VOL. 124 | NO. 49 | Thursday, March 12, 2009
Medtronic Whistleblowers’ Case in Jeopardy
By Tom Wilemon
A former Medtronic employee who filed two whistleblower lawsuits has lost one case on appeal and is trying to convince a judge not to dismiss the second one.
Jacqueline Poteet, who was the company’s travel services manager, may lose the second case because she was not the first whistleblower to file suit. In this lawsuit, she is joined by Bobbie Vaden, another former Medtronic employee in Memphis who worked for 16 years in the company’s accounting department.
But two other former Medtronic employees, a corporate lawyer and a regional sales manager, filed earlier whistleblower complaints. Their allegations about physician kickbacks resulted in a $40 million settlement with the federal government in 2006.
The complaint filed by two Memphis women is about a different scheme, according to a February 2007 filing in Boston federal court by their lawyer, Andrew Carr, an attorney at Bateman Gibson LLC. It relates to off-label uses of the Medtronic Infuse bone graft, alleged illegal payments to Medicare and Medicaid and more payments to physicians. Several doctors are also defendants in this lawsuit.
Lawyers for Medtronic contend the women’s assertions are about issues that have been publicly disclosed. They point to a decision by the Court of Appeals for the Sixth Circuit for reasons to dismiss the case.
The Appeals Court this year affirmed the decision of Bernice Donald to dismiss Poteet’s first complaint from 2003 under the first-to-file provision of the whistleblower statute. That statute, the False Claims Act, provides financial incentives for people to report illegal activity, but it also has provisions to prevent opportunistic suits after the activity has been publicly disclosed.
The Appeals Court judges in their opinion noted that Scott Weiss, a former regional sales manager, initially raised attention to the kickbacks in a wrongful termination suit he filed in California in 2001 and that a former Medtronic lawyer, Ami P. Kelly, filed a whistleblower complaint a year later in Memphis federal court.
Poteet filed her first complaint more than a year after the lawyer’s complaint and two years after the sales manager’s complaint.
After that decision came down, the judge who presided over a related suit in Boston federal court directed lawyers on both sides to prepare briefs on whether that case should also be dismissed.
In this case, which was filed in February 2007, Vaden is a plaintiff as well as Poteet. It focuses on Infuse and off-label uses of the product. For this reason, Carr contends that the case of his clients is different from the Weiss and Kelly complaints.
“Neither of these complaints mention or even remotely implicate any ‘off-label promotion’ scheme for the reason that INFUSE had not even been approved by the (U.S. Food and Drug Administration) until July 2, 2002,” Carr wrote in a court filing. “How can it be imagined that the Weiss complaint could give the government fair notice of a discrete off-label promotion scheme that had not yet been hatched?
“Similarly, the INFUSE off-label promotion scheme was at best inchoate at the time the (Kelly) complaint was filed, and could scarcely have been known to anyone beyond those responsible for actually planning the illegal marketing strategy.”
He also points out that Vaden, who continued working for Medtronic for five months after she initially filed her complaint as John Doe, has provided company records to back up her allegations.
“Vaden performed her detailed investigation of the amount and purposes of payments to the defendant-physicians while working over a long period of time in the nerve center of the accounting department of (Medtronic),” Carr wrote. “Vaden had access to all financial data pertaining to each physician client. She knew what questions to ask, what documents to obtain, and worked methodically over a long period of time assembling her non-public information, which she obtained directly and independently from company files.”
Regardless of the outcome of the whistleblower lawsuits, Medtronic is concerned about the documents Carr and Vaden may possess. The company has subpoenaed both to provide communications and documents exchanged between Carr and Frederick Tecce, a lawyer involved in a Medtronic patent dispute pending in Philadelphia federal court. Carr and Vaden are asking the court to quash that subpoena.
In court papers filed this month to object to the subpoena, Carr’s lawyer cites an allegation against Dr. Kevin T. Foley, one of the surgeons named as a defendant in the whistleblower lawsuit filed in Boston federal court. Foley, a prominent Memphis neurosurgeon, has numerous patents in his name, including spinal stabilization devices, according to the U.S. Patent Office.
Carr’s lawyer, Tim Edwards, in the court filing about the subpoena makes reference to the 2007 complaint in Boston federal court.
Tecce and Carr met last September in Memphis to discuss their respective cases against Medtronic. Tecce told Carr he had documents pertaining to Foley’s compensation but could not supply them because of a protective order, according to the court filing.
“In response, Mr. Carr advised Mr. Tecce that he already knew that certain agreements subsisted between Medtronic Sofamor Danek and Dr. Foley and that he already had most of the data on Dr. Foley,” Edwards wrote in the filing. “For example, Mr. Carr had already alleged in his original complaint in the False Claims Act case pending in Boston (filed in February 2007) that Dr. Foley was among the most highly paid physicians within the Medtronic fold, having received at least $27 million in ‘sham’ royalty and consulting fees from 2001 through the date of the complaint, i.e., February 2007.”
Buck Wellford, a lawyer for Foley, said papers have been filed on behalf of his client to dismiss this lawsuit and that the neurosurgeon’s business relationship is no secret. Foley is a witness in the patent infringement case because he is the inventor of the product, Wellford said.