Schouest v. Medtronic, Inc.

Citations: 13 F. Supp. 3d 692; 2014 U.S. Dist. LEXIS 38123; 2014 WL 1213243Docket: Civil Action No. 3:13-CV-203

Court: District Court, S.D. Texas; March 24, 2014; Federal District Court

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Plaintiffs aiming to file state law claims against the manufacturer of an FDA-approved medical device must navigate two federal preemption doctrines. Express preemption bars claims based on state law that imposes different or additional duties than federal requirements, as established in Riegel v. Medtronic, Inc. Claims that parallel federal requirements are not barred by express preemption but are impliedly preempted and can only be enforced by the FDA if they arise from the federal regulatory framework, as noted in Buckman Co. v. Plaintiffs’ Legal Comm. 

Defendant Medtronic seeks dismissal of a lawsuit concerning the off-label use of its Infuse device. Plaintiff Susan Schouest alleges various state claims, primarily focusing on fraudulent promotion of the off-label use and failure to warn physicians about associated dangers. The court must assess which of Schouest’s claims can avoid express and implied preemption.

The FDA, under the Medical Device Amendment to the FDCA, regulates medical devices, requiring pre-market approval for Class III devices, which present significant risks or support human life. Manufacturers must submit detailed applications, including proposed labeling, and the FDA assesses safety and effectiveness based on this information. Once a device receives pre-market approval, the manufacturer is prohibited from altering any feature without FDA consent.

Medtronic’s Infuse Bone Graft product, approved in January 2001 as a Class III device after a lengthy review, is designed for specific spinal fusion surgeries. It comprises two components: the LT-CAGE® Lumbar Tapered Fusion Device and the Infuse Bone Graft Component, which contains a genetically-engineered liquid bone protein. The FDA approval limited the device’s use to specific surgical procedures involving single-level fusion in the lumbar spine, particularly in the L4-S1 region.

Schouest claims that Medtronic promoted the off-label use of the Infuse device despite knowing its potential dangers. This promotion included providing doctors with information about other practitioners using the device off-label and instructing sales personnel to disseminate misleading information regarding its off-label applications. Medtronic allegedly funded "key opinion leaders" to write articles endorsing the device's off-label efficacy and safety without disclosing financial ties. One doctor was reportedly encouraged to assert that off-label use was safer than existing alternatives. The off-label applications generated nearly 90% of the Infuse device’s $800 million revenue in 2011, amidst ongoing controversies and lawsuits from patients claiming injuries due to off-label use. Notably, a 2011 issue of The Spine Journal highlighted the risks associated with the device, and a Senate Committee on Finance report criticized Medtronic's influence over medical literature authored by compensated physician consultants.

In December 2006, Schouest underwent surgery involving off-label use of the Infuse device, resulting in serious complications diagnosed in June 2009, necessitating further medical treatment. Schouest has filed nine state law claims against Medtronic, including negligence, strict liability, breach of warranties, and fraud. Her case is primarily based on two theories: that Medtronic failed to adequately warn about the risks of off-label use and that it inaccurately represented the safety of such uses.

Medtronic's motion under Federal Rule of Civil Procedure 12(b)(6) seeks dismissal based on its preemption defense, arguing that the plaintiff fails to state a viable claim. In assessing this motion, the court must accept all well-pleaded facts as true and view them in the plaintiff's favor, without going beyond the pleadings. A claim must be "plausible on its face" to survive dismissal. If federal law clearly preempts the plaintiff's claims, dismissal is appropriate at this stage. 

The text also provides an overview of express and implied preemption. Courts start with the presumption that state police powers are not superseded by federal law unless Congress explicitly intends to do so. However, under the Supremacy Clause, state laws that conflict with federal regulations must yield to federal authority. Specifically, Congress has enacted a preemption clause for medical devices, stating that states cannot impose requirements that differ from federal regulations, as outlined in 21 U.S.C. 360k(a). This clause aims to prevent manufacturers from facing inconsistent state regulations and preserves the FDA's regulatory authority over medical devices.

The express preemption analysis consists of two steps. First, courts determine if the Federal Government has established requirements for a medical device. The Infuse device, classified as Class III, underwent specific FDA premarket approval. Schouest argues that since the Infuse device's Premarket Approval (PMA) does not create device-specific federal requirements for the rhBMP-2 bone protein used independently, it should not support express preemption under section 360k(a). However, numerous federal courts have dismissed this argument, affirming that requirements in the premarket approval for the entire device apply equally to its components. 

Once the first step is satisfied, courts assess whether state law claims against a medical device manufacturer are based on requirements that differ from federal ones regarding safety and effectiveness. The Federal Food, Drug, and Cosmetic Act (FDCA) allows states to impose damages remedies for claims based on violations of FDA regulations, as long as the state duties are parallel, not additional, to federal requirements. A state requirement is parallel if it is genuinely equivalent to the federal requirement; otherwise, it is expressly preempted under section 360k(a). 

Additionally, state claims may also face implied preemption, which arises from the requirement that enforcement of the FDCA must be conducted in the name of the United States. In Buckman Co. v. Plaintiffs’ Legal Committee, the Supreme Court ruled that claims founded solely on federal regulatory violations are impliedly preempted, as they conflict with the FDA’s authority. For state law claims to survive preemption, they must be based on conduct that both violates the FDCA and could lead to recovery under state law, independent of the FDCA. The framework established by Riegel and Buckman thus presents a limited avenue for plaintiffs with state law claims against medical device manufacturers.

Courts face challenges in applying the Supreme Court's preemption rulings to cases involving the Infuse device, particularly regarding the interpretation of Riegel and Buckman. While there is consensus that the PMA process establishes requirements for the Infuse device, there are differing views on the implications of these rulings. Some courts, such as Caplinger v. Medtronic, Inc., have interpreted Buckman too broadly, suggesting that fraud claims are preempted because off-label use is inherently tied to the FDCA. Conversely, other courts, like Ramirez, have interpreted Riegel too narrowly, allowing claims related to off-label promotion to escape preemption. A distinction has emerged between claims based on false misrepresentations and those based on omissions, with the Court agreeing that this distinction is crucial for determining which state claims survive preemption. Specifically, Schouest's claims can be categorized as either alleging that Medtronic failed to provide adequate warnings about off-label use or that it made misleading statements regarding the device's safety in off-label procedures. The legal status of off-label promotion under federal law remains ambiguous, as the FDCA does not explicitly define or prohibit it, focusing instead on the misbranding and adulteration of devices based on false labeling or inadequate directions for use.

The FDA views off-label promotion of drugs as misbranding, which is prohibited under the Federal Food, Drug, and Cosmetic Act (FDCA). This position is supported by case law, specifically United States v. Caronia, which indicates that marketing an approved drug for unapproved uses constitutes misbranding. The FDA has successfully pursued substantial settlements from manufacturers for off-label promotion, highlighting the agency's stance. Although courts typically defer to the FDA's interpretations of statutes, some have challenged the FDA's position, asserting that federal law does not categorically ban off-label promotional statements, as they may indicate a drug's intended use. The Caronia case established that criminalizing the simple promotion of off-label uses could violate the First Amendment, though dissenting opinions argue that such prohibitions encourage compliance with FDA approval processes. 

While it is clear that federal law prohibits false or misleading off-label promotion, the legality of truthful off-label marketing remains contested among courts. The FDA allows healthcare providers to use drugs or devices off-label but prohibits manufacturers from promoting such uses. Consequently, any state laws against off-label promotion would conflict with federal law and be preempted, as the FDCA does not explicitly ban the promotion or marketing of drugs for unapproved uses.

Failure-to-warn claims based on truthful off-label promotion of the Infuse device may not violate federal law, creating a challenge to avoid express preemption under Riegel. A key issue arises because the FDA mandated specific labeling for the Infuse device, preventing Medtronic from altering it without FDA approval. Consequently, if a Texas jury deemed the labeling inadequate, it would effectively impose additional requirements beyond FDA approval, contradicting Riegel's express preemption framework. Courts, including Hawkins, have generally upheld that failure-to-warn claims face preemption, as an affirmative duty to warn does not equate to a federal prohibition on off-label promotion. However, a district court in Ramirez found that failure-to-warn claims related to off-label promotion could escape preemption, arguing that such claims stem from unapproved uses not reviewed by the FDA, thereby diminishing the concerns of express preemption. Despite the FDA's non-approval of specific off-label uses, off-label applications are recognized as an integral part of FDA regulation. A successful failure-to-warn claim could undermine FDA policies on device regulation. Schouest's claims against Medtronic for insufficient warnings do not overcome the preemptive force of the Medical Device Amendments (MDA). In contrast, Schouest's state law fraud claims based on false representations regarding off-label procedures may circumvent preemption, as making false or misleading statements about medical devices violates federal law, allowing such claims to proceed if substantiated. This aligns with the notion that state fraud claims can be "genuinely equivalent" to federal law if they identify specific false representations.

Implied preemption concerning the Infuse Device requires examination of affirmative misrepresentation claims that are not expressly preempted. Medtronic argues that such claims related to off-label promotion are impliedly preempted under Buckman, which broadly interprets state law claims that enforce FDCA provisions as beyond state jurisdiction. However, Buckman specifically addressed a "fraud-on-the-FDA" claim linked to fraudulent actions during the FDA approval process, suggesting that its preemption is limited to claims arising solely because of the FDCA regulatory framework. Most state tort claims, such as fraud, breach of express warranty, and negligence, can exist independently of the FDCA and can be pursued against sellers who mislead consumers regarding product use. The distinction between truthful and fraudulent off-label promotion is significant; mere off-label promotion without negligent or fraudulent claims is unlikely to conflict with state tort law. Schouest's affirmative misrepresentation claims, based on independent state law duties allegedly violated by Medtronic post-PMA process, are not impliedly preempted as they would apply to any seller, regardless of federal regulation. Courts have supported this view, emphasizing that such claims are rooted in traditional state common law, existing independently of the FDCA.

The Court analyzes Schouest’s claims in light of the preemption framework established by Riegel and Buckman. 

1. **Negligence and Negligence Per Se (Counts I and VIII)**: Schouest attributes her injuries to Medtronic's negligence and misrepresentations regarding the off-label marketing of the Infuse device. While her negligent misrepresentation claim is not preempted by federal law, claims based on the failure to disclose the risks associated with the off-label use are expressly preempted, as they impose additional warning requirements beyond federal law. The negligence per se claim is clarified as a standard negligence claim since negligence per se is not a standalone cause of action. Schouest seeks to hold Medtronic accountable for allegedly withholding information from the FDA during the premarket approval process, which would constitute a "fraud-on-the-FDA" claim, thus being preempted by Buckman. However, a claim regarding Medtronic's failure to submit adverse-event reports to the FDA post-approval may survive preemption, as it aligns with state law duties to report product risks, supported by the Fifth Circuit's ruling in Hughes. Schouest is permitted to amend her complaint to include these allegations.

2. **Fraud and Constructive Fraud (Counts IV and V)**: Schouest's claims of intentional misrepresentation regarding the safety of the Infuse device, intended to mislead the public and physicians, qualify as affirmative misrepresentation claims that are not subject to preemption. Similarly, her constructive fraud claim, alleging intentional misrepresentation of safety information by Medtronic, would also survive a preemption challenge.

Schouest alleges that Medtronic knowingly marketed the INFUSE Bone Graft, which was defective and dangerous when used off-label, without adequate warnings, indicating a conscious disregard for public safety. This strict liability claim is preempted by federal law, as it challenges the FDA's approved design and manufacturing of the device. 

In her breach of express and implied warranties claims, Schouest contends that Medtronic warranted the safety and effectiveness of off-label uses of the device. While her express warranty claim may proceed, her implied warranty claim is barred because it relies on statements not made by Medtronic. Federal law governs warranty statements, thus preempting the implied warranty claim. The express warranty claim can survive if it pertains to false claims made by Medtronic beyond FDA approvals, as federal law requires truthful warranty statements. However, Schouest's complaint lacks specific details about the warranties Medtronic provided, and the court has allowed her the opportunity to amend her claims.

Additionally, under Texas Consumer Protection Laws, Schouest asserts that Medtronic has a statutory duty to avoid unfair practices related to the INFUSE Bone Graft. Any claims suggesting that Medtronic should have altered its manufacturing or development practices are also preempted due to FDA approval of the device.

A deceptive act related to the promotion of the Infuse device can withstand a preemption challenge, paralleling the claims of fraud and negligent misrepresentation. Schouest is granted an opportunity to clarify her Texas Consumer Protection Statutes claims due to the lack of specificity regarding which statutory duties were violated by Medtronic. However, claims of strict liability and implied warranty are dismissed with prejudice, along with portions of the negligence claim that depend on a failure-to-warn theory. Other claims must survive additional challenges, particularly concerning the specificity of fraud allegations.

Medtronic contends that Schouest's claims are barred by the statute of limitations, as she had lumbar surgery in December 2006 and was diagnosed with bony overgrowth in June 2009, but did not file suit until May 2013. The applicable statute of limitations is disputed as either two or four years, and if it is the former, her claims would be barred. Schouest invokes the “discovery rule” to argue that her claims should not accrue until she was aware of the injury, citing the inherent undetectability and verifiability of her condition. She also relies on the “fraudulent concealment” doctrine, which pauses the statute of limitations if a party conceals their identity and has a duty to disclose. 

As the party asserting the statute of limitations defense, Medtronic must prove that the discovery rule does not apply. The burden lies with Medtronic to establish the accrual date of the claims and negate the discovery rule's applicability. At this stage, Schouest’s allegations regarding the discovery rule are sufficient to avoid dismissal based solely on the statute of limitations. Additionally, the claims must meet the particularity requirement under Rule 9(b), which remains a ground for dismissal.

False representations regarding off-label use violate federal law and trigger Rule 9(b)’s heightened pleading standard, which requires plaintiffs to detail the "who, what, when, where, and how" of the alleged fraud. Courts recognize that this information should be accessible to plaintiffs prior to discovery, enabling defendants to understand the basis of the claims. However, some courts permit a relaxation of this standard if plaintiffs demonstrate they cannot obtain essential information without pretrial discovery. In qui tam cases, the Fifth Circuit allows complaints to survive by alleging specific details of a fraudulent scheme, even if the exact details of submitted false claims are not available. The pleading standard remains strict when relevant information can be obtained from third parties. The Seventh Circuit similarly relaxes pleading requirements in certain RICO cases when plaintiffs lack access to necessary facts. In this context, the fraud allegations stem from an intermediary theory, as the misrepresentations were made to the plaintiff's doctor, who relied on them during a harmful off-label surgery. The court suggests allowing Schouest one opportunity to amend her complaint before determining the applicability of Rule 9(b).

Judicial economy is compromised if the Court engages in a thorough examination of allegations only to find them insufficient and subsequently allows the plaintiff a chance to replead. Generally, district courts provide plaintiffs an opportunity to correct pleading deficiencies unless the defects are clearly incurable or the plaintiff expresses an unwillingness to amend. In this case, Schouest should be allowed to refine her claims before the Court applies Rule 9(b) standards in response to any future motions by Medtronic.

Schouest’s claims are categorized into two types: (a) failure-to-warn or other actions such as design changes, and (b) affirmative misrepresentations. The failure-to-warn claims do not survive preemption, while fraud claims based on misrepresentations may survive if they meet heightened pleading standards under Rule 9(b). Medtronic argues that allowing any claims would undermine reliance on the FDA approval process and hinder medical device innovation. However, the claims avoiding preemption relate to false representations that could render Medtronic liable only for conduct that violates federal law, which the FDA approval process does not shield from state law obligations.

The Court grants in part and denies in part Medtronic's Motion to Dismiss. Schouest’s strict liability claim, breach of implied warranty claim, and part of her negligence claim related to failure to warn about off-label uses are dismissed with prejudice. Schouest is permitted to replead her negligence, breach of express warranty, Texas consumer protection laws, fraud, and constructive fraud claims within thirty days. Following this, Medtronic may renew its motion to dismiss if it believes the claims lack sufficient particularity. The Court's background section is based on Schouest’s Original Complaint, which is assumed true at this stage, referencing several cases that inform its reasoning regarding preemption and pleading standards.

Courts have differentiated between types of claims in preemption cases, as illustrated in Martin v. Ford Motor Co., where claims of material omission were preempted while false representation claims were not. The Court has requested additional briefing on the legality of off-label promotion, questioning whether Caronia’s First Amendment analysis regarding off-label promotion should influence the determination of misbranding violations under the FDCA, potentially allowing for parallel state tort claims. Medtronic argues that statutory interpretation should remain consistent in both criminal and civil contexts, particularly regarding constitutional avoidance principles, although the Court finds it unnecessary to resolve this issue, noting that only misleading off-label promotions could bypass preemption. Sanctions against misleading promotions do not invoke First Amendment issues, as states can prohibit fraudulent commercial expression.

Schouest's gross negligence claim seeks punitive damages based on Medtronic's alleged recklessness, contingent upon the survival of her underlying negligence claim against preemption. Since her negligent misrepresentation claim is deemed to survive preemption, so does the gross negligence claim. The Fifth Circuit’s ruling in Hughes narrows the interpretation of Buckman, allowing state law claims unless they solely rely on FDCA disclosure requirements, which was the case in Buckman itself. The Court notes that while Schouest's fraud claim is subject to heightened pleading standards under Rule 9(b), the status of her constructive fraud and negligent misrepresentation claims regarding this rule remains unclear in the Fifth Circuit. This ambiguity suggests that the Court should defer resolution on the Rule 9(b) issue, allowing Medtronic the opportunity to argue for heightened standards in a future motion to dismiss if it still views the amended complaint as inadequate.