Public Disclosure Bar Does Not Preclude a Qui Tam Suit against Medtronic

In United States ex rel. Forney v. Medtronic, Inc., Judge Edward G. Smith of the United States District Court for the Eastern District of Pennsylvania ruled in favor of the Relator by denying medical device manufacturer, Medtronic’s request for summary judgment.  Judge Smith ruled that Relator Forney was not barred by the public disclosure bar because she is an original source that “materially added” to the publically disclosed allegations of fraud against Medtronic.

The Underlying Fraud Allegations

Relator Forney worked at Medtronic for 16 years until she was terminated in 2012.  She alleges that Medtronic routinely provided free services to individuals who made decisions about device purchases for the purposes of inducing these healthcare professionals to purchase Medtronic devices.  Her amended complaint alleges two main categories of inducements: (1) free device checks and device examinations performed on implanted pacemakers and (2) free practice management consulting during which providers were counseled on how to code for maximum reimbursements.  Relator Forney argues that these services are illegal kickbacks.

Medtronic Claims Public Disclosure Bar

In their motion for summary judgment, Medtronic contended that all of the Relator’s allegations were the subject of prior FCA claims and were therefor barred by the public disclosure bar.  Medtronic pointed to five different qui tam cases (Onwezen, Schroeder, Stokes, Doe, and Burns) and argued that they all qualified as valid prior public disclosures that described substantially the same fraud as the Relator’s amended complaint.

The Court’s Findings

After reviewing the five cases, the Court found that only two of them were valid public disclosures.  The Court determined that the other three cases did not qualify because these cases did not satisfy the government-involvement requirement.   According to Judge Smith, when the government declines to intervene in a qui tam case, it cannot be a party for the purposes of the government-involvement requirement.  Next, the Court turned to the issue of whether the two valid prior public disclosures (Onwezen and Schroeder) served as a bar to the relator’s claims.

The court held that while Relator Forney’s allegations were substantially similar to the other cases, she had knowledge that was independent of the disclosures, making her an original source.  The court found that she provided extensive details to the government that materially added to the factual background possessed by the government from the two prior cases.  Accordingly, the Court denied Medtronic’s motion to dismiss.