Summer love; med tech ‘court-ship’ heats up

July 19, 2017 – 8:52 AM | By Mark McCarty | No comments yet
Even this guy can't stay cool in this heat

Even this guy can’t stay cool this time of year

Louis Armstrong’s Summer Song evokes an inviting and mellow season, but a leisurely pace can be a pain in the neck for a med tech writer. The FDA’s device center might not be pumping out guidances of late, but the courts are always in business, providing grist for the mill even when federal government agencies seem to have fallen prey to the summertime blues.

Forward to the past at CAFC

Michael J. Fox had to go back to the future in a movie thusly titled, but the Cleveland Clinic Foundation (CCF) lost a lawsuit to True Health Diagnostics of Frisco, Texas in a case that revisits a couple of earlier cases, with predictably similar results.

CCF had a patent for a test that presumably was predictive of heart disease by measuring inflammation as indicated by levels of myeloperoxidase (MPO) drawn from blood. The problem was that the test asked the doctor to decide whether the patient’s MPO level suggested inflammation sufficient to infer some sort of pathology, a determination that would be based in part on a general reference level for this marker. My first thought was that this sounds a lot like Mayo v. Prometheus, and that’s pretty much the way it turned out, but not until patent attorneys billed a whole bunch of hours to both parties to this suit.

This does make one wonder who in Cleveland was responsible for deciding to defend these patents, though. Maybe this is just an uninformed layperson’s reaction, but really, what were the prospects that the Court of Appeals for the Federal Circuit would overturn the Supreme Court’s decision in Mayo? We might recall that even Tyrone Davis couldn’t turn back the hands of time, ¬†yes?

Did Kokesh answer the disgorgement question?

Those of a legal bent will note that the Supreme Court tackled the question of disgorgement of funds from companies accused of violating the law in Kokesh v. SEC. This case did not directly involve a company in the life science business, but there are indications that the re-imposition of a five year statute of limitations for disgorgement could be applied to such companies.

Charles Kokesh was accused of mismanaging approximately $36 million in funds belonging to several clients over a 14-year period ending in 2009, and a district court in New Mexico decreed that the SEC could not impose civil monetary penalties after five years. The district court did not impose that limit on disgorgement, however, because disgorgement presumably is not a penalty. The Court of Appeals for the Tenth Circuit came to more or less the same conclusion.

Writing the unanimous decision, Justice Sandra Sotomayor said disgorgement qualifies as a penalty because those monies typically are not applied toward restitution to the injured parties. Perhaps more key to this situation is that the Securities and Exchange Act of 1934 does not explicitly give the SEC the authority to impose disgorgement. The same can be said of the Food, Drug and Cosmetic Act even though the FDA had extracted half a billion dollars from Schering-Plough in 2002, which is not an isolated example.

The matter does not seem entirely settled as some members of the bar are unconvinced that Sotomayor explicitly addressed the question of whether the court had acted within the law in authorizing disgorgement in Kokesh, but there is an undercurrent of thought that disgorgement and criminal prosecution might constitute double jeopardy for companies that are prosecuted under the FD&C Act. Whether federal attorneys see it the same way remains to be seen.

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