United States ex rel. Thornton v. Pfizer Inc.

UNITED STATES OF AMERICA, STATE OF ILLINOIS ex rel. MICHAEL THORNTON Plaintiff, v. PFIZER INC and HOSPIRA, INC., Defendants.

Case No. 16-cv-7142

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 14, 2019

Judge John Robert Blakey

MEMORANDUM OPINION AND ORDER

Relator and Plaintiff Michael Thornton (Relator) has brought a qui tam action under the False Claims Act (FCA), 31 U.S.C. § 3729 et seq., (Count I) and its Illinois counterpart, the Illinois False Claims Act (ICFA), 740 Ill. Comp. Stat. 175/1 et seq., (Count II) on behalf of the United States and the State of Illinois. Relator sues Defendants Pfizer, Inc., and Hospira, Inc., alleging that Defendants knowingly mischarged Medicare and/or Medicaid for defective medical devices. [35] ¶ 1. Relator also brings an FCA retaliation claim, 31 U.S.C. § 3730(h), alleging that Defendants retaliated against him after he attempted to prevent FCA violations (Count III). Id. ¶ 2. Relator brings an Illinois Whistleblower Act claim, 740 Ill. Comp. Stat. 174/1 et seq., under this same theory (Count IV). Id.

Relator filed his Amended Complaint (AC) [35] on May 24, 2018. Defendants have moved to dismiss all claims under Federal Rules of Civil Procedure 12(b)(6) and 9(b). [41]. For the reasons explained below, this Court grants Defendants' motion.

I. Background

A. The Parties

The federal government and state of Illinois jointly fund and administer the Medicare and Medicaid programs in Illinois. [35] ¶ 9. Pfizer is one of the world's leading designers, manufacturers, and distributors of health care products. Id. ¶ 10. It sells its products to both public and private hospitals, pharmacies, home healthcare providers, other medical organizations, and private citizens enrolled in Medicare and/or Medicaid, and therefore requests payment and receives funds (either directly or through healthcare providers) from the U.S. and/or Illinois. Id.

Pfizer is the parent company of Hospira, which is one of the world's leading providers of infusion pumps and other medical technologies. Id. ¶¶ 10, 12. Hospira also sells its products to public and private hospitals, pharmacies, home healthcare providers, other medical organizations, and private citizens enrolled in Medicare and/or Medicaid, and thus similarly requests payment and receives funds (either directly or through healthcare providers) from the U.S. and/or Illinois. Id. ¶ 12. Both Pfizer and Hospira are considered importers and/or manufacturers, as well as distributors, for purposes of U.S. Food and Drug Administration (FDA) regulations. 21 C.F.R. §§ 803.3, 806.2; 21 C.F.R. Part 7, 21.

Hospira employed Relator in a quality assurance role from June 2013 until February 2017, when Defendants sold its infusion systems business to ICU Medical Inc. [35] ¶ 7.

B. Hospira's Relationship with Q Core

Throughout Relator's employment with Hospira, the company maintained an international distribution agreement and business relationship with Q Core Medical Ltd (Q Core). Id. ¶ 16; [35-1] at 2-4. Q Core is an Israeli company focused on developing, manufacturing, and marketing infusion pumps. [35] ¶ 17. One of its products is the Sapphire Multi-Therapy Volumetric Infusion Pump (Sapphire pump); a "technologically advanced compact and lightweight infusion system." [35-1] at 2.

According to Relator, the impetus behind Hospira's relationship with Q Core began in August 2012, when the FDA issued a warning letter to Hospira about quality problems at Hospira's Costa Rica manufacturing plant. [35] ¶ 18. Hospira made most of its infusion pumps at its Costa Rica plant. Id. In November 2012, the FDA followed-up with an import ban, which prevented Hospira from importing and selling infusion pumps manufactured at the Costa Rica facility. Id. ¶ 19.

In January of 2013, while the FDA's import ban remained in place, Hospira entered an international distribution agreement with Q Core for its "Sapphire platform," which included Sapphire pumps and their accompanying microbore set. Id. ¶ 21; [35-1] at 2-4. Following regulatory clearance by the FDA, Hospira introduced the Sapphire pumps and microbore sets (collectively Sapphire sets) to the U.S. Market in October 2013. [35] ¶ 20; [35-1] at 2-4.¹

According to Relator, by "designating Hospira as a distributor and Q Core asthe device manufacturer, Hospira was able to avoid the FDA import ban and compete in the U.S. marketplace for infusion pumps." [35] ¶ 21. He alleges that Hospira and Q Core operated as partners and co-manufacturers of the Sapphire pumps, sharing project managers, design and software engineers, regulatory personnel, commercial, and marketing executives at the manufacturing level. Id. ¶¶ 22-24.

C. Relator's Product Allegations

Relator first learned about the Sapphire sets in December 2014, when Hospira promoted him to "Senior Manager Sapphire Quality Systems," a new position intended to "provide quality assurance assistance and oversight with respect to Hospira's relationship with Q Core, and its marketing and distribution of Q Core's Sapphire products." Id. ¶ 31. Beginning in February 2015, Relator alleges he discovered several quality assurance issues related to Q Core and its Sapphire products after reviewing customer complaints.² Id. ¶ 33. Specifically, Relator alleges that Defendants:

• Engaged in a Silent Recall of Defective Power Cords.See id. ¶¶ 35-49; [35-1] at 5-7. Relator claims that Hospira, in an effort to avoid further FDA scrutiny, failed to notify the public and FDA about: (1) defective power cords that sparked and fell apart as customers used them and would not properly charge; and (2) Q Core and Hospira's decision to replace the original power cords with new cords. Relator claims that Hospira's failure to inform the public and FDA about the defective power cords, and its subsequent decision tocharacterize the new power cords as an enhancement rather than a replacement, constituted a silent recall in violation of FDA regulations, 21 C.F.R. §§ 7.40, 7.46, 7.49, 803.1, 803.10, 803.20, 803.40, 803.50, 803.53, 806.10. Relator also claims that the new power cords failed to correct the problems associated with the original cords.

• Engaged in a Silent Recall through Repeated Software Revisions.See [35] ¶¶ 50-65. Relator claims that Hospira, in an effort to avoid further FDA scrutiny, failed to notify the public and FDA about: (1) Sapphire pumps disabling themselves due to faulty air-in-line and cassette misplaced alarms; (2) Sapphire pumps not properly resetting after these false alarms, which resulted in patients not receiving their medication in proper dosage or in a timely fashion; (3) Sapphire pumps over-and under-delivering proper dosages of medication; and (4) Q Core's and Hospira's decision to correct these issues with 55 software revisions to the Sapphire pumps over the course of four years. Relator claims Hospira's failure to inform the public and FDA about the false alarm and dosage problems, and its subsequent decision to characterize the software revisions as enhancements rather than corrections, constituted a silent recall in violation of FDA regulations, 21 C.F.R. §§ 7.40, 7.46, 7.49, 803.1, 803.10, 803.20, 803.40, 803.50, 803.53, 806.10. Relator also claims that the software revisions failed to correct these performance issues.

• Engaged in a Silent Recall by Acquiescing to Q Core's Request to Return and/or Destroy Microbore Sets.See [35] ¶¶ 66-76. Relator claimsthat in late 2014, Q Core instructed Hospira to place 57 batches of microbore sets "on hold" because it discovered the batches were prone to leaking medication. Because Hospira had already sold and distributed significant quantities of those 57 batches to customers, Relator claims that he and other Hospira employees repeatedly informed Q Core that a hold would constitute an expansion of an existing Field Safety Notice (FSN)/Recall. Nevertheless, Hospira's Corporate Vice President of Quality for the Device Organization, Chris Ganser, signed off on documentation allowing those microbore sets to be either returned to Q Core or destroyed. Hospira never issued an FSN or otherwise informed the public or FDA about the microbore sets, and thus Relator alleges it engaged in a silent recall in violation of FDA regulations, 21 C.F.R. §§ 7.40, 7.46, 7.49, 803.1, 803.10, 803.20, 803.40, 803.50, 803.53, 806.10.

In addition to these product quality issues, Relator also alleges that Hospira created marketing materials that included false information to: (1) help sell the Sapphire pumps; and (2) offer "alternate messaging" around the defects. [35] ¶¶ 25-26.

D. Relator's Retaliation Allegations

Beginning in February or March 2015, Relator brought his concerns regarding the power cords, software, and microbore sets to Hospira's Senior Management team, including Ganser. Id. ¶ 77. In April 2015, Relator completed a site visit of Q Core's facility in Tel Aviv, Israel; he alleges that during the visit, Q Core's President, Tally Eitan, told him that, "we know the quality of our product is bad, but we are not doinga Field Action." Id. ¶ 78. Upon his return, Relator provided a report of his findings on Q Core's lack of quality assurance procedures to Mr. Ganser, and over the following months raised his concerns with: Hospira's Vice President of Medical Devices, David Endicott; Hospira's Vice President of Medical, Dr. Roee Lazebnik; Hospira's Vice President of Alliance Management and Franchise, Chad Jansen; Hospira's Vice President of Quality Assurance, Joe Sener; and Hospira's Vice President of Regulatory Affairs, Amy Giertych. Id. ¶¶ 80-85. None of these individuals addressed Relator's concerns. See, e.g., id.

With respect to the microbore set problem, beginning in May 2015, Jansen repeatedly requested that Relator "confirm the data used to inform Q Core about the steps that were needed to resolve the . . . issue." Id. ¶¶ 86-87. When Relator confirmed the data's accuracy, he claims Jansen ignored it and misled others to...