DOJ Granston Memorandum May Promote Dismissal of Unmeritorious FCA Qui Tam Lawsuits

Michael Granston, the Director of the Commercial Litigation Branch within the United States Department of Justice’s Fraud Section, recently issued an internal memorandum affirming his prior statements that the Department of Justice (DOJ) should consider seeking dismissal of meritless False Claims Act (FCA) suits brought by relators in qui tam cases. Under 31 U.S.C. § 3730(c)(2)(A), the government can dismiss a qui tam action “notwithstanding the objections of the person initiating the action” by filing a motion with the court and provided the relator has had an opportunity to be heard. Historically, this authority has been used sparingly.

Last year, in a surprise announcement at a health care compliance conference, Granston indicated that the DOJ may seek to dismiss qui tam actions brought by FCA relators when it determines the actions lack merit. Following industry speculation that his statements reflected a policy shift by the DOJ, the DOJ disagreed and suggested Granston’s comments were simply a recitation of the status quo and description of the DOJ’s existing power to seek dismissal of unmeritorious FCA suits. The new DOJ memorandum, however, builds on Granston’s conference statements and could signal a more aggressive stance toward dismissal of unmeritorious whistleblower actions. At a minimum, it provides increased ammunition to defense counsel to request the DOJ seek dismissal of such actions. Continue Reading

Florida Court is Latest to Vacate FCA Judgment

As covered in “Court Overturns $350 Million Judgment in FCA Case: Materiality, Scienter, and Causation Standards Preclude Liability by “’Zaps, Traps, and Zingers’”, Andy Bernasconi discusses a recent case, in which the Middle District of Florida issued a blistering opinion vacating a $350 million judgment in a False Claims Act (FCA) case and granting the defendants’ motion for judgment as a matter of law.

This is part of a growing list of decisions that have resulted in dismissal of FCA claims or defense judgments based on a variety of factors, signaling a possible trend in the industry to clamp down on overreaching FCA cases.

This most recent decision comes only months after a Fifth Circuit case in which the court overruled a jury finding of FCA liability, and erased the damages award of more than $663 million, after trebling and inclusion of civil penalties. This case was discussed in depth in “Significant FCA Decision Affirms the Importance of Materiality.”

And in late 2017, we saw the high-profile HCR ManorCare case, in which the DOJ dismissed with prejudice an FCA lawsuit, after the court found that the DOJ’s main expert witness had lied in her deposition.

While the government continues to use the FCA to identify fraud and recover overpayments in government programs, these recent decisions highlight that the courts are looking long and hard at the merits of such cases to determine if any fraud was committed.

FDA Presents Webinar on Technical Considerations for Additive Manufactured Medical Devices

On December 5, 2017, the U.S. Food and Drug Administration (FDA) released the final version of its guidance entitled “Technical Considerations for Additive Manufactured Medical Devices; Guidance for Industry and Food and Drug Administration Staff.” As a follow up to the Guidance’s release the FDA held a webinar on January 10, 2017, to present an overview of the Guidance and answer questions. The presentation was a joint effort from several offices within the FDA’s organization and presenters included FDA employees, Matthew Di Prima, James Coburn (both of the Office of Science and Engineering Laboratories), Eric Horowitz (Office of Science and Engineering Laboratories), David Hwang, Joel Anderson (both of the Office of Device Evaluation) and Nooshin Kiarashi (Office of In Vitro Diagnostics and Radiological Health).

The webinar highlighted the technical assessments that manufacturers of certain 3D printed medical devices should consider when submitting a premarket application for a medical device that includes at least one fabrication step using additive manufacturing. As a helpful tool, the FDA used a hypothetical example of a 3D printed cranial implant device to walk through the information that the FDA would require in a premarket application for such a device. FDA has plainly put a lot of time into thinking about the unique technical aspects involved in 3D printing of medical devices and ensuring that the manufacturers of those devices consider these issues when submitting a premarket application.

The slides for the webinar are currently available on the FDA’s website. The webinar was also recorded and should be available here in the near future.

For more about the FDA Guidance, please see: Observations on FDA 3D Printing Guidance and FDA Publishes Draft Guidance Regarding 3D Printing Of Medical Devices. For more on general legal issues involving 3D printed medical devices, please see: 3D Printing of Medical Devices: When a Novel Technology Meets Traditional Legal Principles, 3D Printing of Manufactured Goods: An Updated Analysis, and 3D Printing: What Could Happen to Products Liability When Users (and Everyone Else in Between) Become Manufacturers”.

Is Your Software a Medical Device? FDA Weighs-in with New Draft Guidances

On December 8, 2017 – nearly a year after President Obama signed into law the 21st Century Cures Act (“Cures Act”) – the Food and Drug Administration (“FDA”) released two new draft guidances that aim to implement section 3060 of the Cures Act, and provide clarity on the Agency’s regulatory approach to software as a medical device. As explained in a statement by FDA Commissioner Scott Gottlieb, the new draft guidances “offer additional clarity about where the FDA sees its role in digital health, and importantly, where we don’t see a need for FDA involvement.”

Section 3060(a) amended section 520 the Federal Food, Drug, and Cosmetic Act (“FDCA”) to remove certain software functions from the definition of device in section 201(h) of the FDCA.  The first draft guidance – Clinical and Patient Decision Support Software – focuses on the provision of the Cures Act that exempts certain clinical decision support (“CDS”) software from the definition of a medical device. The second guidance – Changes to Existing Medical Software Policies Resulting from Section 3060 of the 21st Century Cures Act – outlines FDA’s interpretation of other types of software that are no longer considered medical devices. Continue Reading

Senate Bill Seeks to Provide “Floor” for Cybersecurity Operational Standards for Internet-Connected Devices Purchased by Federal Agencies

A recent bill introduced by Sen. Mark Warner (D-Va.) is attempting to place heightened security standards on all Internet of Things (IoT) devices procured by any federal agency. Should the legislation be enacted, the expectations it sets forth regarding the security of IoT devices could be interpreted by courts as the minimal floor for any IoT product sold to the federal government and, potentially, sold commercially.

Given IoT’s increasing prevalence and importance in the life sciences field, this legislation could have significant impact on pharmaceutical and medical device manufacturers. For more information, please read our Reed Smith Client Alert, “Pending Legislation Seeks to Secure Federal Government IoT.”

FDA Guidance Offers Initial Thoughts on Technical Considerations Specific to Medical Devices Using 3D Printing

The U.S. Food and Drug Administration (FDA) announced the availability of its guidance entitled “Technical Considerations for Additive Manufactured Medical Devices; Guidance for Industry and Food and Drug Administration Staff,” which was published in the Federal Register. This guidance was previously circulated in May 2016 in a draft form and underwent a comment period, where FDA was able to make minor modifications to the guidance based on those from the 3D printing industry. As 3D printing of medical devices continues to alter the daily practice of medicine, this “leapfrog guidance” is meant to provide FDA’s initial thoughts on technical considerations specific to medical devices using 3D printing. This guidance outlines technical considerations associated with the 3D printing processes as well as device design, testing of products for function and durability, and quality system requirements.

In releasing the final guidance, FDA Commissioner Dr. Scott Gottlieb, issued a statement proclaiming that the FDA “is the first [agency] in the world to provide a comprehensive technical framework to advise manufacturers creating medical products on 3D printers.” According to the FDA Commissioner, the agency has reviewed more than 100 medical devices and one drug that are currently on the market, which are being manufactured by 3D printers. He goes on to say that the “FDA is now preparing for a significant wave of new technologies” and that the FDA is “working to provide a more comprehensive regulatory pathway that keeps pace with those advances, and helps facilitate efficient access to safe and effective innovations that are based on these technologies.” That regulatory framework will need to adjust how “existing laws and regulations that govern device manufacturing [apply] to non-traditional manufacturers like medical facilities and academic institutions that create 3D-printed personalized devices for specific patients they are treating.” The FDA is also researching the technology itself and has its own 3D printing labs and is providing opportunities for “innovative approaches to pharmaceutical product design or manufacturing, including additive manufacturing of pharmaceuticals.” In fact, according to the statement “[m]ore than a dozen pharmaceutical manufacturers have formally or informally been in contact with [the FDA’s Center for Drug Evaluation and Research] regarding the use of 3D printing to manufacture drugs.”

While the guidance is not meant to be an all-inclusive document to address all regulatory or technical requirements, it highlights the technical considerations and recommendations for design, manufacturing, and testing of medical devices that are manufactured using 3D printing techniques. The guidance is also meant to evolve as the technology grows over time.

As with its draft version, the guidance is split up into two categories of considerations: (1) design and manufacturing, and (2) device testing. This final guidance should help 3D printing device companies, both traditional and non-traditional, as to what to include in a premarket submission for a device that uses additive manufacturing. As the technology continues to grow, we anticipate that the FDA will become more and more involved in the process.

For more about the draft FDA guidance, please see: FDA Publishes Draft Guidance Regarding 3D Printing Of Medical Devices and for more on general legal issues involving 3D printed medical devices, please see: 3D Printing of Medical Devices: When a Novel Technology Meets Traditional Legal Principles, 3D Printing of Manufactured Goods: An Updated Analysis, and 3D Printing: What Could Happen to Products Liability When Users (and Everyone Else in Between) Become Manufacturers.”

A Complete Victory for Multi-Office Team as the U.S. Department of Justice Dismisses Billion-Dollar False Claims Act Case

On November 8, 2017, following many years of investigation, the U.S. Department of Justice dismissed a billion-dollar False Claims Act (FCA) case against our long-standing client HCR ManorCare, the industry leader in post-acute rehabilitation care. The DOJ alleged that HCR ManorCare delivered unnecessary therapy to patients covered under Medicare Part A in its skilled nursing facilities; HCR ManorCare was determined to fight these allegations, certain they were not true. Throughout the case, our team engaged qualified experts to disprove DOJ’s experts, and also interviewed clinicians who treated sample patients, to prove that no unnecessary services were delivered. Our team also convinced the court that DOJ’s main expert witness had lied in her deposition, resulting in the expert’s report and testimony being stricken from the case. Following this, the DOJ advised the federal court in the Eastern District of Virginia of its intention to dismiss the case. Thanks to the hard work of our Reed Smith team, this case will be dismissed with prejudice, with no payment by HCR ManorCare.

For more information on this important topic, please read the full announcement here.

FDA Finalizes Policy for Sharing Patient-Specific Data from Medical Devices

FDA recently released guidance (“Manufacturers Sharing Patient-Specific Information from Medical Devices with Patients Upon Request”) finalizing its policy on medical device manufacturers sharing patient-specific information from devices with patients at the patients’ request.

In response to the more active roles patients are playing in their health care, and increased frequency with which patients are seeking information that has been recorded, processed or stored on medical devices from the device manufacturers, FDA initially sought to provide clarification on manufacturers’ responsibility with respect to such requests in a draft guidance issued June 10, 2016. In the draft guidance and the recently finalized version, FDA clarifies that a device manufacturer may provide patient-specific information to patients who request it, but that the manufacturer is not obligated to do so under the Food, Drug, and Cosmetic Act (the “Act”). Importantly however, FDA states that the device manufacturer’s responsibility to provide patient-specific information under the Act is distinct and separate from its obligation to provide patients with protected health information (“PHI”) under the Health Insurance Portability and Accountability Act (“HIPAA”), and the HIPAA Privacy Rule. Continue Reading

FDA Withdraws “Compounding Animal Drugs from Bulk Drug Substances” Draft Guidance

The U.S. Food & Drug Administration (“FDA”) announced on November 7, 2017, that it is withdrawing the draft Guidance for Industry #230, “Compounding Animal Drugs from Bulk Drug Substances.” FDA confirmed that it does not intend to finalize the current draft. Rather, it will issue a new draft in early 2018 for public comment.

For more information on this important topic, please read the full client alert here.

Upcoming Free CLE Webinar: “The Internet of Things’ Impact on the Health Care Industry: Diagnosing the Dangers with Disruptive Technology”

Reed Smith not only assists our pharmaceutical and medical device clients with their current legal challenges and opportunities, we look around corners to anticipate the next industry disruptor – and to help our clients navigate the legal issues that come with it.

For our life sciences clients, the Internet of Things is clearly a game changer. That’s why we’re pleased to be offering a free CLE webinar this Thursday, November 9 at 12 p.m. ET on “The Internet of Things’ Impact on the Health Care Industry: Diagnosing the Dangers with Disruptive Technology.”

Traditional health care delivery systems have fully integrated Internet of Things (IoT) devices into their processes, which has led to increased efficiencies but also heightened exposure to new risks. As IoT technologies continue to innovate at an accelerated pace, IoT is also on the verge of significantly disrupting the traditional processes of health care delivery and giving rise to heightened risks.

This webinar will provide those in the health care industry with an overview of the current legal exposures involved with IoT use, including: regulatory implications, security, privacy, and litigation risks; and liability insurance as an additional protective measure. It will also address the expected concerns with near future applications.

The webinar is presumptively approved for 1.0 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.0 credit under New York’s Approved Jurisdiction Policy. To register for the free webinar, please click here.

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