On April 7, 2016, a Texas jury found by a 10-1 verdict that Abbott Laboratories did not violate the False Claims Act (FCA) in its marketing of biliary stents used off-label for non-coronary vascular stenting procedures. The verdict—significant in its up to $1 billion exposure in damages—was the culmination of a decade of litigation before the U.S. District Court for the Northern District of Texas. The case and its outcome underscores the importance of a fact-intensive analysis of the terms of Medicare coverage determinations and other applicable policies when evaluating potential liability under the FCA, specifically whether the use of a medical device off-label may be considered “reasonable and necessary” and covered under the Medicare program.

The qui tam whistleblower case was brought in 2006 by a former sales employee-turned-attorney, Kevin Colquitt, of Guidant Endovascular Solutions, Abbott Laboratories’ predecessor.  Colquitt asserted false presentment and false statement claims under the FCA, 31 U.S.C.  §§ 3729-3733, contending that Abbott, through its sales and marketing practices during the February 2004 to June 2006 period, induced healthcare providers to use biliary stents designed for use in the bile duct for more complex procedures in the peripheral vasculature and to submit false reimbursement claims to Medicare for these procedures.  Colquitt argued that the claims were false because vascular procedures involving the use of Abbott’s biliary stents were not eligible for reimbursement since biliary stents had not been approved by the FDA for this use and because the CPT codes (for vascular procedures) used by healthcare providers on their claim forms misrepresented the nature of the stents used in the procedures.

Although Colquitt had argued that vascular procedures using Abbott’s biliary stents are per se ineligible for Medicare reimbursement when used off-label for peripheral vascular procedures, the District Court disagreed.  In a recent summary judgment ruling, the court held that there was a genuine issue of material fact as to whether claims submitted for vascular procedures involving biliary stents were false given Medicare contractors had “expressly recogniz[] that coverage was allowable for procedures involving the off-label use of a stenting device in various circumstances.” United States of America ex rel. Colquitt v. Abbott Laboratories, et al., No. 3:06-cv-1769-M, 2016 WL 80000, at *4 (N.D. Tex. Jan. 7, 2016).  The Court reaffirmed this point in its jury instructions, which noted that “[t]he FDA’s definition of ‘approved’ is not binding on CMS, its contractors, or Medicare, and does not limit Medicare’s discretion to cover any reasonable and necessary medical care.”  The Court also pointed out in its instructions that “[e]vidence, if any, of off-label promotion or alleged violations of [FDA] rules . . . do not, in and of themselves, establish liability under the False Claims Act.”

Specifically as to the issue of Medicare reimbursement, the District Court’s jury instructions highlighted that during the relevant period, the Centers for Medicare & Medicaid Services (CMS) did not issue a binding national coverage determination (NCD) that addressed whether claims for vascular stenting procedures using biliary stents were eligible for Medicare reimbursement and, absent such a decision, local coverage determinations (LCDs) that are developed by Medicare contractors may apply.  The court in its jury instructions describes LCDs issued by Medicare contractors in fourteen different states that reference “standard medical practice” or “standard practice in the medical community” as relevant criteria for the coverage of vascular stenting procedures, and Colquitt did not ultimately pursue claims of FCA violations in any of these states.  For the other states with applicable LCDs, the jury instructions note that “[t]o determine whether procedures using Defendants’ biliary stents were covered in those states requires a fact-intensive analysis of the specific terms of each LCD.”  In states without applicable LCDs, the jury was instructed that those claims would be decided by local Medicare contractors based on whether the particular claim met the “reasonable and necessary” requirement.

Of note, in a motion for directed verdict made at the close of all evidence in the trial, Defendants argued that Colquitt’s case suffered from another fatal flaw—Colquitt had not provided any evidence of even a single claim that was submitted to Medicare involving a biliary stent used for a vascular procedure.  Among other things, Defendants argued that without such evidence, falsity cannot be proven.