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In re Orthopedic Bone Screw Liability Litigation

November 17, 1998


On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. MDL 1014)

Before: Stapleton, Cowen and Rendell, Circuit Judges

The opinion of the court was delivered by: Stapleton, Circuit Judge

Argued June 9, 1998

Filed November 17, 1998


This case involves thousands of individual plaintiffs-appellants who claim that they suffered injuries resulting from the implantation of orthopedic bone screws into the pedicles of their spines. Over 2,000 individual actions were consolidated for pre-trial proceedings pursuant to the multi-district litigation statute, 28 U.S.C. § 1407. This appeal involves plaintiffs' allegations that one defendant, Buckman Company, Inc. ("Buckman"), made misrepresentations to the Food and Drug Administration ("FDA") serious enough to play a substantial role in the events which resulted in their injuries. The district court granted Buckman's motion to dismiss this state-law"fraud on the FDA" claim, determining that: (1) the claim was "precluded by virtue of the fact that the MDA[i.e., the Medical Device Amendments of 1976, 21 U.S.C. §§ 360c-360k, to the Federal Food, Drug, and Cosmetic Act of 1938 ("FDCA"), 21 U.S.C. § 301 et seq.] does not provide for a private right of action," App. at 157; and (2) plaintiffs could not, as a matter of law, demonstrate proximate causation between the misrepresentations to the FDA and any injuries suffered. App. at 158-59. We will reverse.



The orthopedic bone screw devices that are the subject of this suit are regulated by the FDA pursuant to the MDA. Congress enacted the MDA to address concerns regarding the safety and effectiveness of the wide variety of medical devices introduced into the market. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 476 (1996). The MDA requires classification of medical devices into three categories based upon the risk that they pose to the public. Class I devices present no unreasonable risk of illness or injury and are subject only to general manufacturing controls. See 21

U.S.C. § 360c(a)(1)(A). Class II devices are potentially more harmful and are subject to federal performance regulations. See id. § 360c(a)(1)(B). Finally, Class III devices "present[ ] a potential unreasonable risk of illness or injury" and are subject to the strictest regulation. Id. § 360c(a)(1)(C).

Class III devices may not be introduced into the market until the manufacturer provides the FDA with "reasonable assurance" that the device is both safe and effective. See id. § 360e(d)(2). This "premarket approval" process requires a manufacturer to submit, and the FDA to review, "all information, published or known . . . or which should reasonably be known . . . concerning investigations which have been made to show whether or not such device is safe and effective." Id. § 360e(c)(1)(A). In addition, the manufacturer must provide the FDA with a full statement of design, manufacturing, and marketing plans, as well as any additional information requested by the agency. Securing premarket approval is an arduous and time-consuming process; each submission requires an average of 1,200 hours of FDA review. See Lohr, 518 U.S. at 477.

There are three important exceptions to the requirement that Class III medical devices receive premarket approval before being placed on the market. First, a manufacturer can obtain an Investigational Device Exemption ("IDE"), which allows limited use of an experimental medical device to gather the type of data necessary to support a premarket approval application. See 21 U.S.C. § 360j(g). Though an IDE allows use of a Class III device in clinical trials, it does not permit introduction to the general public.

Second, the MDA allows Class III devices that were in commerce prior to its enactment to remain on the market until the FDA initiates and completes a premarket approval analysis for those "predicate" devices. See id. § 360e(b)(1)(A). This "grandfathering" provision reflects Congress' recognition "that existing medical devices could not be withdrawn from the market while the FDA completed its PMA analysis for those devices." Lohr, 518 U.S. at 477-78.

Third, to prevent manufacturers of grandfathered devices from monopolizing the market while new devices wait for

FDA approval, and to ensure that improvements to existing devices are introduced quickly, the MDA allows devices that are "substantially equivalent" to an existing predicate device to avoid the premarket approval process. See Lohr, 518 U.S. at 478; 21 U.S.C. § 360e(b)(1)(B). The procedure a manufacturer follows to take advantage of this exception is known colloquially as the "§ 510(k) process," after the number of the relevant section in the original Act. A § 510(k) application must contain information supporting the device's substantial equivalence to a predicate device, proposed labeling for the device, and any additional information requested by the FDA. See 21 C.F.R. § 807.87. For a device to be approved under the § 510(k) process, the FDA must determine that the new device has the same intended use as the predicate device and that it possesses the same technological characteristics or is as safe and effective as the predicate device. See 21 U.S.C. § 360c(i)(1)(A).*fn1

The advantage of the § 510(k) process is significant to manufacturers: review of a § 510(k) application by the FDA requires an average of only twenty hours of agency time, compared to the 1,200 hours required for full premarket approval. See Lohr, 518 U.S. at 478-79.


Buckman is a regulatory consultant to medical device manufacturers, and was retained by the AcroMed Corporation to act as its liaison to the FDA in its attempt to secure marketing clearance for its product. AcroMed initiated the § 510(k) process to secure marketing clearance for its orthopedic bone screw device, known as the Variable Screw Placement ("VSP") Spinal Plate Fixation System, in September 1984.*fn2 In this application, AcroMed indicated that it intended to market the device for use in spinal surgery. The FDA rejected the request, determining that the VSP device was a Class III device and was not substantially equivalent to any predicate device.

In September 1985, AcroMed, through Buckman, filed a second application for marketing clearance through the § 510(k) process. The application provided additional information about the VSP device and again indicated its intended use in spinal surgery. The FDA again rejected the application, determining that the device was not substantially equivalent to a predicate device and that it posed potential risks not exhibited by other spinalfixation systems.

In December 1985, AcroMed and Buckman filed twofinal § 510(k) applications seeking market approval for its product. AcroMed and Buckman split the VSP device into its component parts, renamed them "nested bone plates" and "cancellous bone screws" and filed a separate § 510(k) application for each component. In both applications, a new intended use was specified: rather than seeking clearance for spinal applications, they sought clearance to market the plates and screws for use in the long bones of the arms and legs. AcroMed and Buckman claimed that the two components were substantially equivalent to predicate devices used in long bone surgery. The FDA approved the devices for this purpose in February 1986.

The subject of this appeal is plaintiffs' fraud on the FDA claim against Buckman. Plaintiffs allege that AcroMed, through Buckman, made material misrepresentations in its successful § 510(k) submission to the FDA. Specifically, plaintiffs allege that AcroMed, through Buckman, "sought approval of its VSP plates and screws for use in long bones simply as a pretext in order to market the device for its true intended use in the spine." App. at 58. According to the plaintiffs, Buckman, AcroMed and other defendants contrived a strategy in which they would (1) misrepresent the intended use of the screw system to the FDA, (2) obtain the FDA's approval to market the system for that misrepresented use, and (3) subsequently market the system for a use, spinal surgery, for which they could not obtain the FDA's approval. Plaintiffs contend that, as a result of the misrepresentations to the FDA, a § 510(k) clearance was issued, allowing the devices access to the market they would not otherwise have had.


In 1994, the Judicial Panel on Multidistrict Litigation designated the district court as the transferee court for In re: Orthopedic Bone Screw Liability Litigation, MDL No. 1014. Since that time, some 2,300 civil actions have been transferred to the district court. In March 1995 the district court granted a motion brought by AcroMed and other defendants to dismiss plaintiffs' fraud on the FDA claims, determining that those claims (1) were preempted by the MDA, and (2) impermissibly implied a private right of action for violation of the FDCA. See App. at 28 (Pretrial Order No. 12). Relying on our decision in Michael v. Shiley, Inc., 46 F.3d 1316 (3d Cir. 1995), the district court's order purported to "dismiss[ ] all fraud on the FDA . . . claims contained in any pleading" in the consolidated litigation. App. at 37.

Subsequently, in June 1996, the Supreme Court decided Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), in which the Court addressed the scope of MDA preemption for thefirst time. As a result of that decision, plaintiffs filed amended complaints which re-asserted fraud on the FDA claims against Buckman and other defendants. AcroMed and other defendants filed a motion to reaffirm Pretrial Order No. 12 in light of Lohr. Buckman joined this motion, but also simultaneously filed its own motion to dismiss the fraud on the FDA claims against it. The district court granted AcroMed's motion and reaffirmed Pretrial Order No. 12, though on modified grounds. The district court recognized that Lohr likely invalidated one of the two grounds for its prior decision. Nevertheless, it concluded that Lohr did not completely undermine Pretrial Order No. 12 because Lohr "did not address claims of fraud on the FDA with respect to the absence of a private right of action for violations of the FDCA." App. at 157. The district court determined that allowing a fraud on the FDA claim would essentially create a private right of action for violation of the FDCA and that, "in view of the FDA's exclusive prosecutorial discretion . . . any grant of an implied private right of action would be contrary to the letter and spirit of the statute." App. at 153.

In addition, the district court determined that dismissal of plaintiffs' fraud on the FDA claims was warranted because "the alleged fraud cannot be said to have been a proximate cause of plaintiffs' alleged injuries." App. at 158. The court reasoned that since any misrepresentations were directed only to the FDA and any injuries were caused only by unrelated physicians, the connection between the alleged fraud and plaintiffs' injuries "is so tenuous, if existent at all, that the former cannot be said to be a `substantial factor' in causing the latter." App. at 159 (citations omitted).

After granting AcroMed's motion to dismiss the fraud on the FDA claims, the district court subsequently granted Buckman's identical motion to dismiss "for the reasons stated in Pretrial Order No. 845." App. at 162 (Pretrial Order No. 900). Thereafter, the district court certified Pretrial Order No. 900 as a final order pursuant to Fed. R. Civ. P. 54(b). See App. at 163 (Pretrial Order No. 1067).*fn3

We have jurisdiction over the final order of the district court pursuant to 28 U.S.C. § 1291. We exercise plenary review over a dismissal for failure to state a claim, and we accept all factual allegations of the plaintiffs as true and draw all reasonable inferences therefrom in their favor. See Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).


Count I of the complaint tendered to us as representative is entitled "Fraud (on the FDA)." App. at 55. It alleges that: (1) "[i]n response to the FDA's inquiry concerning the intended use of the bone plates and bone screws, . . . Buckman, acting as representative of AcroMed . . . intentionally and falsely represented to the FDA that . . . [they were] `intended for use in appropriate fractures of long bones of both the upper and lower extremity and such other flat bones,' " App. at 58; (2) "Buckman . . . intended for the FDA to clear the VSP device components based upon this misrepresentation," id.; (3) "[i]n reliance on this express misrepresentation, the FDA determined . . . that AcroMed's nested bone plates and cancellous bone screws were substantially equivalent to devices marketed . . . prior to May 28, 1976 for the intended use represented by AcroMed" and issued a § 510(k) clearance, id.; (4) "the VSP device was intended exclusively for use in the spine," id.; (5) "the only purpose for which AcroMed's plates and screws were sold was for use in the spine," id.; (6) "[t]he FDA was ignorant of the fact that these devices and device components were intended by AcroMed to be used as pedicle screw fixation devices," id. at 63; (7) "[w]ere it not for these fraudulent acts and statements, the FDA would not have issued § 510(k) clearances for AcroMed's pedicle screw fixation devices for any purpose, the devices would not have been introduced into interstate commerce, and Plaintiff would not have been exposed to the dangerous device which was surgically implanted in the Plaintiff's spine," id.; and (8) "[a]s a direct and proximate result of the wrongful conduct alleged in Count I of this Complaint, Plaintiff has suffered, and will continue to suffer, severe physical harm, including injury to Plaintiff's spine," id. at 63-64.

Count I is thus drafted to track the elements of a common law cause of action for fraudulent misrepresentation: (1) a representation of fact, opinion,

intention or law; (2) knowledge of its falsity; (3) an intent to induce reliance; (4) justifiable reliance; and (5) resulting injury. See Restatement (Second) of Torts § 525 et seq.

At the time of the decision here appealed, the bone screw cases were still at the pleading stage. While it is clear that the plaintiffs' "fraud on the FDA" claims are based on state rather than federal law, neither the parties nor the district court have yet addressed the potential choice of law issues and those issues are not before us. We note at the outset, however, that the controlling state law of fraudulent representation in some cases may be different from that in other cases. This is important to our analysis because the district court's dismissal of all "fraud on the FDA" claims was appropriate only if federal law forecloses resort to state law or if the allegations comprising those claims do not state a claim on which relief can be granted under any of the potentially applicable state laws. We first ...

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