District of Massachusetts Rejects Relators’ Attempt to Convert Products Liability Theory into FCA Claim

By on February 8, 2016

On February 2, 2016, U.S. District Court for the District of Massachusetts dismissed a complaint alleging sweeping allegations of purported fraud under the False Claims Act (FCA) relating to hip replacement devices, and in doing so reaffirmed the principle that where an FCA complaint fails to plead the specifics of actual false claims, it cannot survive. The case is United States ex rel. Nargol v. DePuy Orthapaedics, Inc., in which, at the end of a 57-page opinion, U.S. District Judge Dennis Saylor denied the relators’ request for leave to amend, observing that “[d]espite full awareness of Rule 9(b)’s pleading standards, the relators—who are expert witnesses in related products-liability lawsuits against DePuy—have failed to plead with requisite particularity even a single false claim for the Pinnacle [metal-on-metal] [] device in their 168-page second amended complaint.”

The relators alleged a variety of conduct, but most of it boiled down to variations on the same theme: alleged concealment of product defects from the U.S. Food and Drug Administration (FDA) and doctors, resulting in the submission of false claims. The relators asserted that all claims for payment submitted to the government for costs of the device between the application for FDA approval and the device’s withdrawal from the market were false. The district court roundly rejected this, holding that despite the litany of allegations, the complaint’s specificity regarding the submission of actual false claims submitted to the government was woefully deficient:

In sum, the [second amended complaint] [] spends more than two hundred paragraphs detailing misrepresentations and false statements that DePuy allegedly made to the FDA and surgeons, including the relators themselves. It alleges in general terms that “the government directly purchased . . . hundreds of thousands of Pinnacle products.” But ten of the twelve allegedly false claims do not even refer to the only product relevant to this suit: the Pinnacle metal-on-metal device. For the two remaining “orders,” the SAC fails to plead with sufficient particularity the who, what, when, where, and how of a single false claim that DePuy presented to the [Veterans’ Administration].

The district court more generally observed that the FCA incentivizes bounty-hunting relators to attempt to turn product defect allegations into allegations of fraud:

The statute provides large awards to qui tam relators as an incentive to bring such cases. The prospect of such an award may also, however, provide an incentive for individuals to try to convert virtually any set of allegations arising out of a defective product or faulty service into an FCA case. That is particularly true in the medical field, where the government purchases medical supplies and services on a large scale through Medicare, Medicaid, the VA, and other health-care programs…

The district court’s detailed opinion demonstrates that, in many courts, a relator’s attempt to convert a products liability theory (or other tort theory) into a claim for fraud on the government under the FCA will be met with a high degree of skepticism.

Laura McLane
Laura McLane serves as head of McDermott's Boston Litigation Practice Group. Laura represents national and international clients in health care, securities and other government enforcement matters, both civil and criminal. She also represents clients in professional and products liability cases and in complex commercial disputes. A significant part of Laura's practice is devoted to representing health care and other companies, as well as individuals, in government investigations and qui tam litigation based on the False Claims Act (FCA) and related statutes, including the Anti-Kickback Statute and the Stark Law. Read Laura McLane's full bio.