United States of America et al v. ev3, Inc.

Filing 139

Judge Richard G. Stearns: ELECTRONIC ORDER entered denying 128 Motion to Amend (RGS, law2).

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 10-11822-RGS
UNITED STATES OF AMERICA ex rel. JEFFREY D’AGOSTINO;
STATES OF CALIFORNIA, CONNECTICUT, DELAWARE, FLORIDA,
GEORGIA, HAWAII, ILLINOIS, INDIANA, LOUISIANA, MARYLAND,
MICHIGAN, MINNESOTA, MONTANA, NEVADA, NEW HAMPSHIRE,
NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA,
OKLAHOMA, RHODE ISLAND, TENNESSEE, TEXAS and WISCONSIN;
COMMONWEALTHS OF MASSACHUSETTS and VIRGINIA; and the
DISTRICT OF COLUMBIA
v.
EV3, INC.; MICRO THERAPEUTICS, INC.; JOHN HARDIN; and
BRETT WALL
MEMORANDUM OF DECISION AND ORDER
ON RELATOR’S MOTION TO AMEND THE COMPLAINT
December 30, 2015
STEARNS, D.J.
This case was remanded by the Court of Appeals for reconsideration of
the court’s refusal to grant leave to plaintiff/relator Jeffrey D’Agostino to file
a fifth iteration of his qui tam Complaint. In its opinion, the Circuit Court
did not delve into this court’s substantive discussion of the merits of the
collective defendants’ motion to dismiss.

See United States ex rel.

D’Agostino v. EV3, Inc., 802 F.3d 188, 191 (1st Cir. 2015) (“First,
[plaintiff/relator] contends that the district court improperly thwarted his

efforts to amend his complaint. Second, he challenges the court’s dismissal
of his complaint and the subsidiary legal determinations undergirding that
dismissal. We start – and end – with the first claim.”). For that reason, the
court believes that the most efficacious way to proceed is by adopting and
adapting its previous discussion of the merits of the case, and analyzing any
new allegations for their effect on the court’s thinking.
D’Agostino, a former employee of defendant EV3, Inc., filed the
prototype of this action under seal on October 26, 2010. At the time, EV3
was the sole defendant. On February 3, 2011, D’Agostino amended the
original Complaint to add three defendants, among them John Hardin, the
Vice President of Sales and Global Marketing at EV3 for the Onyx device.
D’Agostino sought and received permission to amend the Complaint two
additional times, the first on August 28, 2012, and the second on May 17,
2013, while the case remained under seal. On October 1, 2013, the United
States filed a notice of non-intervention, followed on December 19, 2013, by
twenty-five named states and the District of Columbia.1 On December 26,

The State of Maryland did not appear on the Notice of NonIntervention filed by the Commonwealth of Massachusetts on behalf of the
other States and the District of Columbia. Maryland has not intervened in
the action since the case was unsealed.
1

2

2013, the court unsealed the case. 2 D’Agostino received permission to
amend the Complaint yet again on April 28, 2014, adding Microtherapeutics,
Inc. (the company that developed the Onyx and Axium devices before
merging with EV3), and Brett Wall (a former marketing executive at EV3) as
defendants.
On August 1, 2014, on completion of the briefing of the motion to
dismiss, D’Agostino sought to amend his Complaint for a fifth time.3 The
court denied leave to amend pursuant to Fed. R. Civ. P. 16(b)(4), which
requires a showing of “good cause,” and on September 30, 2014, dismissed
the Third Amended Complaint (TAC) with prejudice.
On September 30, 2015, the Court of Appeals remanded with the
instruction that the court consider D’Agostino’s request to amend under the
more lenient standard of Fed. R. Civ. P. 15(a)(2), which permits an
amendment only with leave of the court, but also stipulates that leave is to
be granted freely “when justice so requires.” Nonetheless, as the Court of

Under 31 U.S.C § 3730(b)(1), while the United States, the twenty-six
named states and the District of Columbia decline to be actively involved,
they retain the right to approve dismissal by the relator.
2

D’Agostino did not, at the time, file a motion for leave to amend his
Complaint. Rather, he “conditionally” requested leave to amend in his
Opposition to EV3’s Motion to Dismiss, in the event the court were to decide
to grant defendants’ motion to dismiss.
3

3

Appeals noted, while leave is to be freely granted, a court may deny leave to
amend under Rule 15(a)(2) for essentially the same reasons as under Rule
16(b)(4), including “undue delay, bad faith or dilatory motive on the part of
the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the
amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182
(1962). See D’Agostino, 802 F.3d at 195 (“Let us be perfectly clear. We do
not suggest that the district court will be compelled to grant the motion to
amend on remand.”).
On November 9, 2015, D’Agostino filed a new motion to amend,
attaching a superseding Proposed Complaint (Dkt. # 128-1). Defendants
now oppose this motion, arguing inter alia that it would cause undue delay,
undue prejudice, that D’Agostino has repeatedly tried and failed to cure
deficiencies in the Complaint, and that any further attempt to amend would
be futile.
The defendants focus the bulk of their briefs on the “futility” exception.
“[A] judge may deny leave if amending the pleading would be futile – that is,
if the pined-for amendment does not plead enough to make out a plausible
claim for relief.” HSBC Realty Credit Corp. (USA) v. O’Neill, 745 F.3d 564,
578 (1st Cir. 2014). “Futility of the amendment constitutes an adequate

4

reason to deny the motion to amend.” Todisco v. Verizon Commc’ns, Inc.,
497 F.3d 95, 98 (1st Cir. 2007).

While “plaintiff typically will not be

precluded from amending a defective complaint in order to state a claim on
which relief can be granted . . . several courts have held that if a complaint as
amended could not withstand a motion to dismiss or summary judgment,
then the amendment should be denied as futile.” 6 Charles Alan Wright &
Arthur R. Miller, Fed. Prac. & Proc. Civ. § 1487 (3d ed.); cf. Hatch v. Dep’t
for Children, Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001) (“If leave
to amend is sought before discovery is complete and neither party has moved
for summary judgment, the accuracy of the ‘futility’ label is gauged by
reference to the liberal criteria of Federal Rule of Civil Procedure 12(b)(6).”).
THE AMENDED DECISION4
In this now five-year-old qui tam action, plaintiff/relator Jeffrey
D’Agostino, a former medical device salesman for defendant EV3, Inc.,
alleges that EV3, Micro Therapeutics, Inc. (MTI), John Hardin, and Brett
Wall violated the federal False Claims Act (FCA), 31 U.S.C. § 3729 et seq., as
well as the False Claims Acts of twenty-six states and the District of
Columbia. According to the Proposed Complaint, defendants knowingly

The court will signal any potentially material amendments to the
Proposed Complaint by the use of italics.
4

5

caused the submission of false claims for reimbursement in violation of FCA
§ 3729(a)(1)(A) (Count I), and knowingly made, or caused to be made, false
records or statements that were material to the false reimbursement claims
in violation of FCA § 3729(a)(1)(B) (Count II), and made, used or caused to
be made or used, a false record or statement material to an obligation to
pay or transmit money or property to the government, or knowingly
concealed, avoided or decreased such obligation, in violation of 31 U.S.C. §
3729(a)(1)(G) (Count III), 5 all the while conspiring to commit these acts in
violation of FCA § 3729(a)(1)(C) (Count IV). The Proposed Complaint makes
parallel allegations under the various state and District of Columbia analogs

In the TAC, D’Agostino initially alleged the same claim: violation of
31 U.S.C. § 3729(a)(1)(G) (Count III of the TAC). D’Agostino voluntarily
dismissed this Count on August 1, 2014, without prejudice, in the body of his
“Consolidated Opposition to the Defendants’ Motions to Dismiss”
(Consolidated Opposition). However, D’Agostino resuscitated the claim,
also styled as Count III, in the Proposed Complaint. As was the case in the
TAC, he does not indicate what, if any, “obligation to pay the government”
was avoided. D’Agostino also pleads violations of the Anti-Kickback Statute,
42 U.S.C. § 1320a-7b(b). Prop. Compl. ¶¶ 199-201. However, no distinct
Count within the Proposed Complaint alleges a violation of the AntiKickback Statute, or seeks damages for such a violation; it appears that any
alleged violation of the Anti-Kickback Statute may be intertwined with the
alleged false claims. At the hearing before this court on D’Agostino’s Motion
to Amend, counsel equivocated on whether the Proposed Complaint does or
does not state a claim under the Anti-Kickback statute, and declined to state
one way or the other whether D’Agostino seeks relief under such a theory.
5

6

to the FCA (Counts V-XXXI).6 For reasons to be explained, D’Agostino’s
motion under Rule 15(a)(2) to amend his complaint once more will be
denied.
BACKGROUND
EV3 manufactures the two medical devices implicated in the Proposed
Complaint, the Onyx Liquid Embolic System (Onyx) and the Axium
Detachable Coil System (Axium). Both Onyx and Axium were developed by
MTI (which later merged with EV3).7 Defendant Brett Wall held executive
sales and marketing positions at EV3, MTI, Boston Scientific, and Covidien
(the current parent company of EV3). Wall was actively involved in the
marketing of Onyx and Axium.

Defendant John Hardin was the Vice

President of Sales and Global Marketing for Onyx at EV3. 8 D’Agostino

In the case of Louisiana only the making or causing the making of
false claims is alleged in the Proposed Complaint; in the case of Texas, the
Proposed Complaint makes the additional allegation that defendants caused
the submission of claims for “adulterated, debased, [or] mislabeled”
products. Prop. Compl. ¶¶ 364-367.
6

MTI developed Onyx and shepherded the device through Food and
Drug Administration (FDA) approval. MTI was also the prime developer of
Axium. After the merger, EV3 assumed the responsibility for obtaining FDA
approval to market Axium.
7

The Proposed Complaint alleges (with scant factual elaboration) that
Hardin and Wall bore responsibility for the off-label promotion of Onyx and
the failure to initiate recalls of several generations of allegedly defective
Axium devices.
8

7

served as the Territory Sales Manager for EV3 in the eastern United States
between 2005 and 2010.
A. Onyx
Onyx is a synthetic liquid that, when introduced by a catheter, forms a
solid mass (embolus) inside a patient blocking the flow of blood. The FDA
approved Onyx in July of 2005 for use in the presurgical treatment of a
vascular defect in the brain known as brain arteriovenous malformation
(BAVM). The market for the on-label use of Onyx is very small; there are
only an estimated 3,000 cases of BAVM treated annually in the United
States.
1. Misleading the FDA in the Onyx Approval Process
In broad terms, D’Agostino alleges that MTI misled the FDA during the
Onyx approval process by proposing an overly narrow indication for its use,
while concealing the true scope of its marketing strategy, and failing to report
relevant safety information. D’Agostino alleges that, but for MTI’s fraud,
Onyx would not have been approved for any use by the FDA.9

D’Agostino also attempts to set out specific subsets of false claims, in
an effort to provide the requisite specificity to his Proposed Complaint.
9

8

The factual allegations, distilled from the legal conclusions in which
they are embedded, are as follows.10 According to the Proposed Complaint,
the FDA advisory panel appointed to review the safety and efficacy of Onyx
expressed concern that the device (despite MTI’s assurances) might be
marketed for the off-label treatment of other types of vascular disease, or
might be left permanently embedded in a BAVM patient if follow-up surgery
was not performed.11 In response to the panel’s reservations, the Proposed
Complaint alleges that MTI gave false assurances that it would institute a
program to train surgeons in the proper use of Onyx.

12

The FDA

Factual allegations will be attributed to the Proposed Complaint;
legal conclusions and arguments directly to D’Agostino.
10

An FDA medical device advisory panel gathers information and
opinions from medical experts, the applicant, and other interested parties.
It makes its recommendations regarding the device to the Center for Devices
and Radiological Health, which is the ultimate FDA approving authority.
The panel’s recommendations are not binding on the FDA (or the applicant),
unless they are incorporated as conditions in the FDA approval to market the
device.
11

D’Agostino alleges that MTI undertook to train all physicians who
used Onyx; however, the relevant transcript passage reproduced in the
Proposed Complaint is more nuanced and states only that “the objective of
the physician education program is to ensure that all participating
physicians thoroughly understand the Onyx system.” Prop. Compl. ¶ 52
(emphasis added). This is consistent with the labeling approved by the FDA,
which states that the device “should be used only by physicians with
neurointerventional training,” and while calling attention to the EV3 training
program, does not require a surgeon implanting the device to have received
Onyx-specific training from EV3. Id. ¶¶ 57, 95.
12

9

subsequently approved Onyx for sale and use, subject to the conditions listed
on its label.13 The Proposed Complaint alleges that when EV3 later sought to
expand the scope of the FDA’s approval to include the use of Onyx in the
treatment of vascular defects in the “the periphery” (that is, in the
vasculature outside the brain or below the neck), the FDA denied the request
because of insufficient supporting medical evidence. Prop. Compl. ¶ 59.
Notwithstanding the FDA’s refusal, MTI (and EV3) continued to promote the
use of Onyx for peripheral indications and neurointerventional indications
other than the presurgical treatment of BAVM.14

The FDA-approved label stated that “[p]erforming embolization to
occlude blood vessels is a high-risk procedure. This device should be used
only by physicians with neurointerventional training and a thorough
knowledge of the pathology to be treated, angiographic techniques, and
super-selective embolization.” Prop. Compl. ¶¶ 57, 95. It stated further that
“[s]erious, including fatal, consequences could result with the use of the
Onyx LES without adequate training.
Contact your [MTI] sales
representative for information on training courses.” Id. ¶¶ 58, 96.
D’Agostino presents several additional recommendations of the FDA
advisory panel as “conditions” for Onyx’s approval and usage, id. ¶ 94,
although these were not mandated by the FDA-approved label.
13

The TAC noted that EV3’s sales quotas for Onyx were seven times the
estimated total market, even if it were assumed that sales of Onyx captured
100% of the procedures for which the device was indicated (in other words,
$1.2M of the $1.4M sales quota could only be attributable to off-label uses of
Onyx). TAC ¶ 110. Defendants do not dispute the fact that off-label uses of
Onyx made up a significant portion of its sales. The Proposed Complaint
replaces the calculations in the TAC with the following example: “In 2009,
EV3’s own assessment of the on-label sales potential for Relator’s sales
territory was $506,250, i.e., if he was successful in capturing 100% of the
14

10

At some point, MTI licensed the right to fabricate the liquid material
from which Onyx is manufactured to Enteric Medical Technologies, Inc.,
another medical devices company. After acquiring Enteric, Boston Scientific
used the material to manufacture Enteryx, which was approved by the FDA
in April of 2003 for the treatment of gastroesophageal reflux disease.
Enteryx is injected into the musculature below the esophagus where it
solidifies to create a partial barrier preventing the reflux of stomach acid.
According to the Proposed Complaint, in some cases physicians injecting
Enteryx missed the esophageal musculature, risking potentially fatal
complications.15 D’Agostino argues that because of the intimate corporate
collaboration among EV3, Enteric, Boston Scientific, MTI, and Covidien
(fostered by the hiring of senior executives by one company from another),
EV3 bears responsibility for failing to alert the FDA during the Onyx
approval process to problems being encountered by physicians using
Enteryx: EV3 “was representing to the FDA that Onyx was safe, [while] the

BAVM business in his territory, his maximum revenue was just over
$500,000. Notwithstanding that limited market, the Onyx revenue quota
placed on Relator for 2009 was $1,509,533.” Prop. Compl. ¶ 107 (emphasis
in original).
These include the accidental introduction of the rapidly solidifying
liquid Onyx into the aorta, the body’s largest artery, which lies close to the
esophagus.
15

11

same molecule, in the form of Enteryx, was killing people.” Prop. Compl. ¶
81. D’Agostino alleges that EV3, during the Onyx approval process, failed to
adequately warn the FDA about the dangers of Enteryx, and that “[h]ad the
FDA known what MTI was planning, it probably would not have granted the
approval.” Prop. Compl. ¶ 176.16
2. Training Program Used to Drive Off-Label Sales
The Proposed Complaint describes a surgical training program in
which, after a physician was trained in the use of Onyx, EV3 would supply
Onyx to any hospital facility at which the physician had admitting privileges.
These included facilities that had no surgeons on staff with practices
requiring the on-label use of Onyx. The Proposed Complaint further alleges
that EV3 paid physicians to conduct Onyx training for other physicians,
which sometimes included training in off-label uses. Prop. Compl. ¶ 132.
Because vascular “holes” in areas below the neck (the periphery) are typically
much larger than those in the brain, more Onyx is required to plug them,

D’Agostino’s Enteryx theory is inconsistent with the “new evidence”
he proffers to bolster the Proposed Complaint, specifically the declaration of
Dr. Johnny Pryor. D’Agostino contends on the one hand that Onyx was
patently unsafe, and that adverse events associated with Enteryx belied
MTI’s “represent[ations] to the FDA that Onyx was safe.” Prop. Compl. ¶ 81.
Dr. Pryor’s statement on the other hand praises Onyx as “an excellent
product” which “can and has saved many lives” in the hands of trained
surgeons. Id. ¶ 93.
16

12

thus making off-label uses more lucrative for EV3.

This recognition,

according to the Proposed Complaint, led EV3 to ramp up the dissemination
to physicians of information promoting Onyx’s off-label use. An example
given by the Proposed Complaint is a 2008 EV3 national sales meeting at
which National Marketing Manager (and former defendant) Vitas Sipelis
discussed case reports involving the use of Onyx in peripheral vasculature
surgical interventions, while at the same time urging sales staff to “[g]et users
to think about additional [off-label] applications (i.e., [dural arteriovenous
fistulas] DAVFs).” Prop. Compl. ¶ 117.17
3. Filing of False Claims
Inpatient and outpatient hospital treatment procedures for eligible
patients are paid by Medicare subject to the condition that the treatment is
certified to be medically reasonable and necessary.18 Reimbursement is at
the rates established by the Diagnosis Related Group (DRG) or the

While D’Agostino calls particular attention to the fact that Onyx was
not “approved to treat dural arteriovenous fistulas,” Prop. Compl. ¶ 3, and
that MTI and EV3 promoted its use for this purpose, the statement of
D’Agostino’s expert, Dr. Pryor, suggests that such treatment was medically
reasonable. Dr. Pryor acknowledges that he has himself presented talks
extolling the safety and effectiveness of Onyx for this very purpose. Id. ¶ 93.
17

In cases in which a physician bills separately for his or her services
in performing an eligible procedure, he or she must also certify that the care
provided was medically indicated and necessary.
18

13

Ambulatory Payment Classification, as appropriate. Although the cost of a
medical device is not billed directly to Medicare, the hospital ultimately
recovers the cost of the device indirectly by way of the fixed aggregate
reimbursement rates.

Where the actual cost of a particular procedure

exceeds the fixed limit, the hospital is permitted to bill Medicare for the
additional cost (a so-called “outlier payment”).
D’Agostino originally maintained that all off-label uses of Onyx were
“affirmatively unsafe, ineffective, and hazardous to patient health,” 19 and
that consequently, all “claims which fall into this category were false under
the FCA.” TAC ¶ 181. In the Proposed Complaint, D’Agostino repeats this
allegation in slightly altered language: “All claims submitted by hospitals
and doctor to government healthcare programs for procedures involving
Onyx were fraudulent under the FCA.” Prop. Compl. ¶ 186 n.19. While
Medicare is prohibited from reimbursing hospitals or physicians for
unapproved devices (unless they are part of an FDA-authorized clinical trial),

The TAC described two incidents in which embolization of a dural
fistulae failed leading, in one of the instances, to the patient’s permanent
impairment. The TAC alleged that the surgeon in the latter case had
attended an EV3 training session promoting the off-label use of Onyx to treat
dural fistula some two weeks prior to the failed operation. TAC ¶¶ 203-205.
The Proposed Complaint replaces the references to these two incidents with
language from an FDA advisory notice identifying some 100 adverse events
that may have been related to Onyx use.
19

14

see 42 C.F.R § 411.15(o), D’Agostino acknowledges that Onyx was FDAapproved

(and

therefore

eligible

for

Medicare

reimbursement).

Nonetheless, D’Agostino argues that because defendants fraudulently
induced the FDA to grant the initial approval for Onyx, all off-label
reimbursement claims were tainted as a result.20
B. Axium
Axium is an embolization coil attached to a delivery pusher equipped
with a manual detacher. A surgeon threads the coil into the position at which
he or she wishes to promote the formation of an embolus, and then detaches
the coil and removes the pusher.

First marketed in 2007, Axium was

developed with the intent of embolizing intracranial aneurysms and other
neurovascular anomalies.
1. Axium Defects
The Proposed Complaint alleges that EV3 unnecessarily hurried the
development of Axium, resulting in the launching of a product that “was not
adequately designed, was not properly manufactured, and was not safe for

The TAC also alleged that because off-label procedures using Onyx
as an agent of embolization are more expensive to perform than conventional
embolization in the peripheral vasculature, “there is a substantial
likelihood that government payers incurred significant additional
reimbursement requests.” TAC ¶¶ 207-208 (emphasis added). D’Agostino
omits this allegation from the Proposed Complaint.
20

15

use.” Prop. Compl. ¶ 208. During the first year following the launch, the
device was modified “more than a half dozen times” to correct problems
encountered during surgeries. Id. According to the Proposed Complaint,
EV3 actively explored ways of minimizing losses on the recall of earlier
iterations of Axium.

As an example, the Proposed Complaint cites an

internal EV3 email from National Manager Fred Gunderman to EV3
executives, written after generation 1E of Axium was marketed.21 See Prop.
Compl. ¶ 224. The email, in discussing the need to withdraw the earlier
generations 1 through 1B from the market, suggested trading out generations
1C and 1D<7mm for the more expensive version 1E to recoup losses on the
recalled units. Id. The email also discussed the possibility of selling the
superannuated prior generations into the peripheral market.22 Id.
The Proposed Complaint notes that Dr. Stephen Ohki at Hartford
Hospital in Connecticut reported an Axium coil detachment failure in late

Axium 1E continued to have detachment problems leading
successively to the 1F and Axium Prime models.
21

Like Onyx, Axium was intended for vasculature treatments in the
brain. While the Proposed Complaint is agnostic on the issue of whether
anything ever came of the email discussion, D’Agostino alleges that some
older generation Axium devices were shipped back to EV3 where they were
rebranded and remarketed under the name Concerto. D’Agostino conceded,
when this court considered the TAC, that the FDA had approved Concerto
for use in treatments of vasculature diseases in the peripheral region.
22

16

2008 that “led to a negative outcome for the patient.” Prop. Compl. ¶ 245.
In October 2009, Dr. Ohki reported a similar problem with another Axium
coil. When D’Agostino was asked by Hartford Hospital’s legal department
for an internal report on the failures, he contacted EV3’s engineering
department. D’Agostino was told that coils were failing to detach properly
because of a manufacturing error (over welding), caused by a laser welder
being set “too hot.”

Id. ¶ 247.

The Proposed Complaint lists eleven

additional instances of alleged Axium failures supplementing the two
failures (reported by Dr. Ohki) that were also listed in the TAC.
The Proposed Complaint recites the previously alleged manufacturing
defects in other versions of Axium, including instances of a malformed
retainer ring caused by worn manufacturing equipment, and a welding error
that resulted in an improper coupling of the detachment wire to the inner
wall of the coil. Id. ¶¶ 245-249. While detachment failures can be remedied
by secondary detachment methods (such as tugging on the device with a
forceps), these also entail risks to patients. 23 D’Agostino, however, omits

According to the Proposed Complaint, instead of recalling the
defective devices, EV3’s management decided to instruct sales staff to
emphasize the use of the secondary/manual detachment method of
overcoming a detachment failure, while avoiding mention of the use of
forceps or “torque devices,” as it was thought that the disclosure might draw
negative attention from the FDA. Id. ¶ 252.
23

17

from the Proposed Complaint the misbranding and adulteration claims
related to Axium alleged in the TAC.
2. Axium Adverse Event Reporting
The Proposed Complaint alleges that EV3’s investigations into adverse
events involving Axium were “often bogus, blaming the problem on
everything but the defective product.” Prop. Compl. ¶ 268.24 By minimizing
Axium’s role in causing “hundreds” of adverse events, D’Agostino argues that
EV3 avoided its obligation to file Medical Device Reports with the FDA, and
had the FDA been aware of EV3’s misfeasance, “it could have recalled the
devices, or greatly restricted the instructions for [their] use.” Id. ¶ 277. As
with Onyx, D’Agostino maintains that, in the case of Axium, defendants
induced “hospitals and physicians to certify . . . that the medical products . . .
provided to patients were in compliance with applicable statutes [and]
regulations,” and that such certifications “were false [] because EV3 was not
in statutory or regulatory compliance.” Id. ¶ 278. In other words, EV3 was
marketing medical devices that were eligible for Medicare reimbursement

D’Agostino claims that he personally “wrote very detailed adverse
event reports, including such details as physicians being forced to use pliers
and other torque devices . . . .” Id. ¶ 275 (which were presumably ignored by
EV3).
24

18

only because the government did not know “the truth about these products.”
Id. ¶ 277.
DISCUSSION
“FCA liability attaches to any individual who ‘knowingly presents, or
causes to be presented, a false or fraudulent claim for payment or approval,’
31 U.S.C. § 3729(a)(1)(A), or ‘knowingly makes, uses, or causes to be made
or used, a false record or statement material to a false or fraudulent claim,’ §
3729(a)(1)(B).” United States ex rel. Hutcheson v. Blackstone Med., Inc.,
647 F.3d 377, 380 n.3 (1st Cir. 2011).
For purposes of both subsections, “[a] person acts ‘knowingly’ if
he or she ‘(1) had actual knowledge of the information; (2) acts
in deliberate ignorance of the truth or falsity of the information;
or (3) acts in reckless disregard of the truth or falsity of the
information.’”
United States ex rel. Dyer v. Raytheon Co., 2011 WL 3294489, at *6 (D.
Mass. July 29, 2011), quoting Hutcheson, 647 F.3d at 380; see also Allison
Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 672-673 (2008)
(the elements of an FCA claim require proof that a defendant knew, as a
“natural, ordinary and reasonable consequence[]” of its acts, that false claims
would be submitted to the government for payment). The statute further
prohibits “conspir[acies] to defraud the Government by getting a false or
fraudulent claim allowed or paid.” United States ex. rel. Gagne v. City of

19

Worcester, 565 F.3d 40, 42 (1st Cir. 2009); Allison Engine, 533 U.S. at 672.
Persons who violate the FCA are liable for civil penalties and double or treble
damages, plus the costs (including attorney’s fees) incurred in bringing the
qui tam action. 31 U.S.C. § 3729(a)(2)-(3).
1. Public Disclosure Bar
“The threshold question in a False Claims Act case is whether the
statute bars jurisdiction.” United States ex rel. Rost v. Pfizer, Inc., 507 F.3d
720, 727 (1st Cir. 2007), overruled in part on other grounds by Allison
Engine, 553 U.S. 662. The Public Disclosure Bar, as set out in 31 U.S.C. §
3730(e)(4), provides:
(A) The court shall dismiss an action or claim under this
section, unless opposed by the Government, if substantially the
same allegations or transactions as alleged in the action or
claim were publicly disclosed–
(i) in a Federal criminal, civil, or administrative hearing in
which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office,
or other Federal report, hearing, audit, or investigation; or
(iii) from the news media, unless the action is brought by
the Attorney General or the person bringing the action is
an original source of the information.
(B) For purposes of this paragraph, “original source” means an
individual who either (i) prior to a public disclosure under
subsection (e)(4)(a), has voluntarily disclosed to the
Government the information on which allegations or
transactions in a claim are based, or (2) who has knowledge that
20

is independent of and materially adds to the publicly disclosed
allegations or transactions, and who has voluntarily provided
the information to the Government before filing an action
under this section.
A multi-part test is used to decide whether the Public Disclosure Bar
applies. See United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49,
53 (1st Cir. 2009); United States ex rel. Poteet v. Bahler Med. Inc., 619 F.3d
104, 109 (1st Cir. 2010). The court must determine:
(1) whether there has been public disclosure of the allegations or
transactions in the relator’s complaint;
(2) if so, whether the public disclosure occurred in the manner
specified in the statute;
(3) if so, whether the relator’s suit is “based upon” those publicly
disclosed allegations or transactions; and
(4) if the answers to these questions are in the affirmative,
whether the relator falls within the “original source” exception as
defined in § 3730(e)(4)(B).
Rost, 507 F.3d at 728. “For the purpose of the FCA, public disclosure occurs
when the essential elements exposing the particular transaction as
fraudulent find their way into the public domain.” Ondis, 587 F.3d at 54.
“[T]he disclosure must reveal both the misrepresented state of facts and the
true state of facts so that the inference of fraud may be drawn.” Id., quoting
United States ex rel. Mistick PBT v. Hous. Auth. of Pittsburgh, 186 F.3d 376,
385 (3d Cir. 1999). “The two states of facts may come from different sources,

21

as long as the disclosures together lead to a plausible inference of fraud.”
Ondis, 587 F.3d at 54.25
With respect to the fraud-on-the-FDA allegations regarding the
approval of Onyx, defendants raise the Public Disclosure Bar, arguing that
D’Agostino’s allegations are based on materials that had been disclosed to
the FDA well before the filing of D’Agostino’s original Complaint. While
defendants do not argue that a direct allegation of fraud was a matter of
public record, they rely on the fact that “both [the allegedly] misrepresented
state of facts and a true state of facts [were in the public realm] so that the . . .
reader [had the means to] infer fraud.” Poteet, 619 F.3d at 110.26
The essential allegations of the Proposed Complaint with regard to
Onyx and the alleged fraud-on-the-FDA are: (1) that MTI fraudulently
omitted safety information pertaining to Enteryx; (2) that MTI fraudulently
misrepresented the substance of the training program that it proposed to

In Poteet, the First Circuit noted that the Public Disclosure Bar was
“designed to preclude qui tam suits based on information that would have
been equally available to strangers to the fraud transaction had they chosen
to look for it.” Poteet, 619 F.3d at 110.
25

D’Agostino concedes in his Reply that he has provided no
supplementary reasoning, evidence, or developments in the law addressing
the Public Disclosure Bar since the TAC was filed. Instead, D’Agostino urges
the court to reconsider its previous rulings.
26

22

provide for Onyx users; and (3) that MTI concealed its intention to market
Onyx for uses other than the treatment of BAVM.
With respect to Enteryx, the Proposed Complaint contrasts MTI’s
submissions to the FDA and the FDA advisory panel during the Onyx
approval process with the FDA’s internal records concerning safety issues
associated with Enteryx. By citing extensively from the publicly available
FDA documents, the Proposed Complaint itself establishes the first element
of the Public Disclosure Bar under Rost.27 As the FDA was the source of both
sets of public records, the second prong of the Rost test is also met. Finally,
D’Agostino does not (by definition) qualify as an “original source” of the
Enteryx disclosure, as he did not provide the FDA with the safety information
concerning Enteryx.28 Consequently, the Enteryx allegations are precluded
by the Public Disclosure Bar.

For example, D’Agostino quotes from the Onyx FDA Preclinical
Review, showing the link between Onyx and Enteryx, and reproduces a
passage from FDA Patient Safety Alert # 32, October 2004, detailing the
death of a patient who had undergone treatment with Enteryx. Prop. Compl.
¶¶ 60-62. In addition, D’Agostino references reports from the FDA adverse
event reporting system (id. ¶ 60 n.4) and the FDA recall notification for
Enteryx dated October 14, 2005. Id. ¶ 64. Based on his analysis of FDA
published records, D’Agostino concludes that none of the dangers of Enteryx
were effectively communicated to the FDA regulators considering the Onyx
application.
27

D’Agostino now claims that he qualifies as an “original source” based
upon “insider’ knowledge” that Onyx, once in the marketplace, ultimately
28

23

The same is true with respect to the Onyx training program that was
ultimately instituted by EV3. The court is constrained to accept the Proposed
Complaint’s version of the program as the one actually implemented
(providing training per site rather than per physician). But see footnote 12,
supra. Nonetheless, as defendants note, a record of MTI’s promise to the
advisory panel to implement an “all physician” training program was placed
in the public domain (first prong) by the FDA (second prong). And because
the disclosures were made public before D’Agostino began his employment
at EV3, he could not have been their original source (third prong). 29

created the same safety hazards as Enteryx. Reply at 5-6. This claim is
irrelevant to whether MTI withheld information from the FDA regarding
Enteryx at the time of approval, and whether that information was in fact
then publicly available.
D’Agostino now counters that, while the alleged promise of an “all
physician” training program was indeed a matter of public record, “[p]rior to
the unsealing of this case, there was no public evidence that [EV3] would
‘turn on the Onyx faucet’” by providing training per site rather than per
physician. Reply at 5. D’Agostino’s counsel repeated this argument at the
hearing. However, as EV3 pointed out in its Motion to Dismiss the TAC, the
FDA’s published Summary of Safety and Effectiveness Data (SSED)
references the training program “that all sites will participate in prior to
independently using [Onyx].” Dkt. # 75 at 8 n.14 (emphasis added). An
SSED is made publicly available upon notice of approval of a drug or device
(in this case, in July of 2005). D’Agostino makes no claim as to having been
the original source of the information disclosed by the SSED.
29

Moreover, whether or not MTI ultimately failed to institute the training
program promised to the FDA, D’Agostino has failed to plausibly allege
scienter: that MTI’s representations to the FDA regarding the training
24

Consequently, the court lacks jurisdiction over the training program
allegations by operation of the Public Disclosure Bar.
With respect to the final allegation, that MTI misrepresented the
breadth of its off-label marketing plans with respect to Onyx, the court agrees
with D’Agostino that the Public Disclosure Bar does not divest jurisdiction.
While the purported misrepresentation was clearly in the public domain, the
facts from which the existence of a fraud might be inferred were drawn from
D’Agostino’s experience as a senior sales manager for EV3. Consequently,
the court will consider the off-label marketing allegations, along with
D’Agostino’s argument that Onyx was not Medicare reimbursable because of
a lack of medical reasonableness and necessity on their merits.30

program were false when made, and that MTI knew that they were false. A
relator “does not satisfy the requirements of Rule 9(b) merely by pleading
‘fraud by hindsight.’” Gross v. Summa Four, Inc., 93 F.3d 987, 991 (1st Cir.
1996). “[A] general averment that defendants knew earlier what later turned
out badly does not convey the necessary particularity that Rule 9(b)
requires.” Id. D’Agostino proffers only the conclusory allegation that “the
company planned” at the time to market Onyx off-label, as a permanent
implant, or to physicians without neurointerventional training, Prop. Compl.
¶ 174, without providing any basis for this allegation. D’Agostino
acknowledges that company policy was for MTI sales representatives to
provide additional (presumably individualized) training to physicians who
did not attend neurovascular training. Prop. Compl. ¶ 103.
Defendants do not attempt to raise the Public Disclosure Bar with
respect to this latter allegation.
30

25

2. Failure to Plead with the Specificity and Particularity
Required Under Rule 9(b)
The strict pleading requirements of Fed. R. Civ. P. 9(b) apply to an FCA
qui tam action. See United States ex rel. Karvelas v. Melrose-Wakefield
Hosp., 360 F.3d 220, 228 (1st Cir. 2004). Qui tam relators bringing an
action under the False Claims Act are required to set forth with particularly
the “‘who, what, when, where, and how’ of the alleged fraud.” United States
ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d 116, 123 (1st Cir. 2013),
quoting United States ex rel. Walsh v. Eastman Kodak Co., 98 F. Supp. 2d
141, 147 (D. Mass. 2000).
[D]etails concerning the dates of the claims, the content
of the forms or bills submitted, their identification
numbers, the amount of money charged to the
government, the particular goods or services for which
the government was billed, the individuals involved in the
billing, and the length of time between the alleged
fraudulent practices and the submission of claims based
on those practices are the types of information that may
help a relator to state his or her claims with particularity.
These details do not constitute a checklist of mandatory
requirements that must be satisfied by each allegation
included in a complaint. However . . . we believe that
some of this information for at least some of the claims
must be pleaded in order to satisfy Rule 9(b).
Karvelas, 360 F.3d at 233 (internal citations and quotations omitted). In a
qui tam action in which the defendant is alleged to have induced third parties
to file false claims with the government, a relator can satisfy the rule

26

requiring fraud to be pled with particularity by “providing ‘factual or
statistical evidence to strengthen the inference of fraud beyond possibility’
without necessarily providing details as to each false claim.” Ge, 737 F.3d at
123-124, quoting United States ex rel. Duxbury v. Ortho Biotech Prods., L.P.,
579 F.3d 13, 29 (1st Cir. 2009). There is, however, an important caveat: “[A]
per se rule that if sufficient allegations of misconduct are made, it necessarily
follows that false claims and/or material false information were filed . . .
[would] violate[] the specificity requirements of Rule 9(b).” Ge, 737 F.3d at
124.31
D’Agostino’s theory of “total falsity” essentially maintains that, if the
FDA had been aware of the company’s off-label marketing plans for Onyx, it
would not (or at least may not) have approved the device. Because all claims
submitted to government agencies for Onyx were based on an FDA approval
acquired through fraud, the theory goes, all such claims were ipso facto false
claims. The court’s research has uncovered no case in this Circuit that
endorses D’Agostino’s theory. Indeed, the Court of Appeals for the First
Circuit has indicated its disapproval of similar claims in the context of
securities class actions and state tort claims, particularly in the absence of
FDA findings of fraud. See, e.g., New Jersey Carpenters Pension & Annuity
Funds v. Biogen IDEC Inc., 537 F.3d 35, 49 (1st Cir. 2008) (finding in a
securities class action that “[p]laintiffs’ claim that the FDA gave its approval
only because defendants hid data from it . . . is a very serious charge and is
not substantiated by the allegations in the complaint or the documents in the
record.”); id. at 49-50 (observing that “[t]he plaintiffs’ claim that Biogen hid
data from the FDA is not based on any FDA finding that this was true. Rather,
it is based primarily on plaintiffs’ reading of after-the-fact statements about
earlier events.”). Moreover, as set forth below, the court finds that even were
it to adopt D’Agostino’s litigation theory of “total falsity,” D’Agostino has
failed to allege sufficient facts to support a plausible inference of fraudulent
inducement of FDA approval.
31

27

a. Onyx
With respect to the marketing of Onyx, D’Agostino fails to even
approximate the level of particularity required to meet the Rule 9(b)
requirements limned by the First Circuit in Karvelas, Ge, and Duxbury.
D’Agostino theorizes that because Onyx should not have been approved by
the FDA in the first instance, or, alternatively, because it should have been
withdrawn from the market or placed under more stringent controls (by EV3
or the FDA), all reimbursement claims for the use of Onyx must be deemed
categorically false. While the TAC specified two adverse incidents attributed
to Onyx, TAC ¶¶ 203-205, any identification of the surgeons or facility
involved was missing, any description of a monetary loss to the government
was omitted,32 and there was no allegation that a claim for payment (false or
otherwise) was presented to any government payer as a result of either of the
alleged incidents. The conclusory allegation that “hundreds” of similar
incidents must have occurred and that some of these must have cost the

While D’Agostino alleges that Onyx claims inflated DRG
reimbursement requests, thereby increasing the cost to the government, at
no point does the TAC (or the Proposed Complaint) give the factual details
of any specific claim, any description of how DRG rates were impacted by
Onyx, any specific outlier claims involving Onyx, or any details of claims for
off-label use of Onyx that might show how the costs were inflated with
respect to alternative or non-conventional treatments.
32

28

government money is illustrative of the kind of opportunistic pleading that
Rule 9(b) is designed to prevent. See TAC ¶¶ 206, 271. In his Proposed
Complaint, D’Agostino substitutes the two adverse events allegedly
connected to Onyx with new examples. The Proposed Complaint, in an
attempt to import the requisite specificity, cites an FDA advisory from 2012,
which warns of the possibility of catheter entrapment associated with the use
of Onyx. In this advisory notice, the FDA stated that it had received “more
than 100 reported cases, including nine patient deaths, of catheter
breakage that may be related to catheter entrapment.” Prop. Compl. ¶ 160.
D’Agostino has not, however, identified the hospitals at which these adverse
events occurred, which surgeons were involved, whether the surgeons were
trained in using Onyx, whether their uses of Onyx were off-label, or whether
claims for reimbursement were submitted to government payers for any of
these procedures.

D’Agostino’s theory that “every claim paid by the

government which involved the use of Onyx violated the FCA,” fits precisely
in the legal-argument-disguised-as-fact category that the First Circuit flatly
rejected in Ge. Consolidated Opp’n at 17 (emphasis supplied).
Moreover, even were the court to accept D’Agostino’s theory of total
falsity as a working premise, he has failed to meet the “materiality” standard
of the FCA. 31 U.S.C. § 3729(a); see Allison Engine, 553 U.S. at 665 (plaintiff

29

“must prove that the defendant intended that the false record or statement
be material to the Government’s decision to pay or approve the false claim.”).
D’Agostino has not alleged with specificity that any misrepresentations to the
FDA about the off-label marketing of Onyx were material to the FDA’s
decision to approve the device.

D’Agostino has alleged no facts which

plausibly suggest that the FDA relied upon, or even considered, MTI’s
marketing strategy when it approved Onyx for use, or that the FDA would
not have approved the device were it aware of MTI’s plans for off-label
marketing. 33 As the Supreme Court has observed, there is nothing improper
per se about off-label uses of drugs and medical devices:
“[O]ff-label” usage of medical devices (use of a device for some
other purpose than that for which it has been approved by the
FDA) is an accepted and necessary corollary of the FDA’s mission
to regulate in this area without directly interfering with the
practice of medicine. See, e.g., Beck & Azari, FDA, Off-Label Use,
and Informed Consent: Debunking Myths and Misconceptions,
53 Food & Drug L.J. 71, 76-77 (1998) (noting that courts, several
States, and the “FDA itself recogniz[e] the value and propriety of
off-label use.”).
Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 350 (2001). Certainly,
the FDA might reasonably expect that a device with a limited label indication

The court notes that in the five years since this litigation began,
despite the fact that D’Agostino’s alleged misrepresentations have been
brought to the FDA’s attention, the FDA has not elected to withdraw its
approval of Onyx or to recall the device.
33

30

would be marketed and used accordingly; but a promise broken after the fact
is not, without more, the equivalent of a false claim for purposes of the FCA.34
Here, D’Agostino again adopts the approach that the First Circuit rejected in
Ge: From a generalized allegation of misconduct or deception (the alleged
off-label marketing scheme), he asks the court to infer the global existence of
false claims.
This, however, does not end the discussion. Although D’Agostino has
not plausibly alleged facts supporting an inference that all claims for
reimbursement of Onyx were false per se, he also alleges that a specific subset
of claims for reimbursement were false. 35 First, D’Agostino alleges that
certain claims were not “medically reasonable or medically necessary,”
D’Agostino’s extensive quotations from the FDA panel transcript do
not compel D’Agostino’s conclusion (that the FDA was duped about the
safety profile of Onyx), but rather the opposite. They suggest instead that the
FDA advisory panel engaged in a difficult cost-benefit analysis with respect
to the safety of Onyx, and concluded that the potential benefits of the device
outweighed the significant risks. For example, D’Agostino quotes a member
of the panel as stating, “[I] do believe that actually if this product is
associated with a number of deaths that it will be a small victory here.” Prop.
Compl. ¶ 55.
34

Simply alleging a scheme of off-label promotion is, for this purpose,
insufficient. “Proof of unlawful off-label promotion alone cannot sustain a
successful FCA action; the FCA does not impose liability for all fraudulent
acts, only for fraudulent claims.” United States ex rel. Nowak v. Medtronic,
Inc., 806 F. Supp. 2d 310, 345 (D. Mass. 2011). Providing evidence of an
actual false claim is “the sine qua non of a False Claims Act violation.”
Karvelas, 360 F.3d at 225.
35

31

because they were submitted by surgeons inadequately trained in the use of
Onyx. To support this “medical necessity” claim, D’Agostino presents the
expert opinion of the new-to-the-case Dr. Pryor. 36 Dr. Pryor opines that use
of Onyx, absent sufficient device-specific training, is never medically
reasonable or necessary. 37 Dr. Pryor’s opinion does not, however, satisfy
D’Agostino’s task of identifying a specific subset of false claims. While Dr.
Pryor reports having witnessed the use of Onyx by several untrained
physicians for both approved and off-label purposes, Dr. Pryor’s account
does not identify those physicians, the dates their allegedly medically
unreasonable uses of Onyx occurred, or (most crucially) whether any of these

Dr. Pryor does not contend that Onyx is, like the 1963 Chevrolet
Corvair, “unsafe at any speed” (or even that off-label uses of Onyx are per se
unsafe, see footnote 17, supra). Dr. Pryor merely states that (in his
professional opinion) use of Onyx is never medically reasonable in the hands
of untrained physicians even if the outcomes are benign.
36

EV3 emphasizes that it is the professional opinion of treating
physicians, rather than Dr. Pryor’s purported witnessing, which is relevant
to the question of medical necessity. D’Agostino rebuts this characterization
in his Reply, noting that “a physician’s determination of necessity does not
answer the reimbursement inquiry. Rather, coverage decisions are made by
Medicare and other government healthcare programs, not the prescribing
physician.” Reply at 9. D’Agostino does not, however, suggest why, once
Medicare has made the decision that a particular treatment is reasonable and
necessary in a given case, Dr. Pryor’s expert opinion should overrule the
agency’s finding.
37

32

physicians in fact submitted claims for reimbursement to federal or state
governmental entities.38

Despite repeated attempts to cure this deficiency, D’Agostino’s
Proposed Complaint fails to identify with particularity the “sine qua non” of
the FCA: a specific false claim submitted to a government payer for
reimbursement. D’Agostino notes that both Axium and Onyx were sold to
several government hospitals, including some Veterans Administration
hospitals. However, he provides scant evidence of the amounts of Onyx and
Axium sold to these hospitals; moreover, he again fails to allege with
particularity that these hospitals used Onyx in any improper or medically
unreasonable manner.
38

D’Agostino claims that he “can state that more than 50% of the patients
who underwent procedures involving Onyx were insured by government
healthcare programs.” Prop. Compl. ¶ 186. The evidence for this statement,
however, appears to be that over 50% of the patients in hospitals within the
northeastern United States were insured by governmental programs, and
that it must logically follow that the patient population treated with Onyx
had similar rates of Medicare or Medicaid coverage. Prop. Compl. ¶ 186 n.16.
D’Agostino’s back-of-the-envelope “statistical analyses” fall well short of the
particularity requirement of Rule 9(b), much less the evidentiary standards
governing the admissibility of statistical proofs. Indeed, D’Agostino
acknowledges that his 50% figure is merely what he considers a
“conservative estimate,” Prop. Compl. ¶ 197 n.21.
D’Agostino alleges that he has personal knowledge that several
physicians (whom D’Agostino names) at Massachusetts General Hospital
and at Brigham & Women’s Hospital submitted bills to government
healthcare programs for uses of Onyx. Prop. Compl. ¶ 187. However, he
provides no evidence of dates or amounts of the claims filed, or (most
critically) whether those physicians were either untrained in using Onyx or
used Onyx for off-label purposes.
Finally, D’Agostino cites two doctors – Christopher Kwolek and ChiehMin Fan – who allegedly performed procedures involving Onyx, although
neither was a neurosurgeon and neither attended EV3’s training program.
Again, D’Agostino does not identify with particularity any Onyx-related
33

b. Axium
While the TAC contained little that could be read as the kind of
particularized pleading that satisfies the criteria identified in Karvelas or
Ge,39 in his Consolidated Opposition to the defendants’ motion to dismiss the
TAC D’Agostino attempted to collate disparate allegations in the Complaint
under the headings “Who,” “What,” “When,” and “How.” Consolidated

claims submitted to government programs by either of these surgeons.
D’Agostino alleges that “over 50%” of the two surgeons’ patients were
insured by government programs, but that is the extent of his identification
of possible false claims. The court cannot conclude, based on this
information, that D’Agostino has identified actual false claims with the
specificity demanded by Rule 9(b). To take an example, while 45.3% of
Americans do not file tax returns, it does not follow that nearly half the
American population are necessarily tax scofflaws (because of withholding,
death or dislocation, or failure to meet the minimum income threshold), nor
does it mean that any particular subset of Americans, like physicians who use
Onyx, are more likely than not to have failed to meet their tax obligations.
(The 45.3 percent figure and the explanation are from Roberton Williams,
New Estimates Of How Many Households Pay No Federal Income Tax,
TaxVox
(October
6,
2015),
available
at
http://taxvox.taxpolicycenter.org/2015/10/06/new-estimates-of-howmany-households-pay-no-federal-income-tax/ (last visited December 23,
2015)).
While D’Agostino makes general allegations linking defective Axium
coils with false claims, the only details offered are those concerning Dr.
Ohki’s patients and the eleven additional events cited in the Proposed
Complaint. However, it is not alleged in the Proposed Complaint that a claim
for reimbursement for the treatment provided to either of these patients was
ever submitted to Medicare.
39

34

Opp’n at 9-12. In the summary under “Who” (which also attempts to fulfill
the role of “where”), D’Agostino cited six hospitals named in the TAC as
sources of false claims. Only one of these, however, is linked to Axium.
Although a specific physician was mentioned, there was no allegation that
any claim was submitted to a government payer. In the discussion under
“What,” D’Agostino simply alleged a legal conclusion: that because Axium
was knowingly sold as a defective and misbranded device, it was not
medically necessary. The category of “When” received even more conclusory
treatment. D’Agostino stated in his Consolidated Opposition that the Axium
device was defective from the time it was first placed on the market. In other
words, the answer to the question “When?” appeared to be “Always.” This
court has previously ruled that it is impermissible to assume that any claim
in a date range is, ipso facto, false simply because some intermittent device
failures were identified. See United States ex rel. Provuncher v. Angioscore,
Inc., 2012 WL 3144885, at *1-2 (D. Mass. Aug. 3, 2012). The “How” element
was equally lacking in specifics. Here again, D’Agostino returned to his
overarching theory of total falseness as a substitute for specific and particular
examples of false claims. Finally, D’Agostino’s arguments that all Axium
claims are false because they contributed indirectly to inflated Medicare

35

costs were cut from the same cloth as the Onyx allegations. In sum, the TAC
failed to satisfy the Rule 9(b) criteria mandated by Karvelas and Ge.
While D’Agostino does not address these deficiencies directly, he now
claims that the Proposed Complaint “establishes conclusively that Axium
coils were defectively designed.” Reply at 17. This, in the court’s view, is a
gross overstatement.

With respect to Axium, D’Agostino’s Proposed

Complaint does nothing to elaborate in any material fashion the conclusory
allegations of the TAC and the Consolidated Opposition to EV3’s Motion to
Dismiss. D’Agostino alleges that EV3 released several iterations of Axium,
each of which made moderate improvements over the previous release.
D’Agostino proposes that this fact demonstrates EV3 was aware that Axium
was defective and required fixing. The court sees no reason to conclude that
the release of a newer and safer version of a device indicates ipso facto that
the older version was defective or unreasonably dangerous. For a court to so
hold would perversely act as a disincentive for manufacturers to make safety
improvements in a marketed device after FDA-approval for fear of litigation.
D’Agostino’s primary supplement to the TAC is a list of eleven
additional examples of supposed Axium failures, offered as evidence of the
device’s alleged defectiveness (bringing the total number of examples to
thirteen). Without an indication of Axium’s failure rate, however, the

36

Proposed Complaint – which alleges that Axium was so patently defective
that all claims for reimbursement were false claims – again falls short of the
particularity required by Rule 9(b). As this court has observed, it is perfectly
reasonable for government agencies to allow for a modicum of risk and a
certain failure rate for medical devices, or for other products for which the
government pays. Were the perfect allowed to become the enemy of the
good, the many patients, indeed the overwhelming majority of patients,
whose lives are saved or prolonged because of devices like Onyx would be
unnecessarily sacrificed in the quest for a defect-free world. 40
As with his Onyx allegations, D’Agostino depends largely on an
overarching theory that all claims for Axium were false because the product
was defective per se. D’Agostino alleges in the Proposed Complaint that all
Axium claims were false because “a device which is dangerous to patient
health is, a priori, not ‘reasonable and necessary’ for the treatment of illness
or injury.” Prop. Compl. ¶ 255. This is not only a legal (and not a factual)

D’Agostino also alleges, for both Onyx and Axium, that EV3 failed to
comply with adverse-event reporting requirements and improperly “watered
down” adverse event reports. D’Agostino does not, however, identify even a
single specific instance of a “squelched” or “watered down” report, Prop.
Compl. ¶¶ 268-270, nor does he link any such report to a claim for
government reimbursement or a prospect for an FDA reconsideration of its
approval of the marketing of the devices.
40

37

conclusion, but also an incorrect one. As the court has previously said, the
FDA and insurers may, in their discretion, determine that a certain degree of
danger or risk is acceptable when weighed against the potential benefits of a
device. As with Onyx, D’Agostino does not buttress his allegation with any
details regarding specific false claims submitted to the government. While
D’Agostino observes that more than 50% of patients in the hospitals he
identifies are on some form of government insurance, Prop. Compl. ¶ 186
n.16, as with Onyx, he does not establish that any of those patients were in
fact treated with Axium.
3. Failure to State a Claim Under Rule 12(b)(6)
In addition to falling short of Rule 9(b), the Proposed Complaint does
not survive a Rule 12(b)(6) analysis. “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (internal citations and quotations omitted). “While a complaint
attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted); see

38

also Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95-96 (1st Cir.
2007).
In broad generalizations, D’Agostino alleges that all Axium devices on
the market were defective and therefore, any claim for Medicare
reimbursement involving Axium was false. With regard to Onyx, D’Agostino
returns repeatedly to the theme that, but for defendants’ misrepresentations,
the FDA would not have approved Onyx in the first instance. In another
iteration of this argument, D’Agostino speculates that, had the FDA known
of all of the alleged hidden defects, it would have withdrawn its approval of
Onyx or ordered its recall.
The FDA is charged with the difficult task of balancing the risk and
benefits of placing drugs and medical devices on the market, and D’Agostino
is, in effect, asking this court to usurp the FDA’s prerogative and assume that
function. D’Agostino proposes, in the guise of an FCA action, that this court
reevaluate years of FDA decisions concerning the approval or recall of EV3’s
medical devices. As the Court of Appeals has observed, “[s]urely, where the
FDA was authorized to render the expert decision on . . . use and labeling, it,
and not some jury or judge, is best suited to determine the factual issues and
what their effect would have been on its original conclusions.” King v.
Collagen Corp., 983 F.2d 1130, 1140 (1st Cir. 1993) (Aldrich and Campbell,

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JJ., concurring). The FCA is a vehicle for rooting out undetected financial
fraud against the federal government by giving generous financial incentives
to insider whistleblowers; it is not a substitute for the certiorari review of
discretionary decisions taken by the FDA in the area of competence
delegated to it by Congress.
In this latter regard, there is a well-established regulatory path for
bringing medical devices (as well as new drugs) to clinical trials on an
investigational basis, and if the benefits of the device are determined to
outweigh its potential risks, to place it in the stream of commerce. See Riegel
v. Medtronic, Inc., 552 U.S. 312, 325 (2008) (observing that FDA conducts
cost-benefit analysis to determine “[h]ow many more lives will be saved by a
device which, along with its greater effectiveness, brings a greater risk of
harm”). There are also well-established legal, regulatory, and administrative
mechanisms for managing the risks and benefits of the device as it is further
tested in the marketplace.
While the FDA expects and requires good faith and responsible
behavior from participants in the clinical review and marketing processes, it
also has significant administrative sanction and enforcement powers, as well
as an Office of Criminal Investigations empowered to refer cases to the
Department of Justice for prosecution. See generally Fire & Police Pension

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Ass’n of Colorado v. Abiomed, Inc., 778 F.3d 228, 233-238 (1st Cir. 2015);
see also Biogen, 537 F.3d at 47-48 (“Fraud on the FDA is, to be sure,
prohibited, see 21 U.S.C. § 331, and the FDA has statutory power to catch,
punish, and deter such fraud, see id. § 372 (FDA empowered to conduct
investigations); id. § 332 (FDA can seek injunctive relief); id. § 333 (FDA can
pursue criminal prosecutions and civil penalties.)”). Perfecting the science
of threading tiny tubes inside the human skull to treat vascular defects
requires an acute level of medical judgment that is well beyond that
possessed by most courts, lawyers, and medical device salespersons. In
short, an FCA action is not the appropriate vehicle for this court to exercise
its judgment in second-guessing decisions taken by the FDA in approving the
use of medical devices simply because the government happens to pay for
some of them.
4. Undue Prejudice
Leaving aside the futility of D’Agostino’s proposed amendments, the
court is also of the tentative view that permitting a further amendment would
substantially prejudice the individual defendants, Hardin and Wall.
D’Agostino makes no claim that either Wall or Hardin acted ultra vires, or
outside the scope of their employment. Nor does D’Agostino provide any
indication of what Wall and Hardin bring to this litigation, in their capacity

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as defendants, which EV3 and MTI (under the doctrine of respondeat
superior) do not provide.41 Given, however, the court’s decision to deny the
motion to amend, it is not necessary for the court to definitively resolve the
issue of whether the costs and uncertainties of the litigation cause undue
hardship to the individual defendants.
5. Undue Delay
The defendants argue that D’Agostino’s “new evidence” – the
statement of Dr. Pryor, the 2012 FDA advisory cataloguing adverse events

The theory behind Wall and Hardin’s specific culpability appears to
be that the two men as corporate executives are personally liable for any
wrongdoing by their company. With respect to Hardin, D’Agostino alleges
only that Hardin “regularly attended” sales meetings at which off-label
marketing plans were discussed (Prop. Compl. ¶ 114); that Hardin
introduced, at a national sales meeting, a guest speaker and radiologist who
demonstrated “peripheral” uses of Onyx to the sales force (id. ¶ 118); that
Hardin managed a list of invitees to EV3 physician training sessions, which
included training in off-label uses (id. ¶¶ 131-146); that Hardin disseminated
information about successful off-label uses of Onyx throughout the company
(id. ¶¶ 147, 149); and that Hardin requested that sales representatives
conduct an inventory of older generations of Axium (id. ¶ 227).
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With respect to Wall, D’Agostino’s allegations are even thinner. He
proffers only the conclusion that “Wall was responsible for virtually every
aspect of the marketing and sales of Onyx and Axium,” and “had supervisory
authority over many individuals who were illegally marketing and selling
both products, was aware of these illegal activities, and supported the efforts
of these individuals,” (Prop. Compl. ¶ 75 n.9), that Wall, like Hardin,
“regularly attended” sales meetings, (id. ¶ 114) and that that Wall received,
by email, a medical journal extolling the virtues of off-label uses of Onyx (id.
¶ 158).

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related to Onyx, and eleven additional instances of adverse events correlated
with Axium use – was available to D’Agostino throughout much of the
litigation, and particularly at the time of the TAC, and therefore should have
been included in previous iterations of the Complaint. The court is inclined
to agree. D’Agostino could have obtained, with reasonable diligence, the
expert opinion of Dr. Pryor and the thirteen listed cases of Axium failure
before filing the TAC. The FDA’s advisory notice was made public well before
the unsealing of the case and nearly two years before D’Agostino submitted
the TAC. D’Agostino’s argument that the instant motion represents his first
opportunity to cure the deficiencies in his Complaint is unavailing.
D’Agostino “was put on notice of the deficiencies in the complaint by the
motion to dismiss [the TAC]. If [he] had something relevant to add, [he]
should have moved to add it then.” Abiomed, 778 F.3d at 247. D’Agostino
was not, at that time, “entitled to wait and see if [his] amended complaint
was rejected by the district court before being put to the costs of filing [an
additional] amended complaint.” ACA Financial Guaranty Corp. v. Advest,
Inc., 512 F.3d 46, 57 (1st Cir. 2008). As the First Circuit observed in that
case,
[relator] ha[s] it exactly backwards – [his] methodology would
lead to delays, inefficiencies, and wasted work. [Plaintiffs] do not
get leisurely repeated bites at the apple, forcing a district judge
to decide whether each successive complaint was adequate. . . .
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Plaintiffs may not, having the needed information, deliberately
wait in the wings for a year and a half with another amendment
to a complaint should the court hold the first amended complaint
was insufficient. Such an approach would impose unnecessary
costs and inefficiencies on both the courts and party opponents.
Id.
ORDER
For the foregoing reasons, relator Jeffrey D’Agostino’s motion to
amend his complaint pursuant to Federal Rule of Civil Procedure 15(a)(2) is
DENIED. The Clerk will enter dismissals with prejudice as to all defendants,
and close the case.
SO ORDERED.
/s/ Richard G. Stearns
___________________________
UNITED STATES DISTRICT JUDGE

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