According to the complaint filed 3/12/2012, Plaintiff brings this shareholder derivative action on behalf of Medtronic, Inc. against its officers and directors for breaching their fiduciary duties to the Company and violating Section 14(a) of the Securities Exchange Act of 1934 between November 20, 2006 and the present.
Medtronic is a Minnesota corporation that manufactures medical devices, including
the INFUSE Bone Graft (“Infuse”) at the heart of this action. Infuse generates approximately $800 million in revenue each year for the Company.
Plaintiff’s claims arise from management’s intentional promotion of “off-label” uses
for Infuse. Off-label use is the practice of prescribing a device for an unapproved form of administration. A physician’s use of a device in a manner not specifically approved by the FDA is not illegal. It is illegal, however, for a manufacturer to promote a device’s off-label uses. Here, Medtronic’s officers and directors caused the Company to engage in this illegal promotion such that more than 85% of Infuse sales involved off-label use.
Medtronic’s officers and directors also caused the Company to issue false and
misleading statements about the revenues derived from Infuse sales, repeatedly touting and attributing the strong sales of Infuse to continued “strong acceptance” by the U.S. medical community. But the Individual Defendants failed to disclose that: (a) 85% of Infuse’s revenues were dependent upon off-label uses of the product; (b) off-label uses of Infuse were causing a significant and increasing number of medical complications to patients; and (c) the Company was engaging in an unlawful campaign to market and encourage off-label uses of the product in direct violation of the Corporate Integrity Agreement with the DOJ. Because of these false statements and material omissions, shareholders were led to believe that Infuse sales were stable and would continue to grow.
On March 25, 2013, the Court issued an Order granting the Defendants' Motion to Dismiss without prejudice. Plaintiff was given leave to file an amended complaint.
An amended complaint was filed on April 23, 2014.
On March 30, 2015, the Court issued an Order dismissing this case with prejudice. On October 30, the plaintiffs filed a Notice of Appeal of this decision.
On March 1, 2017, the Court of Appeals affirmed the decision of the District Court.