FDA Victory In Civil Money Penalty Case Could Signal More To Come

Article preview reprinted from "The Gray Sheet" - November 16, 2009

A federal appeals court decision upholding $340,000 in civil money penalties against TMJ Implants for adverse event reporting violations may "embolden" FDA to impose money penalties more often, attorneys familiar with the device industry say. Read more...

FDA Victory In Civil Money Penalty Case Could Signal More To Come

Article preview reprinted from "The Gray Sheet" - November 16, 2009

A federal appeals court decision upholding $340,000 in civil money penalties against TMJ Implants for adverse event reporting violations may "embolden" FDA to impose money penalties more often, attorneys familiar with the device industry say.

The U.S. Court of Appeals for the Tenth Circuit affirmed prior Health and Human Services administrative rulings against TMJ and its president, Robert Christensen, Oct. 27, after five years of back and forth between FDA and the company.

TMJ and Christensen will each pay $170,000 in civil money penalties for allegedly failing to file 17 medical device reports (MDRs) related to the firm's temporomandibular joint implants to FDA.

"It is the first judicial opinion that really substantively affirms FDA's interpretation of the MDR regulations," said health care attorney Vernessa Pollard of the law firm Arnold & Porter.

"The opinion reaffirms that FDA takes this requirement seriously and that the agency is willing to use its civil money penalty and other enforcement authorities to address what it feels are significant violations of that requirement."

Pollard, former associate chief counsel of enforcement in FDA's Office of Chief Counsel, handled the original civil money penalty action and HHS Departmental Appeals Board appeal while at FDA.

"This is a victory for the agency that certainly may encourage folks in compliance to pursue or recommend civil money penalties where they otherwise may not have done so," she said.

TMJ Implants markets the Fossa-Eminence and Condylar joint reconstructionsystems.

First Civil Money Penalties For MDR Violations

FDA has issued hundreds of warning letters over the years for MDR reporting failures, but the TMJ case marks the first time the agency has imposed civil money penalties for the violations, Pollard says.

The Safe Medical Devices Act of 1990 gave FDA authority to impose civil money penalties for most device-related violations of the Food, Drug & Cosmetic Act.

For example, civil money penalties may be imposed for marketing a device without proper 510(k) clearance, violating promotion and advertising requirements or failing to meet clinical trial reporting requirements, FDA notes in a 1999 draft guidance for staff on the civil money penalty policy.

In the case of MDR or Good Manufacturing Practice violations, however, FDA may impose civil money penalties only when the violations "constitute a significant or knowing departure from such requirements or a risk to public health," the draft guidance states.

The TMJ case reminds companies "the [civil money penalty] authority still exists in FDA's weapons cache," lawyer John Fleder, Hyman, Phelps & McNamara, wrote following the earlier court decisions.

Although a number of civil money penalty actions have been litigated, and many more have been settled, FDA has historically used the enforcement tool only "sporadically," according to James Ellison, another attorney with Hyman, Phelps & McNamara.

"One would not list FDA civil penalty action among the top ten things likely to keep CEOs in FDA-regulated industries up at night," Ellison posted on the firm's blog.

But the TMJ decision and a $1.1 million civil money penalties settlement against Advanced Bionics in 2008 indicate "civil penalties need to move up [to] that top ten list," Ellison wrote.

According to Arnold & Porter's Pollard, Congress seems to want to put more civil money penalty authority in FDA's hands.

"With every new amendment to the Food, Drug & Cosmetic Act, or every new piece of legislation, Congress gives FDA civil money penalty authority, and the minimum penalty amount seems to be increasing with every piece of legislation," she said.

For example, the 2007 FDA Amendments Act allows FDA to collect civil money penalties for failures to comply with new ClinicalTrials.gov trial registration and reporting requirements.

- - Jessica Bylander

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