Court Opinion

ID: 4110875
Source: CourtListenerOpinion
Date Created: 2016-12-23 21:00:41.004933+00
Date Added: 2024-06-11T09:36:32.875626
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 16–1126

                      JEFFREY D'AGOSTINO,

                     Plaintiff, Appellant,

STATE OF CALIFORNIA; STATE OF CONNECTICUT; DISTRICT OF COLUMBIA;
  STATE OF FLORIDA; STATE OF GEORGIA; STATE OF HAWAII; STATE OF
     ILLINOIS; STATE OF INDIANA; STATE OF LOUISIANA; STATE OF
   MARYLAND; COMMONWEALTH OF MASSACHUSETTS; STATE OF MICHIGAN;
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; COMMONWEALTH OF VIRGINIA; STATE OF
 WISCONSIN; JOHN DOE; UNITED STATES; STATE OF DELAWARE; STATE OF
                            MINNESOTA,

                          Plaintiffs,

                               v.

              EV3, INC.; MICROTHERAPEUTICS, INC.,

                     Defendants, Appellees,

    JOHN CUBELIC; VITAS J. SIPELIS; JOHN HARDIN; BRETT WALL,

                          Defendants.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Richard G. Stearns, U.S. District Judge]

                             Before

                      Howard, Chief Judge,
               Selya and Kayatta, Circuit Judges.
     Daniel Robert Miller, with whom Susan Schneider Thomas,
Berger & Montague PC, Lynn G. Weissberg, Jonathan Shapiro, and
Shapiro, Weissberg & Garin LLP were on brief, for appellant.
     Joshua S. Levy, with whom Mitchell Stromberg, Rebecca C.
Ellis, Bryan Alexander Pennington, Jeremy E. Kanarek, and Ropes &
Gray LLP were on brief, for appellees.
     Tara S. Morrissey, Attorney, Department of Justice, Civil
Division, with whom Michael S. Raab, Attorney, Civil Division,
Benjamin C. Mizer, Principal Deputy Assistant Attorney General,
Civil Division, and Carmen M. Ortiz, United States Attorney, were
on brief, for amicus curiae the United States of America.

                        December 23, 2016
               KAYATTA, Circuit Judge.           This qui tam action makes its

second appearance before us.          Last year, we held that the district

court should have evaluated Jeffrey D'Agostino's request for leave

to file his fourth amended complaint under the standard set forth

in Federal Rule of Civil Procedure 15(a).                United States ex rel.

D'Agostino v. ev3, Inc. (D'Agostino I), 802 F.3d 188, 193–96 (1st

Cir. 2015).      On remand, the district court found that D'Agostino's

desired amendment failed under that standard because, even as

proposed to be amended, the complaint did not allege claims upon

which    the    court    could   grant    relief.      United   States    ex   rel.

D'Agostino v. ev3, Inc., 153 F. Supp. 3d 519, 538 (D. Mass. 2015).

For the following reasons, we agree.

                                 I.   Background

A.      Factual Allegations

                Defendant    ev3,     Inc.   ("ev3")     discovers,      develops,

manufactures,      and    markets     medical     devices.      Defendant      Micro

Therapeutics, Inc. ("MTI"), ev3's subsidiary since 2006, likewise

manufactures and markets medical devices.                D'Agostino's original

and proposed complaints against these companies focus on two

devices, the Onyx Liquid Embolic System ("Onyx") and the Axium

Detachable Coil System ("Axium").                We recite the relevant facts

concerning each device as they are alleged by D'Agostino in his

proposed complaint, assuming them to be true unless they are merely

conclusory.      See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

                                         - 3 -
      1.   Onyx

           Onyx is an artificial liquid material developed by MTI

to treat malformed blood vessels in the brain.            In plain terms, it

is injected into blood vessels near the brain, and then forms a

mass blocking the flow of blood to facilitate subsequent surgery.

In the early 2000s, MTI licensed the Onyx molecule to a company

named Enteric.       Enteric used the molecule to develop another

medical device, Enteryx, which went to market first, after gaining

Food and Drug Administration ("FDA") approval in April 2003 for

the treatment of gastroesophageal reflux disease.                  A series of

adverse events involving Enteryx followed, prompting a patient

safety alert in October 2004, and culminating in a complete recall

of the device in September 2005.

           It was during this timeframe--between Enteryx's approval

and   recall--that    MTI   sought    approval    for    Onyx.          The   FDA's

regulations   require   a   premarket    approval       ("PMA")    process     for

medical devices like Onyx.     See 21 C.F.R. § 814.1(c).            During that

process, the device manufacturer supplies the FDA with extensive

information     regarding     the     device--including           its     design,

manufacturing, packing, labeling, and testing--to satisfy the

agency that the device is safe and effective.               Id. § 814.20.         A

"sufficiently     complete"   application        proceeds    to    substantive

review.    Id. § 814.42(a).          That review is performed by FDA

personnel and, at the FDA's election as in this instance, by an

                                     - 4 -
advisory panel of outside experts.            Id. § 814.44(a).        The panel

holds   a   public   meeting    to   review    the   PMA    before    making      a

recommendation to the FDA.            Id. § 814.44(b).          The FDA then

considers the PMA application, together with any advisory panel

report and recommendation, before issuing a decision on approval.

Id. § 814.44(c).

            MTI's PMA application identified a narrow indication for

Onyx:   "use in the treatment of brain arteriovenous malformations

('BAVM's'), when embolization is indicated to minimize blood loss

to reduce the BAVM size prior to surgery." While seeking approval,

MTI emphasized the narrow scope of the indication as well as the

rigorous nature of the training program required for physicians

using Onyx.       According to the testimony of MTI's Vice President

before the FDA advisory panel, that training program would include

an instructional session, a hands-on workshop, a case review, and

observations.      According to another MTI witness, any physician who

completed    this    training   would   receive      the   assistance      of    an

experienced proctor the first time he or she used Onyx.                         The

advisory panel members placed great weight on these training

requirements, describing them as "critically important" and "a

very big component of getting [Onyx] into safe use."

            The    panel   ultimately   recommended        approval   of   Onyx.

However, several of its members explained that it was a "cautious

approval," and others warned that they would advise the FDA to

                                     - 5 -
rescind       approval    if    MTI     disregarded          their     suggestions         for

carefully monitoring Onyx cases.

              The FDA adopted the panel's recommendation, granting

approval to Onyx in July 2005.                   The Onyx label authorized by the

FDA     restricted       the     device's            use      to     "physicians           with

neurointerventional        training         and     a   thorough      knowledge       of   the

pathology      to   be   treated,      angiographic          techniques,        and    super-

selective       embolization."              It     stated,     "Contact     your        Micro

Therapeutics Inc. sales representative for information on training

courses."

              Enter D'Agostino, a sales representative who worked at

ev3 from January 2005 until his termination in January 2010. After

ev3 acquired MTI in 2006, D'Agostino became familiar with the

manner in which the defendants promoted and sold Onyx.                                He says

that he observed physician trainings that lasted as little as four

hours and proctored surgeries that involved off-label procedures.

He     also    alleges    that        the        defendants        instituted     a     "Site

Certification Process" whereby they certified and sold Onyx to any

site where a single neurosurgeon who had completed their training

enjoyed privileges.        As a result, he says that Onyx fell into the

hands of physicians at those sites with inadequate training or no

training at all.          Additionally, the defendants encouraged off-

label marketing by setting sales quotas for their representatives

that    anticipated      such    sales,          educating    their     sales    force      on

                                            - 6 -
"peripheral applications," and providing off-label training to

physicians during all-expenses-paid retreats.                    All in all, it

became     clear,      alleges    D'Agostino,   that     the   defendants   never

intended to honor the commitments that MTI had made to the FDA.

      2.       Axium

               Because clinical trials involving Onyx in the treatment

of aneurysms evinced numerous complications, the defendants in

2007 launched a new medical device, Axium.1                    Put simply, Axium

provides another means of generating an embolism to facilitate the

surgical treatment of anomalies in blood vessels in the brain.

Surgeons use the device to place a small, detachable coil at a

desired spot to generate a blockage of blood flow to an abnormality

such as an aneurysm.             Following the initial launch in 2007, the

defendants redesigned the device several times in response to

reports that it malfunctioned during procedures.                   They did not,

however,       recall   earlier     generations    or    relabel   any   devices.

Problems persisted, notwithstanding frequent modifications.                    On

top       of    these     design     challenges,        irregularities      during

manufacturing resulted in defective lots of the devices that the

defendants nonetheless sold.           D'Agostino, who also promoted Axium,

attended a February 2009 meeting where top brass admonished the

      1The proposed complaint does not allege that Axium was not
FDA-approved.
                                       - 7 -
sales force to keep quiet about defects in hopes of dodging FDA

scrutiny.

     3.     Qui Tam Action

            Approximately one year later, the defendants terminated

D'Agostino's employment.          In October 2010, he brought this qui tam

action as a "relator" on behalf of the United States under the

False Claims Act ("FCA"), 31 U.S.C. §§ 3729–3733, and on behalf of

numerous    states   under    similar      state   statutes.       The   relevant

provisions of the FCA are those imposing liability on anyone who

"knowingly    presents,      or   causes    to   be   presented,    a    false   or

fraudulent claim for payment or approval," id. § 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," id.

§ 3729(a)(1)(B).     D'Agostino's proposed complaint accuses ev3 and

MTI of violating those provisions in selling Onyx and Axium to

hospitals that seek reimbursement from the federal government

through, for example, the Center for Medicare and Medicaid Services

("CMS").

B.   Procedural History

            Our opinion in D'Agostino I provides a full recitation

of the suit's early procedural history, 802 F.3d at 190–91, which

we repeat only briefly here.                D'Agostino filed his original

complaint under seal in October 2010 and amended the complaint as

a matter of course in February 2011.                  Through two subsequent

                                      - 8 -
amendments, both with permission of the court, D'Agostino added

several defendants2 and retooled his claims.          In October 2013, the

United States declined to intervene, and the court lifted the seal

and authorized service.         The parties then submitted a joint

briefing schedule to the court for the defendants' motion to

dismiss. The court endorsed the schedule and the defendants timely

filed their motion.

             A few days before his opposition was due, D'Agostino

filed a fourth amended complaint (i.e., his fifth version of the

complaint).    The defendants immediately moved to strike, insisting

that D'Agostino had used up his right to amend as a matter of

course back in February 2011.          The court agreed but construed

D'Agostino's filing as a request for leave to amend.            It applied

to that request the "good cause" standard from Rule 16(b) of the

Federal Rules of Civil Procedure and struck the amended complaint

for want of good cause.       His fourth amended complaint rejected,

D'Agostino    opposed   the   motion   to   dismiss    his   third   amended

complaint.     The district court sided with the defendants, ruling

that certain claims were subject to the FCA's public disclosure

     2 The defendants named in the fourth amended complaint are
ev3, MTI, and two individuals: John H. Hardin II, a Vice President
of Sales at ev3 who oversaw Onyx and Axium, and Brett Wall, a
Director at MTI who joined ev3 to serve as a Vice President of
Marketing.    During the pendency of this appeal, D'Agostino
voluntarily dismissed with prejudice his appeal as to those
individual defendants.
                                  - 9 -
bar, 31 U.S.C. § 3730(e)(4), and that the remaining claims failed

to satisfy the pleading requirements of Rules 9(b) and 12(b)(6).

See United States ex rel. D'Agostino v. ev3, Inc., No. 10-CV-

11822, 2014 WL 4926369, at *5–9 (D. Mass. Sept. 30, 2014).

             In the appeal that followed, we held that the district

court   erred    by    applying    Rule   16(b)'s   standard    rather   than

Rule 15(a)'s more lenient standard.             D'Agostino I, 802 F.3d at

194.    We therefore remanded the case to the district court to

evaluate under Rule 15(a) D'Agostino's request to file a fourth

amended complaint.      Id. at 195–96.       After briefing and argument on

the proposed amendment, the district court once again denied

D'Agostino's request to file a fourth amended complaint.                   See

D'Agostino, 153 F. Supp. 3d at 525.          As before, the district court

determined that certain claims were subject to the FCA's public

disclosure    bar.      Id.   at   530–32.      Others,   it   found,   lacked

particularity per Rule 9(b), id. at 533–38, or otherwise failed to

state a claim upon which relief can be granted per Rule 12(b)(6),

id. at 538–39.       It therefore deemed the motion to amend futile.

             In addition to finding the proposed amendment futile,

the district court expressed the "tentative view that permitting

a further amendment would substantially prejudice the individual

defendants," id. at 539, but decided it was "not necessary for the

court to definitively resolve the issue," id. at 540.              The court

finally noted that it was "inclined to agree" with undue delay

                                    - 10 -
arguments advanced by the defendants, which faulted D'Agostino for

labeling as "new evidence" information that he could have obtained

through    reasonable         diligence    before     filing   the   third   amended

complaint.       Id.

             This appeal followed.

                                  II.     Discussion

             A    district      court's     ruling     under    Rule   15(a)   that

amendment would be futile "means that the complaint, as amended,

would fail to state a claim upon which relief could be granted."

Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)

(citing 3 Moore's Federal Practice ¶ 15.08[4], at 15–80 (2d ed.

1993)).3         While   we    review     Rule     15(a)   rulings   for   abuse   of

discretion, see, e.g., Nikitine v. Wilmington Trust Co., 715 F.3d
388, 389 (1st Cir. 2013), a material error of law constitutes such

an abuse, and the question whether a motion to amend is futile

because the amended complaint fails to state a claim upon which

relief can be granted is a question of law, see Ouch v. Fed. Nat'l

Mortg. Ass'n, 799 F.3d 62, 65 (1st Cir. 2015).                  Hence, our review

in this case is actually de novo.

             In performing this review, we, like the district court,

confront a proposed complaint that covers 123 pages and features

     3 To be more precise, a futility finding could also mean that
the proposed complaint would require dismissal for other reasons,
such as lack of subject-matter jurisdiction under Rule 12(b)(1).
                                          - 11 -
extensive single-spaced excerpts.                  D'Agostino devotes most of his

pleading to establishing in excessive detail that the defendants

said and did things that they knew were false or improper, and to

critiquing the Onyx and Axium devices.                          At the same time, the

pleading offers hints of numerous theories for tying the alleged

improprieties and defects to false claims.                      D'Agostino's briefs on

appeal call for us to consider two of those theories for his claims

concerning Onyx, and two for his claims concerning Axium.

A.     Onyx Fraudulent Inducement Claims

                 D'Agostino's          principal        claim     relating        to      the

government's payment for the use of MTI's Onyx device rests on an

allegation that MTI made three fraudulent representations to the

FDA    in       seeking    approval     to     market    Onyx.      Specifically,         the

defendants disclaimed uses for the device they later pursued,

overstated the training they later provided, and omitted critical

safety information about the molecule, including its failure in

the Enteryx device.              The FDA, however, made none of the payments

at issue in this lawsuit.                    Rather, CMS made the payments by

reimbursing physicians who performed procedures using Onyx and

hospitals         where    such   procedures       took    place.      "FCA      liability

attaches to a 'false or fraudulent claim for payment or approval'

or    to    a    'false    record      or    statement    material    to     a    false    or

fraudulent claim.'" United States ex rel. Kelly v. Novartis Pharm.

Corp.,      827 F.3d 5,    14    (1st    Cir.    2016)     (quoting       31    U.S.C.

                                             - 12 -
§ 3729(a)(1)(A)–(B)). To link those CMS payments to the fraudulent

representations allegedly made to the FDA, D'Agostino notes that

FDA approval is a precondition to CMS reimbursement for use of a

medical device, and argues that the fraudulent representations

allegedly made by MTI to the FDA "could have" influenced the FDA

to grant that approval.

             We    reject   this    argument     because    alleging    that   the

fraudulent representations "could have" influenced the FDA to

approve Onyx falls short of pleading a causal link between the

representations made to the FDA and the payments made by CMS.                  If

the representations did not actually cause the FDA to grant

approval it otherwise would not have granted, CMS would still have

paid   the     claims.      In   this    respect,    D'Agostino's      fraudulent

inducement theory is like a kick shot in billiards where the cue

ball "could have" but did not in fact bounce off the rail, much

less hit the targeted ball.

             D'Agostino tries to rebut this conclusion by relying on

the    FCA's      materiality      standard.        Under   that   standard,    a

representation made to secure a payment is material if it has "a

natural tendency to influence, or [is] capable of influencing, the

payment or receipt of money or property."              31 U.S.C. § 3729(b)(4).

He reasons that as long as MTI's representations at issue "could

have" influenced the FDA to grant approval, the representations

were material.

                                        - 13 -
            This argument may well misconstrue the FCA's materiality

standard.   It is a "demanding" standard.    Universal Health Servs.,

Inc. v. United States, 136 S. Ct. 1989, 2003 (2016).          Moreover,

the FCA requires that the fraudulent representation be material to

the government's payment decision itself.         Id. at 2002–04.   The

fact that CMS has not denied reimbursement for Onyx in the wake of

D'Agostino's allegations casts serious doubt on the materiality of

the fraudulent representations that D'Agostino alleges.         Id. at

2003–04 ("[I]f the Government regularly pays a particular type of

claim in full despite actual knowledge that certain requirements

were violated, and has signaled no change in position, that is

strong evidence that the requirements are not material.").

            In   any   event,   even   if   the    alleged   fraudulent

representations were material as defined by the FCA, the elements

of D'Agostino's fraudulent inducement claims include not just

materiality but also causation; the defendant's conduct must cause

the government to make a payment or to forfeit money owed.          See

United States ex rel. Westrick v. Second Chance Body Armor Inc.,

128 F. Supp. 3d 1, 18 (D.D.C. 2015) (holding that a plaintiff

asserting fraudulent inducement claims must demonstrate "not only

that the omitted information was material but also that the

government was induced by, or relied on, the fraudulent statement

or omission" (quoting United States ex rel. Thomas v. Siemens AG,

991 F. Supp. 2d 540, 569 (E.D. Pa. 2014))), reconsideration granted

                                - 14 -
in part on other grounds sub nom. United States v. Second Chance

Body Armor Inc., No. 04-CV-280, 2016 WL 3033937 (D.D.C. Feb. 11,

2016); see also, e.g., United States ex rel. Main v. Oakland City

Univ., 426 F.3d 914, 916 (7th Cir. 2005) ("The [FCA] requires a

causal   rather    than   a     temporal   connection      between   fraud   and

payment.").     See generally 1 John T. Boese, Civil False Claims and

Qui Tam Actions §§ 2.01[A][3], 2.05 (4th ed. 2016).                  If the FDA

would have approved Onyx notwithstanding the alleged fraudulent

representations, then the connection between those representations

to the FDA and a payment by CMS relying on FDA approval disappears.

              The defect in D'Agostino's claim is not a mere flaw in

the complaint's choice of words. In the six years since D'Agostino

surfaced the alleged fraud, the FDA has apparently demanded neither

recall nor relabeling of Onyx--this notwithstanding the agency's

option to impose postapproval requirements, 21 C.F.R. § 814.82(a),

its   clear    prerogative      to   suspend    approval    temporarily,     id.

§ 814.47(a), and its broad authority to withdraw approval, id.

§ 814.46(a).      In particular, when the FDA concludes that it has

been misled because an "application contained or was accompanied

by an untrue statement of a material fact," it can commence an

"informal"      hearing   and    withdraw      its   approval   allowing     the

marketing of a device.           See 21 U.S.C. § 360e(e).            In such an

instance, it acts with the benefit, where appropriate, of "advice

                                     - 15 -
on scientific matters from a panel or panels [of experts] under

section 360c."    Id.

          The FDA's failure actually to withdraw its approval of

Onyx in the face of D'Agostino's allegations precludes D'Agostino

from resting his claims on a contention that the FDA's approval

was fraudulently obtained.   To rule otherwise would be to turn the

FCA into a tool with which a jury of six people could retroactively

eliminate the value of FDA approval and effectively require that

a product largely be withdrawn from the market even when the FDA

itself sees no reason to do so.     The FCA exists to protect the

government from paying fraudulent claims, not to second-guess

agencies' judgments about whether to rescind regulatory rulings.

See D'Agostino, 153 F. Supp. 3d at 539 ("Surely, 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." (quoting King v. Collagen Corp., 983 F.2d
1130, 1140 (1st Cir. 1993) (Aldrich, J., concurring))).

          The collateral effects of allowing juries in qui tam

actions to find causation by determining the judgment of the FDA

when the FDA itself has not spoken are akin to those practical

effects that counsel in favor of not allowing state-law fraud-on-

the-FDA claims.    See Buckman Co. v. Plaintiffs' Legal Comm., 531
U.S. 341, 349–51 (2001).   If jurors in a single qui tam case could

                               - 16 -
determine     precisely          what     representations        were   essential     to

approval, which experts to believe, and how the FDA interpreted

submissions    made     to   it,        some    potential     applicants   who     would

otherwise seek approval for new products might be deterred, others

might swamp the FDA with more data than it wants, and the "FDA's

responsibility        to         police        fraud     consistently      with      the

Administration's judgment and objectives" might be undercut.                         Id.

at 350.

            Practical problems of proof also inform our conclusion.

How would a relator prove that the FDA would not have granted

approval    but   for      the    fraudulent         representations    made   by    the

applicant?     Would competing experts read someone's mind?                       Whose?

What if former officials no longer in government were of one view,

and current officials of another?                   These and similar questions all

support our position that the absence of some official agency

action confirming its position and judgment in accordance with the

law renders D'Agostino's fraud-on-the-FDA theory futile.

            The    United         States       as    amicus   curiae    agrees      that

D'Agostino's      fraudulent            inducement      theory    "necessarily      asks

whether [the] FDA would have made a different decision absent the

fraud."    The United States does request that we reject any reading

of the district court's opinion as implying that a fraudulent

inducement claim would not lie even if fraudulent representations

"actually caused [the] FDA to approve or clear the device."

                                           - 17 -
             We do not read the district court's carefully crafted

opinion that way.       Its holding does not, in our view, hinge on

rejecting or accepting the position of the United States, and

neither does ours.         Nor are we saying that the FCA is in this

context preempted by the Federal Food, Drug, and Cosmetic Act, 21

U.S.C. §§ 301–399f.     We hold only that causation is an element of

the fraudulent inducement claims D'Agostino alleges and that the

absence of official action by the FDA establishing such causation

leaves   a   fatal   gap    in    this   particular     proposed   complaint.

Certainly some official action by the FDA confirming that its

approval     was   actually      procured    by   the   alleged    fraudulent

representations would fill that particular gap in the proposed

complaint.      Whether it would suffice to sustain the proposed

complaint we need not decide.

             We do recognize that, should a valid FCA claim exist if

the FDA withdrew its approval for a product upon discovering fraud,

our   ruling    today   would     pose   a   theoretical    risk   that   the

whistleblowing relator might be deprived of his or her bounty by

a government intent on doing so. This is because the relator would

need to alert the FDA--to secure withdrawal of approval--before

the relator could allege causation.          In theory, the government in

such an instance might first file an FCA action itself, thereby

arguably precluding the whistleblower from qualifying for a share

of the recovery under 31 U.S.C. § 3730(d).            As a practical matter,

                                    - 18 -
though, this risk is small, and it does not warrant eliminating

causation as an element of the claim.              As the United States notes,

instances in which fraudulent representations "masked problems

that are so serious that [the] FDA would have (for example)

withheld or withdrawn its approval" are "likely rare."                  Moreover,

if such a case actually arises, there is no logical reason why the

government itself (in a case involving what the FDA finds to be

the fraudulent procural of approval) would want to proceed in a

manner      that   deprives   the    whistleblower       of   a   bounty,   thereby

reducing the incentive for future potential whistleblowers aware

of fraud on the FDA.4

              In any event, the FDA approved Onyx, and has never

withdrawn that approval.           D'Agostino therefore cannot establish a

causal link between the alleged fraudulent representations made to

the   FDA    and   the   payment    of    claims   for   reimbursement      by   the

government.

B.    Onyx "Training Program" Claims

              That leaves, with respect to Onyx, D'Agostino's theory

that the defendants caused the submission of false claims by

encouraging medically unnecessary and dangerous uses of Onyx by

physicians who did not attend the training program offered by the

      4The whistleblower in such a scenario, as an original source
of the information, would trump any copycats who tried to first
file suit after the FDA publicly disclosed its actions. See 31
U.S.C. § 3730(e)(4)(A)(i)–(ii).
                                         - 19 -
defendants.      Undergirding this theory is the fact that Medicare

excludes from coverage claims involving procedures that "are not

reasonable and necessary for the diagnosis or treatment of illness

or injury."      42 U.S.C. § 1395y(a)(1)(A).      D'Agostino's proposed

complaint incorporates the statement of a neurosurgeon and leading

Onyx user, who opines that it is never "medically reasonable or

medically necessary for an untrained physician to use Onyx in

procedure [sic] involving a live human being," as such use "creates

an exceedingly dangerous situation for the patient."        According to

D'Agostino, the defendants therefore caused the submission of

false claims by "fail[ing] to provide the physician training that

the FDA required as a condition of approval usage, and subsequently

induc[ing] those untrained doctors to use Onyx anyway."             This

theory, rather than targeting every Onyx claim, attacks the subset

of   claims    seeking   reimbursement   for   procedures   performed   by

physicians whom the defendants did not train.

              We evaluate the sufficiency of these allegations under

Federal Rule of Civil Procedure 9(b), which provides that, "[i]n

alleging fraud or mistake, a party must state with particularity

the circumstances constituting fraud or mistake."           Fed. R. Civ.

P. 9(b).      More precisely, Rule 9(b) requires a relator to allege

with particularity the who, what, when, where, and how of the

fraud.     United States ex rel. Ge v. Takeda Pharm. Co., 737 F.3d
116, 123 (1st Cir. 2013).        Furthermore, allegations limited to

                                 - 20 -
describing the defendant's scheme and intent are insufficient,

"[b]ecause FCA liability attaches only to false claims."               Id. at

124 (citing United States ex rel. Karvelas v. Melrose-Wakefield

Hosp., 360 F.3d 220, 225 (1st Cir. 2004), abrogated on other

grounds by United States ex rel. Gagne v. City of Worcester, 565
F.3d 40   (1st   Cir.    2009)).    Thus,   the   allegations    must    also

establish    that    the    fraudulent    conduct    actually     caused   the

submission of false claims to the government for payment.                  Id.

(citing United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720,

732–33 (1st Cir. 2007), overruled in part by Allison Engine Co. v.

United States ex rel. Sanders, 553 U.S. 662 (2008)).             As a general

matter, a relator does this by alleging with particularity examples

of actual false claims submitted to the government.             Karvelas, 360
F.3d at 232–33.     By doing so, the relator conveys that if the facts

alleged are true, the filing of a false claim is not merely a

possibility, but rather, necessarily occurred.           Alternatively, in

appropriate circumstances, a relator may instead allege "factual

or statistical evidence to strengthen the inference of fraud beyond

possibility."       United States ex rel. Duxbury v. Ortho Biotech

Prod., L.P., 579 F.3d 13, 29 (1st Cir. 2009) (quoting Rost, 507
F.3d at 733).        See, e.g., United States ex rel. Escobar v.

Universal Health Servs., Inc., 780 F.3d 504, 515 (1st Cir. 2015),

overruled on other grounds by 136 S. Ct. 1989 (2016) (holding that

particular allegations concerning one patient were sufficient

                                     - 21 -
because they arose from a "systematic failure" that necessarily

"infected" other claims with fraud).

            Applying   these    rules,   the   district   court   found   the

proposed     complaint's    allegations     insufficient,    citing    their

failure to identify any specific false claim submitted to the

government for reimbursement.       D'Agostino, 153 F. Supp. 3d at 536

n.38.    In response, D'Agostino repeats the argument he made to the

district court, pointing to allegations in his proposed complaint

that two physicians who did not attend the defendants' training

program performed a total of approximately seventy procedures

using Onyx, and that "well over 50%" of these physicians' patients

were     insured   under   government     health   plans.     So,     reasons

D'Agostino, the odds are very high that at least some bills were

submitted to and paid by the government for use of Onyx by

untrained physicians.       And since the device label calls for use

only by trained physicians, the use by untrained physicians was

both off-label and, in the opinion of an expert retained by

D'Agostino, not medically necessary.

            There are several problems with this line of reasoning.

First, and most simply, while the FDA-approved label for Onyx does

indeed    restrict   use   to   "physicians     with   neurointerventional

training," and refers users to MTI "for information on training

courses," it contains no requirement that the physician must obtain

the training from MTI or ev3.       Therefore, D'Agostino's allegation

                                   - 22 -
that the defendants did not train these two physicians falls

materially short of alleging facts showing that they were not

trained at all.    And if they were indeed otherwise trained,5 the

use of Onyx would not have been off-label.         For this reason alone,

D'Agostino's "training program" claims fail.

           Additionally, even if we were to overlook this gap in

the allegations, the assumption that physicians submitted claims

for reimbursement merely because many of their patients in general

were insured under government programs is faulty.           The district

court noted as much, explaining the distinction between alleging

that a certain percentage of patients carried government insurance

and   alleging   that   any   patient   carrying   government   insurance

underwent a procedure involving the device that resulted in a claim

for government reimbursement.      D'Agostino, 153 F. Supp. 3d at 536

n.38.     D'Agostino's assumption is particularly faulty because

seeking reimbursement here would have required the physicians

knowingly to submit off-label claims if they did indeed lack the

training the label plainly required.        See Rost, 507 F.3d at 732–

34.

           For each of these reasons, we agree with the district

court that D'Agostino's "training program" version of his Onyx

      5The proposed complaint alleges that the defendants trained
at least one physician at each medical facility, including
presumably the facilities at which each of these two physicians
worked.
                                  - 23 -
claim fails because it does not sufficiently allege the submission

of a false claim nor does it advance a theory and facts that

together    create   a   "strong   inference"   that    false    claims    were

actually filed.      Id. at 732.

C.   Axium Manufacturing Defect Claims

            D'Agostino describes various alleged defects in the

manufacture of Axium. Instead of identifying specific false claims

to CMS involving Axium, the proposed complaint seeks to rely on

what D'Agostino calls a "complete falsity" theory.               This theory

applies, he argues, when every device is defective, rendering each

claim for reimbursement involving the product false, and thereby

"logically obviat[ing] the need for identification of specific

false claims, because their submission is a virtual certainty."

            This case presents no need to decide whether such a

theory is tenable.       The proposed complaint simply does not allege

facts making it plausible that all Axium devices--or even most--

were defective.       It alleges only that "certain lots of Axium"

contained    manufacturing     defects   that   caused     the    device     to

malfunction when the surgeon tried to use it.                   The proposed

complaint does not give the number or percentage of Axium devices

that suffered these manufacturing defects.             It does identify by

hospital, surgeon, date, and (sometimes) Axium generation and lot

number a dozen or so surgeries during which the surgeon encountered

difficulty or failure in trying to deploy the Axium coil.                  Only

                                   - 24 -
certain   of    those   instances    are   said    to    involve    defectively

manufactured devices, and none are alleged to have resulted in any

particular false claims paid by the government. See, e.g., Hagerty

ex rel. United States v. Cyberonics, Inc., No. 16-1304, 2016 WL
7321224, at *4–5 (1st Cir. Dec. 16, 2016) (holding that identifying

doctors   and    hospitals   whose   patients      had    device    replacement

surgeries does not establish that any medical provider actually

submitted claims for government reimbursement).                    Importantly,

there is no claim here of a latent manufacturing defect that

manifested itself only after the surgery was completed and the

claim for reimbursement submitted. To the contrary, the allegation

is that the defect caused the device to fail as the surgeons tried

to use it, and thus before any claim for reimbursement might have

been submitted.     We are therefore left with a proposed complaint

that neither alleges any specific false claims involving Axium

devices   with    manufacturing      defects      nor    demonstrates    beyond

possibility that claims of the type said to be false were actually

submitted.

D.   Axium Design Defect Claims

             The proposed complaint also seeks to advance a design

defect claim.     To do so, it first asserts that Axium was modified

and improved over time.       It then calls "defective" all earlier

versions of the device that predated such improvements.                 Even by

their own conclusory terms, these allegations do not make all

                                    - 25 -
devices defective; for example, any device featuring the most

recent modifications when sold would not be "defective."                 More

importantly, we agree with the district court that a product (much

less an FDA-approved medical device) cannot be called defective

for purposes of establishing falsity in a qui tam case merely

because new versions of the product contain design improvements.

See D'Agostino, 153 F. Supp. 3d at 537.          Indeed, by that standard,

most every car sold to the government would be per se defective.

                             III.   Conclusion

          None    of   the   claims    in    D'Agostino's   fourth     amended

complaint is adequately pled, so his request for leave to file

that complaint was properly denied as futile.               A fortiori, the

lesser included factual recitation set forth in the third amended

complaint fails as well.       We therefore have no need to consider

the   district     court's    alternative        reasons    for      rejecting

D'Agostino's     claims.      The     district    court's    order     denying

D'Agostino's motion to amend the complaint is affirmed.

                                    - 26 -