfeld article). Retraction Watch’s coverage of that article led to what I assume will be the only time in my career I had the chance to ask a Ph.D./M.D. if he was familiar with Seinfeld and if the show is, in fact, fiction, based on him publishing − and in fact being listed as an editor of − another MedCrave journal.
There is also a list of suspected predatory journals archived at Beall’s List. The appearance of a journal on that list is not conclusive evidence that it is predatory, but it is enough to raise questions. The removal of a journal from the Directory of Open Access Journals for “editorial misconduct” or “not adhering to best practices” (see list, here) is another giveaway. The Loyola Law School’s “Journal Evaluation Tool” can also provide a useful rubric, accessible to non-scientifically-trained lawyers, for evaluating whether a journal is likely legitimate or not. And your own experts can likely provide feedback to you about journals.
Most experts will not have published in predatory journals. But it is still worth the time to explore the question, especially about pivotal articles on which the experts are relying − whether the expert is your adversary’s or your own. Even if the publication offer was innocently accepted (i.e., even if the author did not realize she was publishing in a predatory journal), the lack of rigor in evaluating the article by the publisher should at a minimum eliminate any weight given to the peer review factor. And if an author has intentionally published in such a journal, that should be the equivalent of an intentionally false statement in a C.V.
Not All Peer Review Is the Same
Of course, these relatively new faux journals are not the only way experts get published. Consider the most traditional form of peer review, where editors of a journal have outside reviewers, usually with their identities screened from the authors, evaluate the quality and originality of the work, confirming that the methodologies presented appear legitimate and that the conclusions reached are reasonable based on what’s described. Given that those goals line up nicely with the goals of a Daubert analysis, it is sensible indeed for a court to look at that as a potential indicator of reliability − indeed, that’s why peer review is a factor in the first place.
But even if a proffered expert testifies to having followed a methodology that matches something in a peer-reviewed publication, it is often worth at least a few deposition questions about the review process and a line in your subpoena duces tecum requesting copies of any materials the author has received relating to the review, or to attempt some third party discovery on the journals in question − though some courts may limit or refuse that discovery. See, e.g., In re Bextra & Celebrex Mktg. Sales Practices & Prod. Liab. Litig., 2008 WL 859207 (D. Mass. March 31, 2008) (granting protective order for non-party medical journal publisher, expressing concerns about a chilling effect). The propriety of allowing such discovery is beyond the scope of this article, but I addressed it in more detail in The Overlapping Magisteria of Law and Science: When Litigation and Science Collide, 85 Neb. L. Rev. 643 (2007).
If you get peer review notes, it’s possible you’ll find that a reviewer recommended the removal of a conclusion that the expert is now presenting, or that the reviewer warned against a particular inference from what is in the article. Making it even easier, some journals, traditional and, more often, “open access,” are now posting their reviewers’ comments online. Even if you do not find anything relevant, most experts will readily concede that peer review reflects at most an “approval” of the overall approach and is not a guarantee of correctness as to conclusions. And sometimes you’ll be able to establish that the study in question was based on flawed data or that the work done for litigation did not, in fact, use the same methodology as that in the publication. See, e.g., In re Mirena IUS Levonorgestrel-Related Prods. Liab. Litig., ___ F. Supp.3d ___, 2018 WL 5276431, at *11-13, *28, *34, 37-38, *50-51 (S.D.N.Y. Oct. 24, 2018) (rejecting expert’s reliance on “repudiated” open access journal article by author that did not disclose retention as a plaintiff’s litigation expert); In re Viagra Prods. Liab. Litig., 658 F. Supp. 2d 936, 945 (D. Minn. 2009) (reversing an initial denial of defendants’ Daubert motion after learning of flaws in underlying data and processing, noting that “Peer review and publication mean little if a study is not based on accurate underlying data.”); Palazzolo v. Hoffman La Roche, Inc., No. A-3789-07T3, 2010 WL 363834, at *5 (N.J. Super. App. Div. Feb. 3, 2010) (finding no abuse of discretion in excluding an expert’s conclusion based on conclusion that the expert did not in fact use the methodology claimed to have used in the underlying peer-reviewed study).
Sometimes, even in a more traditional context, the peer review that was performed was not what was likely pictured by the Daubert court, particularly when the work at issue is outside the so-called “hard sciences.” In a publicized example, the review of a history-oriented book about the lead and vinyl chloride industries, authored by frequent plaintiffs’ experts and published by the University of California, involved reviewers known to − and in some cases recommended by − at least one of the authors . See 85 Neb. L.R. at 660-63 (describing this situation; original book website was removed). Whether or not that review was adequate for the academic purpose, it was materially different from, say, the reviewers of a double-blind clinical trial, and the facts surrounding it seem plainly relevant to how much weight a court should give it under Rule 702 and Daubert. Without that discovery, the court may well not have learned about what “peer review” meant in that context.
Consider also the scenario where an expert says that their methodology has gone through peer review but the article has not yet been published. Again, it may be worth pursuing more details, especially if the expert seems likely to cite to that review in defending their position. If it has not yet been accepted for publication, consider requesting a copy of the comments the expert received from the reviewers. If those comments are provided, they may be helpful; if their production is refused, the fact of that review should be rejected as a basis for admissibility.
What To Watch Out For
Fundamentally, the important thing is to look through your and your adversaries’ experts’ C.V.s with care, especially as to articles that are directly on point with the issue you’re addressing. It is not enough to think about what the articles say, and it also is not enough to think to yourself, “Well, that sounds like a legitimate journal.” Look at the publishers’ site; look for hints in the article itself; and do some searches. Ask a few questions of the expert about author fees and what the peer review entailed and throw in a document request to see if there is something worth exploring further. And if you are dealing with a situation with what you think is a predatory journal, be ready to teach a judge about what that means; as of this writing, no court has referenced “predatory journals” in a reported Daubert decision.
Today’s case is not our usual fare. But we’ve never seen this kind of appeal succeed before, so we’re going to spare a few minutes for something a little odd but important.
First of all, the patient and the medical device manufacturer are on the same side – they’re both plaintiffs in Alcresta Therapeutics, Inc. v. Azar, 2018 U.S. App. LEXIS 33961 (D.C. App. Dec. 3, 2018). Because in this suit, the medical device manufacturer and the patient are aligned in their desire to get the patient access to the device. Defendant is the Secretary of Health and Human Services. And the issue is the billing code, or lack thereof, assigned by HHS to the device.
The device, Relizorb, is a cartridge containing an enzyme that predigests fats in enteral formula. So the device is designed to be used with enteral feeding via a stomach tube for people with illnesses who have difficulty digesting and absorbing essential fats. Id. at *2. Relizorb is expensive and is not needed by all enteral feeding patients. Id. at *6-7. Feeding tube systems consist of many different parts that are not pre-packaged together, but that are coded and priced together by the HHS as an “enteral feeding supply kit.” Id. at *2. Many other products used for enteral feeding are priced and coded separately. HHS determined, however, that Relizorb should be coded as part of the supply kit rather than separately. Id. That decision has led Medicare and private insurers to deny reimbursement for Relizorb which in turn has prevented the patient from getting Relizorb and the manufacturer from selling it. So, they sought a preliminary injunction ordering HHS to assign the device a temporary billing code that doesn’t treat Relizorb as a component of the enteral feeding supply kit allowing it be separately priced.
The district court denied the injunction and the only issue on appeal was whether plaintiffs had demonstrated irreparable injury. Id. at *5. That, and of course, whether they had standing to challenge HHS’s coding determinations. HHS argued that coding decisions are not determinations of the reimbursement rates and that the only way plaintiffs should be allowed to proceed is to challenge a specific reimbursement denial through the Medicare appeals process. Id. at *7. But, in this instance, the coding decision dictated the reimbursement rate. HHS had no evidence that it made any separate pricing determination separate from the coding decision. Therefore, both the patient and the manufacturer had standing because they demonstrated “they are harmed by a lack of opportunity to obtain reimbursement that is caused at least in significant part by HHS’s coding determination” and a new, independent billing code would redress that harm. Id. at *8. The new billing code wouldn’t set the reimbursement rate, but it would allow the agency to set a reimbursement rate for the device.
A similar argument prevailed on irreparable harm. The patient-plaintiff cannot afford to buy Relizorb without insurance reimbursement and the manufacturer-plaintiff can’t sell Relizorb because patients cannot get insurance reimbursement. Id. at *10. The detriment to the manufacturer threatened to put it out of business. For the reasons noted above on standing, plaintiffs demonstrated a sufficient connection between the HHS coding decision and their irreparable harm “that success on the merits would meaningfully redress those injuries.” Id. at *11.
This may be a rare situation, but important for our clients, and therefore us, to be aware of.
When it comes to medical device preemption, having Pre-Market Approval (“PMA”) is like being dealt pocket aces in Texas Hold’Em Poker. It’s the strongest starting hand you can have; a 4:1 favorite over any other two card combo. It means you’re starting in the power position. Since the Supreme Court’s decision in Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), manufacturers of PMA medical devices are in the power position in products liability litigation. Very little slips by the double-edge sword of express and implied preemption in PMA cases. The same can, and should be said for IDE cases as well. And that’s what the Kentucky Court of Appeals said in Russell v. Johnson & Johnson, — S.W.2d –, 2018 WL 5851101 (Ky. Ct. App. Nov. 9, 2018).
Defendant manufactures medical catheters. The catheter was approved by the FDA via the PMA process in 2004. Id. at *1. In 2015, the FDA approved use of the catheter under the Investigational Device Exemption (“IDE”) to the MDA which allowed the catheter to be used in a clinical trial to evaluate its safety in certain cardiac ablation procedures. Plaintiff underwent a cardiac ablation procedure as part of the clinical trial in which defendant’s catheter was used. Id. After plaintiff’s procedure the catheter did receive full pre-market approval. Id. at *4.
Plaintiff suffered complications during the procedure and subsequently filed suit alleging defendant was liable for strict liability, negligence, lack of informed consent, failure to warn, breach of warranties, fraud, and unjust enrichment. Id. at *2. Defendant moved to dismiss all claims on the grounds of preemption and the trial court, relying on Riegel, granted the motion. Id. Plaintiff later asked the court to set aside its ruling based on defendant’s voluntary recall of other catheters, but not the one used on plaintiff. The court denied that motion. Plaintiff appealed both rulings.
Not surprisingly, plaintiff’s primary argument was that the court should discount Riegel because at the time of plaintiff’s surgery, the device had not yet received pre-market approval. Id. at *4. But the court found the argument contradicted by numerous courts to have considered the issue. Some courts find that timing of the grant of PMA to be immaterial. Id. While others find IDE approval to be synonymous with PMA. Id. This certainly follows the logic of Riegel. Riegel adopted a two-step test for preemption and the first step is whether the FDA has established requirements applicable to the device. Riegel concludes that a PMA does in fact establish such requirements. Well, so does an IDE.
[b]ecause IDE devices are subject to a level of FDA oversight and control that is, for the purpose of a preemption analysis, identical to that governing PMA devices, the body of preemption law governing PMA devices applies equally to the IDE device at issue in this case.
Id. (citing Martin v. Telectronics Pacing Sys., Inc., 105 F.3d 1090 (6th Cir. 1997).
Thwarted by authorities from other jurisdictions on the issue, plaintiff next urged the court to rely on a Kentucky Supreme Court case decided before Riegel – Niehoff v. Surgidev Corp., 950 S.W.2d 816 (Ky. 1997). Id. Niehoff rejected preemption in an IDE case relying on Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996). But as we all know, Lohr dealt with a device approved via the §510k “substantial equivalence” process. As pointed out above, the IDE process is more analogous to the PMA process and therefore, in a post-Riegel world, Riegel is controlling. In Niehoff, the manufacturer also stopped the clinical trial before the FDA considered its PMA application. Id. Whereas in Russell, the device was granted PMA just over one year after plaintiff’s procedure. Id. at *5.
In deciding the preemption question in the current case, the court started its analysis with the clear cut statement that “there is no presumption against preemption” in an express preemption case. Id. After checking that box, the court looked at the device at issue and concluded that “approval after being subject to both the IDE and PMA processes, satisfies the first prong of Riegel.” Id. at *6. So, to survive preemption, plaintiff cannot be alleging a claim that is different or additional to FDA’s requirements regarding safety and effectiveness. Id. That means, plaintiff in his complaint must allege three things: “violation of a federal requirement; violation of an identical state violation; and a link between the federal violation and [plaintiff’s] injury.” Id. Plaintiff went 0 for 3.
The court could find no allegations of federal violations, or even a cite to a federal regulation. No factual support for any alleged violation. No allegations that his injury was caused by a federal violation. All plaintiff did was allege the device was defective – “in other words, the FDA should have imposed more stringent requirements – an attack precisely prohibited by the MDA.” Id. at *7.
Failure to allege a parallel violation required dismissal of plaintiff’s strict liability, negligence, failure to warn, and fraud claims. Id. at *7, *8. Plaintiff’s informed consent claim failed because plaintiff signed a detailed consent form that was approved by the FDA. Any claim that the consent was inadequate would impose a different or additional requirement on the defendant. Id. at *7. Claims that the device breached warranties regarding safety and effectiveness “directly contradict the FDA’s conclusion that the catheter was safe and effective.” Id. at *8. As would an unjust enrichment claim premised on a claim that plaintiff did not receive safe and effective medical care. Id. Finally, plaintiff failed to allege a parallel federal statute to the Kentucky Consumer Protection Act. Id. So, all of the claims were properly dismissed as preempted. The appellate court also upheld the trial’s court’s decision that any attempt at amendment would be futile. “Additional time would not have transformed [plaintiff’s] claims into parallel state claims.” Id.
As for the motion to set aside the dismissal based on the recall, the court again upheld the trial court’s decision. A final judgement can be set aside based on newly discovered evidence which could not have been learned via due diligence in time for a new trial. Id. at *9. But new evidence is not events that occur after entry of a final judgment – such as the recall here. Id. Moreover, the new evidence needs to be relevant. The recall was of different catheters, not the one used in plaintiff’s procedure. Id. Next, the voluntary recall “negated neither federal preemption nor FDA approval.” Id. The FDA was aware of adverse events and of the recall, but did not withdraw its approval of the device. And, a recall is not a presumption that FDA regulations have been violated. A recall doesn’t turn a “preempted claim into a parallel cause of action.” Id.
No doubt defendant had pocket aces going into this appeal, but Jim Murdica and Kara Kapke from Barnes & Thornburg and Lori Hammond from Frost Brown Todd deserve a shout out for knowing when to go all in!
Some of your favorite Drug and Device Law bloggers will be presenting at Reed Smith’s Life Sciences CLE Day, which will be presented live in Reed Smith’s Philadelphia office and via videoconference to our Pittsburgh office on Thursday, November 15. This is a free, full-day CLE program designed for in-house counsel at life sciences companies.
Bexis will be covering “Key Issues Currently Before the Supreme Court and Other Supremely Interesting Cases,” discussing cases teed up for the current Supreme Court term that could have significant implications for preemption in prescription drug cases, class action strike suits, and even basic product liability law.
Steve McConnell and Rachel Weil will be discussing “Games People Play: Decision Points in MDLs,” which will examine recent trends in multidistrict litigation, particularly in life sciences and product liability cases. The focus will be on strategies for being in the right court, reasonably cabining the scope of discovery, facilitating federal-state and joint defense cooperation, and avoiding adverse trial scenarios.
In between, some of our Reed Smith colleagues will discuss:
- Ethics “do’s and don’t’s” in-house counsel can learn from some real stories of questionable ethics and sanctionable conduct
- The recent N.J. Supreme Court decision where the Court unanimously upgraded the state’s standards for admission of expert testimony, and wider discussion around expert testimony
- Health tech developments affecting drug and device companies
- Unexpected issues that are arising for life sciences and health companies in a post-GDPR world, despite companies’ careful preparedness for GDPR implementation
- Key State AG enforcement activities relevant for life sciences companies, and likely new trends in this area
- Pharmaceutical pricing and contracting compliance and the potential impact of the Trump administration’s “Blueprint” to address concerns over pricing
The good people at Reed Smith are also providing a networking breakfast and lunch, with a reception immediately following the CLE day in Philadelphia.
This program is presumptively approved for 5.0 general CLE credit and 1.0 Ethics credit in Pennsylvania, California, Texas and Florida. The program is also approved for 6.0 general CLE credit and 1.0 Ethics credit in New Jersey. It is presumptively approved for 5.0 general CLE credit and 1.0 Ethics credit under New York’s approved jurisdiction policy. Applications for general and Ethics CLE are pending in Delaware, Illinois, and West Virginia.
Interested? You can register here. (Please note that space is limited.)
Happy birthday, Aubrey Drake Graham. Most people know Mr. Graham strictly by his middle name. The Canadian rapper Drake has carved out a hugely successful career for himself. He sells lots and lots of records – or whatever it is that they sell in the music business these days. Surprise: Drake’s music isn’t exactly our thing. We still play the Beatles more than anything else, we sing along with Crosby, Stills, & Nash in the car, and we have difficulty naming songs post-dating Nirvana. (Seinfeld once famously asked, “How could you not like the Drake?” He was talking about somebody else. Still, it’s a question we hear frequently from friends and family, chiding us for our retrograde taste in music.) Nevertheless, it’s impossible to swim in this culture without getting at least a little wet from Drake’s songs. With “Worst Behavior,” for example, we got doused with language that you won’t hear in “Hello/Goodbye,” “Suite: Judy Blue Eyes,” or even “Come as You Are.” The main lyrics in “Worst Behavior” are about remembering how some bad, um, person, didn’t love Drake enough. Anyway, thinking about that song made us review instances of the worst behavior by plaintiffs we have known and not loved. There’s outright lying, cheating, and stealing. And that’s looking only at the Plaintiff’s Fact Sheet. Sometimes it goes beyond that. Way beyond that. Sometimes there’s hiding assets, including one’s pending tort claims, in bankruptcy. It’s a swell way to stiff creditors.
This is not the first time we’ve encountered a case where a plaintiff neglected to list a mass tort claim as an asset in a bankruptcy proceeding. See our blogposts here and here, for example. Such neglect can have serious consequences, including staying or even dismissing the tort claim. In today’s case, Kinderline v. Accord Healthcare, Inc., (In re Taxotere Prod. Liab. litigation), 2018 WL 5016219 (E.D. Louisiana Oct. 16, 2018), the plaintiff declared bankruptcy first, and two months later brought the mass tort action. The plaintiff did not amend the bankruptcy papers to identify the claim. The mass tort being an MDL, it dragged on, and the plaintiff’s bankruptcy closed with the trustee not hearing about the pending mass tort claim. The plaintiff received a “no asset” discharge from bankruptcy. A fresh start! The plaintiff’s failure to include the tort claim in the bankruptcy proceeding was caught only after she was deposed by the defendant in the MDL. (See – there’s a reason why that bankruptcy question shows up in your depo outlines.). The plaintiff then belatedly reopened the bankruptcy proceeding to list the tort claim. The issue was whether the plaintiff was collaterally estopped from pursuing the tort claim in the MDL.
First things first. Which law governed the estoppel issue? The plaintiff wanted to apply the law of her home jurisdiction, Ohio. But the application of judicial estoppel is a matter of federal common law, and the case had been transferred to the MDL court in Louisiana, which is part of the Fifth Circuit. There is precedent, though not by the Fifth Circuit, holding that application of federal (Constitutional, statutory, or common) law is governed by the law of the transferee court. Judge Fallon in E.D. Louisiana went that route in the Vioxx MDL. It certainly makes administration of the MDL easier. (That’s not the same thing as saying it is right.) Even without Fifth Circuit precedent squarely on point, the Taxotere MDL court was convinced that the circuit law of the transferee court held sway, and therefore applied Fifth Circuit, not Sixth Circuit, law. We’re not sure there is any difference in terms of application of judicial estoppel. That is usually the threshold issue in a choice of law analysis. Not so here.
This choice of law rule might be important to you when you are deciding what court you will argue for when it comes to creating an MDL. Most lawyers tend to focus on the particular judge and district court they like better (or which particular judge and district court most terrifies them), but we should also think about the circuit court. For instance, we recently argued for sending an MDL to the district of New Jersey. The judge there seemed quite good. But we were not blind to the fact that Third Circuit Law on preemption, in the form of the dreaded Fosamax decision, was bad bad bad. We ended up concluding that Fosamax was so obviously bad that SCOTUS would reverse it. That’s a heck of a gamble. Right now, as we mentioned recently when we reviewed the Solicitor General’s amicus brief in Fosamax, it looks like a good gamble. To quote a musician much more likely to be found in our playlist (and much more likely to be found in the Third Circuit), Fosamax is “going down, down, down, down.”
Back to Kinderline. The court held that the plaintiff was, indeed, estopped. Fifth Circuit law on estoppel, like the law in most places, looks at three elements: (1) the party against whom estoppel is sought has asserted a position plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently. The first element was met here because the plaintiff failed to amend her bankruptcy petition to disclose a claim pursued after filing the petition. The duty to disclose claims/assets in bankruptcy is an ongoing obligation. The second element is straightforward and obviously satisfied, because the court accepted the prior position – hence the no-asset discharge. Now comes the third element, inadvertence. To establish a defense of inadvertence, a party must prove (1) that she did not know about the inconsistency, or (2) that she lacked a motive for concealment. There is no help for the plaintiff in Kinderline there, as there is no evidence she was oblivious to the inconsistency between the filing of the lawsuit and the failure to list it in bankruptcy, and the motive for concealment, keeping creditors away from any proceeds of the lawsuit, is undeniable and has, in fact, been recognized by the Fifth Circuit in another judicial estoppel case. The plaintiff “would have reaped a windfall if she had been able to pursue this claim and collect a judgment from Accord without having to share the judgment with her creditors.”
The best fact the Kinderline plaintiff had going for her was that she reopened the bankruptcy proceeding before the defendant managed to move for estoppel. She won the race to the courthouse. Whoopee. Not good enough. The plaintiff did not seek to correct the record until being caught at her deposition and until almost a year after she knew of the lawsuit as asset. Borrowing from Fifth Circuit precedent, it is clear that to bless the plaintiff’s gamesmanship by allowing the debtor to “back-up, reopen the bankruptcy case, and amend [her] bankruptcy filings, only after [her] omission has been challenged by an adversary, suggests that a debtor should consider disclosing personal assets only if [she] is caught concealing them.” In other words, there must be consequences for the plaintiff’s bad behavior. The plaintiff claimed that her delay was caused by her decision to wait to confirm product identification to ensure she was suing the correct party. Hmmm. Such carefulness on the part of the plaintiff and her attorneys! Yet it did not stop her from filing the tort lawsuit. Nor did it account for all of the year-long delay. The plaintiff is not innocent. For that reason, judicial estoppel means that she cannot pursue her lawsuit in the MDL.
But the Chapter 7 trustee is innocent and is the real party in interest. The Trustee did not hide assets. For that reason, the bankruptcy trustee could pursue the plaintiff’s claim. But here’s an odd wrinkle: the rejection of the plaintiff’s right to claim on her own behalf meant that her husband’s consortium claim was extinguished, as it was purely derivative of his wife’s claim. To allude to the title of another Drake song, the husband’s claim was “Over.”
Did you know that October is National Cybersecurity Awareness Month? Neither did we, until we started poking around the FDA’s recent press release announcing that it intends to update its guidance on medical device cybersecurity within the next few weeks. We also learned that National Cybersecurity Awareness Month has been observed each October since its inception in 2004. Observed by whom? We’re not exactly sure. We picture our IT consultants walking office to office handing out hats and stickers with catchy slogans like “A password is like underwear. Change it!” Or some lame pun involving the work “phishing.” If it were up to us, we would default to the simple and classic “Ctrl-alt-delete before you leave your seat.”
All kidding aside, cybersecurity threats have moved in recent years from theoretical to very real, and while there remains no reported instance of anyone hacking into a medical device being used to treat a patient, the potential vulnerability is one to which we need to pay attention.
That includes the FDA. The FDA has published guidance on cybersecurity with regard to both premarket submissions and post-market submissions. (You can see our take on the postmarket guidance here) Based on the FDA’s press release, updates are coming to the premarket guidance, specifically to “highlight the importance of providing customers and users with a ‘cybersecurity bill of materials,’ or in other words, a list of commercial and off-the-shelf software and hardware components of a device that could be vulnerable to attack.” This jibes with the FDA’s general approach to cybersecurity, which is to undertake a risk-based analysis that identifies vulnerabilities, assesses the potential frequency and severity of the risk, identifies mitigations, and proceeds accordingly. Such a risk-based analysis should be familiar to anyone who operates in the medical device space, where risks and benefits are weighed on a daily basis.
The other news of the press release is the publication of a Medical Device Cybersecurity Regional Incident Preparedness and Response Playbook, which “describes the types of readiness activities that’ll enable HDOs [healthcare delivery organizations] to be better prepared for a cybersecurity incident involving their medical devices.” This Playbook was prepared by the MITRE Corporation, a government-sponsored research and development organization. You can get a copy of the Playbook here, and you can that it is aimed at healthcare providers and critical healthcare infrastructure in which medical devices operate.
The purpose of the Playbook is to help HDOs get ready for cybersecurity threats affecting medical devices that could impact continuity of care and patient safety. More specifically, the playbooks objectives are to:
- Provide baseline medical device cybersecurity information that can be incorporated into an HDO’s emergency preparedness and response framework;
- Outline roles and responsibilities for responders to clarify lines of communication “across HDOs, medical device manufacturers (MDMs), state and local governments, and the federal government”;
- Describe a standardized approach to response efforts;
- Serve as a basis for enhanced coordination activities among medical device cybersecurity stakeholders;
- Inform decision making and the need to escalate response;
- Identify resources HDOs can leverage as a part of preparedness and response activities; and
- “Serve as a customizable regional preparedness and response tool for medical device cyber resiliency that could be broadly implemented.”
We put that last one in quotes because we’re not exactly sure what “cyber resiliency” means, but we assume it means the ability to fend off a cybersecurity event or at least mitigate its impact. Toward that end, the Playbook suggests a four phase approach: (1) Preparedness; (2) Detection and Analysis; (3) Containment, Eradication, and Recovery; and (4) Post Activity.
“Preparedness” means exactly what it says, with an emphasis on mindfulness of cybersecurity when procuring medical devices and keeping an inventory such that the HDO is always aware of what connected devices it has on hand. HDOs should engage in “hazard vulnerability analysis” (again, a focus on risk) and plan for communicating and responding during an event. That includes medical device manufacturers, whom the Playbook places squarely within the communication loop with the HDO and the FDA.
“Detection and Analysis” focuses on identifying when an incident has occurred and assessing its priority on a numerical scare that strangely assigns “Emergency” events to “Category 0.” Analysis and documentation are important parts of the process, too.
The core of the response falls under “Containment, Eradication, and Recovery,” which appropriately focused on patient safety. Is the device safe to use? Is there a reliable way to test the device and confirm it is working correctly? Are there spare or backup devices? How quickly can the problem be fixed, and has there been collateral damage to the broader healthcare system? These are the questions that HDO should be asking.
Finally, the “Post Activity.” The Playbook recommends attention to lessons learned, including possibly retaining a digital forensics expert and updating the plan.
As we have said before, medical device cybersecurity is here to stay, and the FDA has been busy. In addition to the Playbook (which is not an FDA document, but still, you get the gist), the FDA has entered into memoranda of understanding to form information sharing analysis organizations (“ISAOs”), which are “groups of experts that gather, analyze and disseminate important information about cyber threats.” The Agency has participated in cybersecurity exercises and summits, and has engaged discussions with other government agencies, including the Department of Homeland Security. It has proposed a Center of Excellence for Digital Health, which “would help establish more efficient regulatory paradigms, consider the building of new capacity to evaluate and recognize third-party certifiers, and support a cybersecurity unit to complement the advances in software-based devices.” We will keep you posted.
Not too long ago we read a non-drug/device decision, Hale v. State Farm Mutual Automobile Insurance Co., 2018 WL 3241971 (S.D. Ill. July 3, 2018), which left us shaking our heads. How this suit could not be a blatant First Amendment violation is beyond us.
But that’s not really the point of this post.
The alleged “facts” are downright bizarre: The plaintiffs were sore losers in previous litigation against the same defendant. They had managed, through the use of now-discredited legal gamesmanship – a nationwide class action involving the extraterritorial application of the Illinois consumer protection statute – to obtain a verdict of over a billion dollars on claims involving State Farm and allegedly inferior replacement parts used in car repairs. Thankfully, plaintiffs couldn’t hold it. In Avery v. State Farm Mutual Automobile Insurance Co., 835 N.E.2d 801 (Ill. 2005), the court rejected extraterritoriality and nationwide consumer fraud class actions. Id. at 855 (“we conclude that the circuit court erred in certifying a nationwide class that included class members whose claims proceedings took place outside Illinois”). The nominal vote was 4-2, with one justice not participating, but even the dissent agreed on this issue. Id. at 864 (“I agree with the ultimate result reached by my colleagues − I, too, would find that the circuit court erred in certifying the nationwide class”) (concurring and dissenting opinion). There were a slew of other issues in this contentious case, but with rejection of the nationwide extraterritorial class, any basis for the boxcar, billion-dollar verdict disappeared.
But plaintiffs (or their lawyers) didn’t give up. Instead they filed a RICO action alleging that State Farm was “racketeering” when it gave large amounts of campaign contributions – Hale contains nothing to suggest that any state-law campaign finance violations were involved − to support the election of a particular “pro-business” candidate to the Illinois Supreme Court, while the Avery appeal was pending:
In essence, plaintiffs allege that defendants secretly recruited [the candidate] to run for an open seat on the Illinois Supreme Court, where the Avery . . . appeal was pending; that defendants organized and managed his campaign behind the scenes; that defendants covertly funneled millions of dollars to support his campaign through intermediary organizations over which [defendants] exerted considerable influence.
Hale, 2018 WL 3241971, at *1. You get the drift. Next came the predictable allegations that everything was covered up so no recusal occurred. Id. The new justice supposedly “broke” a “deadlock” – yeah, right, in a case where the main result was unanimous − and “voted to overturn the judgment.” Id. All this purportedly nefarious politicking supposedly “deprived [plaintiff plaintiffs] of their constitutionally-guaranteed right to be judged by a tribunal uncontaminated by politics.” Id.
It’s not the point of this post to debate the intricacies of RICO causation, damages, or enterprises. We don’t think Hale should ever have gone that far. We’ve previously advocated the First Amendment protection of purely scientific speech, because we don’t believe that one side to a scientific debate should be allowed to sue the other into submission. That was our primary interest when Citizens United v. Federal Election Com’n, 558 U.S. 310 (2010), was handed down. We frankly didn’t dream that core political speech of the sort at issue in Hale could give rise to private prosecutions under RICO.
But be that as it may. If it’s open season on the opposition’s campaign contributions, can the defense side play, too? After all, in most judicial elections, contributions from the defense are dwarfed by what our politically minded adversaries are able to raise and spend. It’s no secret. Here, for example, is the “Campaign Finance Online Reporting” of the Pennsylvania Secretary of State. You can type in the name of your most (or least) favorite judge and relevant election year and see everybody from whom s/he reported receiving contributions. Or you can click on “contributions made” and track the donations by your favorite plaintiffs’ lawyer or firm. Our clients have just as much of a “constitutionally-guaranteed right to be judged by a tribunal uncontaminated by politics” as do plaintiffs. Are there RICO violations here?
But maybe that’s not enough. Perhaps it’s too diffuse to assert a RICO violation just because the other side’s contributions made up 90%+ of the total contributions to a particular judge sitting on a particular case. Maybe there needs to be a “pending” matter to focus things more precisely. Still, our side might be able to play. Consider all of those “civil enforcement” actions nominally brought by cities, counties, and states against our clients – where the real vigorish goes to the contingent fee, private counsel brought in to prosecute the action for the government. We’ve complained about those actions, as well, without much success. If it turns out that contingent fee counsel (or those acting in concert with counsel) made large political contributions to the particular politicians who later authorized the filing of one of those suits against a client, does the client have a RICO counterclaim under the same rationale as Hale?
Our bottom line is that suits like Hale are abuses of the judicial system and attempts to sue over the other side’s First Amendment protected political activity. We’re, frankly, shocked that Hale survived summary judgment. But if plaintiffs insist on opening up that Pandora’s Box, our side should consider whether it wants to play, too.