NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

THE DAN ABRAMS COMPANY LLC, 

Relator, 

Plaintiff-Appellant, 

and 

UNITED STATES OF AMERICA, ex rel.; 

STATE OF ARKANSAS; STATE OF 

CALIFORNIA; STATE OF COLORADO; 

STATE OF CONNECTICUT; STATE OF 

DELAWARE; DISTRICT OF COLUMBIA; 

STATE OF FLORIDA; STATE OF 

GEORGIA; STATE OF HAWAII; STATE 

OF ILLINOIS; STATE OF INDIANA; 

STATE OF IOWA; STATE OF 

LOUISIANA; STATE OF 

MASSACHUSETTS; STATE OF 

MICHIGAN; STATE OF MINNESOTA; 

STATE OF MISSOURI; STATE OF 

MONTANA; STATE OF NEVADA; 

STATE OF NEW HAMPSHIRE; STATE OF 

NEW JERSEY; STATE OF NEW MEXICO; 

STATE OF NEW YORK; STATE OF 

NORTH CAROLINA; STATE OF 

OKLAHOMA; STATE OF RHODE 

ISLAND; STATE OF TENNESSEE; 

STATE OF TEXAS; STATE OF VIRGINIA; 

No. 19-56377 

D.C. No. 

2:15-cv-01212-JAK-AS 

MEMORANDUM*

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

FILED

APR 2 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

STATE OF WASHINGTON; STATE OF 

WISCONSIN, 

Plaintiffs, 

 v. 

MEDTRONIC INC.; MEDTRONIC PLC; 

MEDTRONIC SOFAMOR DANEK USA, 

INC.; WARSAW ORTHOPEDIC, INC.; 

MEDTRONIC SOFAMOR DANEK 

DEGGENDORF GMBH; MEDTRONIC 

PUERTO RICO OPERATIONS CO.; 

HUMACAO, 

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

John A. Kronstadt, District Judge, Presiding

Argued and Submitted February 10, 2021

Pasadena, California

Before: TALLMAN, CALLAHAN, and LEE, Circuit Judges.

The Dan Abrams Company LLC (Relator) appeals the dismissal of its False 

Claims Act (FCA) lawsuit. 31 U.S.C. §§ 3729-3733. Relator alleges that Medtronic 

Inc. and various related entities fraudulently obtained Food and Drug Administration 

clearance for several devices used in spinal fusion surgeries (Subject Devices), 

unlawfully marketed them for an off-label and contraindicated use, and illegally 

compensated physicians to use them. According to Relator, these fraudulent and 

unlawful practices caused physicians to submit false claims to Medicare. We affirm 
3 

in part and reverse in part.

The False Claims Act makes liable anyone who “knowingly presents, or 

causes to be presented, a false or fraudulent claim for payment or approval,” or 

“knowingly makes, uses, or causes to be made or used, a false record or statement 

material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A), (B). The 

essential elements of an FCA claim are “(1) a false statement or fraudulent course 

of conduct, (2) made with the [requisite] scienter, (3) that was material, causing (4) 

the government to pay out money or forfeit moneys due.” United States ex rel. 

Campie v. Gilead Sciences, Inc., 862 F.3d 890, 899 (9th Cir. 2017) (quoting United 

States ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1174 (9th Cir. 2006)). 

1. Off-label/contraindicated-use theory: Relator alleges that Medtronic 

marketed the Subject Devices without FDA approval or clearance for use in the 

cervical spine—an “off-label” and indeed contraindicated use. Relator thus alleges 

that Medtronic engaged in misbranding, mislabeling, and adulterating in violation 

of the Food, Drug, and Cosmetics Act (FDCA). 

The fundamental problem with this theory is that Relator incorrectly assumes 

that the federal government will not reimburse for an off-label use of a medical 

device. To the contrary, the federal government has recognized that doctors may 

use medical devices for off-label purposes as long as it is medically necessary and 

reasonable. See, e.g., Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 350
4 

(2001) (“‘[O]ff label’ usage of medical devices . . . is an accepted and necessary 

corollary of the FDA’s mission to regulate in this area without directly interfering 

with the practice of medicine.”); U.S. Dep’t of Health & Hum. Serv. (HHS), 

Medicare Benefit Policy Manual, ch. 14 § 10, available at 

https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/bp102c14.pdf (noting that Medicare 

reimburses for “[d]evices cleared by the FDA through the 510(k) process”—not 

cleared uses of a device) (emphasis added).

Thus, the federal government does not distinguish between on-label and offlabel uses in determining whether to pay for medical devices. Rather, to be 

reimbursable, a device must (1) have FDA approval/clearance, (2) be “reasonable 

and necessary,” Int’l Rehab. Sci. Inc. v. Sebelius, 688 F.3d 994, 997, 1002 (9th Cir. 

2012), and (3) meet any other pertinent regulations, HHS, Medicare Benefit Policy 

Manual, ch. 14 § 10. Relator’s argument must thus be considered through the prism 

of these three requirements.

First, the FDA cleared the Subject Devices through the 510(k) process

(though, as discussed later, Relator claims Medtronic defrauded FDA in the 

clearance process).

Second, the Relator has not plausibly alleged that the Subject Devices are not 

“reasonable and necessary.” This court has cited Centers for Medicare & Medicaid 
5 

(CMS) guidance in explaining that “a device is not ‘reasonable and necessary’ —

and thus is not eligible for Medicare coverage—if it is (a) “not ‘safe’ and ‘effective,” 

(b) “experimental,” (c) “not appropriate for the individual beneficiary’s needs,” or 

(d) “substantially more costly than a medically appropriate and realistically feasible 

alternative pattern of care.” Int’l Rehab. Sci., Inc., 688 F.3d at 997 (cleaned up). 

CMS guidance makes clear that safety and efficacy determinations are based on 

“authoritative evidence” or “general[] accept[ance] in the medical community.” Id.

Relator makes no allegations about published studies demonstrating that 

cervical use of vertebral body replacement (VBR) is medically unsafe or ineffective. 

Nor does Relator allege that VBR use in the cervical spine is contrary to accepted 

standards of medical practice. Instead, Relator points to a few anecdotal examples 

of harm caused by the Subject Devices. The problem is that any surgery carries the 

potential risk of harm. Merely showing that harm can occur is insufficient. Relator 

also argues that the Subject Devices were not reasonable and necessary because 

cheaper and equally effective options existed. Yet, as the district court correctly 

observed, Relator does not connect any “alleged false statements and the pricing 

criterion of Medicare coverage.”

Relator argues that this is not a case of merely off-label use, but 

contraindicated use of the Subject Devices. But neither the federal government nor 

the judiciary appears to carve out an exception for contraindicated use in discussing 
6 

off-label uses. Indeed, the FDCA specifically contemplates that devices may be 

cleared even if contraindicated uses are expected: if the FDA suspects that a potential 

Class II device may be used for contraindicated purposes, the FDA “may require a 

statement” on the product’s label disclosing that use. 21 U.S.C. §360c(i)(1)(E)(i). 

As long as a doctor finds an off-label use to be medically reasonable and necessary, 

then the off-label use is permitted, even if the particular use is contraindicated on the 

label.

Third, Relator points to no statute, regulation, or administrative manual that 

specifically states that a contraindicated use of a device is categorically not 

reasonable and necessary.

Relator cites this court’s Campie decision for the proposition that 

“misbranded and adulterated devices are not eligible for Medicare reimbursement.” 

But in Campie, one of the relator’s claims was that the drug was “misbranded” or 

“adulterated” because the drug company had substituted an unapproved ingredient 

for an approved ingredient. 862 F.3d at 902. In contrast here, Relator alleges that 

the Subject Devices were misbranded because they were sold for a contraindicated 

purpose. But the federal government acknowledges that doctors may use medical 

devices for off-label and even contraindicated uses if they believe that such use is 

medically necessary and reasonable. So contraindicated use of the Subject Devices 

is not material to the government’s decision to pay. 
7 

We thus affirm the district court’s dismissal of Relator’s claim based on offlabel/contraindicated labels. 

2. Fraud-on-the-FDA theory: Relator also alleges that Medtronic 

defrauded the FDA into granting the Subject Devices Class II clearance. According 

to this theory, since Medicare reimbursement requires FDA clearance, the Subject 

Devices would have been ineligible for reimbursement but for Medtronic’s fraud. 

Relator appears to divide the Subject Devices into two distinct groups. The 

first group of Subject Devices consists of those that allegedly cannot be used for 

their labeled intended use and can only be used for their contraindicated use in the 

cervical spine. For these “Contraindicated-only Devices,”

1 Relator alleges that 

Medtronic falsely represented in its clearance application that they were intended for 

use in the thoracolumbar spine (the part of the spine below the neck) when in fact 

they could not be used there and could only be used in the cervical (neck-area) of the 

spine. 

The second group of Subject Devices—“Extra-use Devices”2—includes those 

that could be used for their stated intended use (i.e., use in the thoracolumbar spine)

but which were contraindicated for use in the cervical spine. Relator alleges that 

1 This label was not used by the parties but is included here for the sake of clarity.

2 Again, this is not a term that the parties use and is included here only for the sake 

of clarity.
8 

Medtronic secretly intended to sell these Extra-use Devices for their contraindicated 

use. 

The district court dismissed Relator’s fraud-on-the-FDA theory for failure to 

state a claim, finding that its allegations were offered “solely as a predicate for the 

claim that the Subject Devices were intended for off-label use.” 

The district court is correct that the materiality element cannot be met for the 

Extra-use Devices because the federal government allows reimbursement for offlabel and even contraindicated uses. Put another way, Medtronic’s alleged omission 

about its intent to market the devices for a contraindicated use was immaterial to the 

FDA’s clearance for Extra-use Devices.

But the Contraindicated-only Devices present a different story. For those 

devices, Relator does not allege mere off-label use. Rather, Relator alleges that the 

Contraindicated-only Devices were not properly cleared for any use: they cannot be 

used for their labeled intended use (and are thus not substantially similar to the 

predicate device), and they can only be used for their contraindicated use. Relator 

claims that Medtronic knew that cervical VBRs posed different questions of safety

to its previously approved devices, and if Medtronic disclosed that the devices were 

intended for use in the cervical spine, then the FDA may have required Class III 

approval. These considerations—intended use, similarity to a predicate device, and 

different questions about safety—are precisely those that the FDA considers in 
9 

granting Class II certification. 21 U.S.C. § 360c(i)(1)(A). Put differently, 

Medtronic’s alleged fraud went “to the very essence of the bargain.” United Health

Serv., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 2003 n.5 (2016) (cleaned 

up). 

Medtronic argues that the FCA is not the proper vehicle to bring a fraud-onthe-FDA claim. In Buckman, the Supreme Court held that the FDCA bars a private 

party from asserting state law claims that the device manufacturer defrauded the 

FDA during the 510(k)-clearance process concerning a device’s intended use. 531 

U.S. at 348. And the First Circuit has extended Buckman’s holding to the FCA 

context. United States ex rel. D’Agostino v. ev3, Inc., 845 F.3d 1, 7-9 (1st Cir. 2016). 

Medtronic invites us to follow suit. But this court’s decision in Campie forecloses

that path. In Campie, we noted that other jurisdictions had “cautioned against 

allowing claims under the False Claims Act to wade into the FDA’s regulatory 

regime.” 862 F.3d. at 905 (citing, amongst others, D’Agostino, 845 F.3d at 9). Yet 

we nevertheless allowed the relator’s fraud-on-the-FDA theory to go forward. Id. at 

905-06.

We thus affirm the district court for claims based on the Extra-use Devices, 

but we reverse for claims based on Contraindicated-only Devices.

3. Anti-Kickback Statute (AKS): The AKS prohibits “knowingly and 

willfully offer[ing] or pay[ing] any remuneration . . . to any person to induce such 
10 

person . . . to purchase . . . [any] item for which payment may be made in whole or 

in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2)(B).

Relator first alleges that Medtronic entered into improper rebate agreements 

with hospitals to buy the Subject Devices. But the AKS exempts from its scope 

discounts offered to providers if properly disclosed to and reflected in charges to the 

federal program. 42 U.S.C. § 1320a-7b(b)(3)(A). Similarly, Medicaid allows rebate 

agreements so long as the state Medicaid programs are offered the same pricing. 42 

U.S.C. § 1396r-8(a)(1). Relator does not explain how Medtronic’s rebate agreement 

violated the AKS. Therefore, in relation to the rebate agreements, Relator fails to 

state a claim.

Relator next alleges that Medtronic remunerated physicians by paying the 

costs, including food, travel, and promotional expenses, in connection with certain 

business development events. But as the district court observed, these “general 

allegations do not identify any physicians, or categories of them, who actually 

received payment in connection with decisions — in which they participated — to 

purchase or use of any of the Subject Devices.” We thus affirm the district court’s 

dismissal of Relator’s AKS claim. 

AFFIRMED IN PART; REVERSED IN PART. Each party shall bear its 

own costs.