Tenth Circuit Affirms Civil Money Penalties Against Device Manufacturer and President for Failure to Submit Medical Device Reports

October 28, 2009

By JP Ellison

Last year we posed the question “Are the Stars Lining Up for FDA Civil Penalties?”   The intervening year has not answered that question, but a recent decision from the Tenth Circuit affirming civil penalties against TMJ Implants, Inc. (“TMJI”) and its founder and president Robert Christensen serves as a reminder of this FDA enforcement tool.  In last year’s blog post we referred to an earlier Food and Drug Law Institute article discussing civil money penalties (CMPs) generally, and the TMJI case specifically.

At that time, the penalties had not yet been assessed in the case.  Subsequently, the administrative law judge (“ALJ”) assessed CMPs totaling $170,000, which represented a $10,000 penalty for failure to submit 17 medical device reports (“MDRs”).  The maximum penalty allowed by regulation for each violation was $165,000.  Yesterday, the Tenth Circuit affirmed a decision of the HHS Departmental Appeals Board (“DAB”), which had, in turn, affirmed the ALJ’s decision.

The central issue in the case was whether MDRs were required despite TMJI’s claim that it did not believe the events in question (either explants of the device or antibiotic treatments) were caused by the device, and thus did not need to be reported.  FDA employees had been telling TMJI since a February 2004 Warning Letter that the events needed to be reported.  TMJI steadfastly refused.  After more than a year of correspondence, FDA filed an administrative CMP action, which resulted in the penalties that the Tenth Circuit affirmed.

For those followers of the Park doctrine, the Tenth Circuit opinion contains a brief, but potentially important discussion of the relevance of Park to CMPs.  In its decision, the Tenth Circuit affirms CMPs against TMJI’s founder and president, Dr. Christensen and cites Park.  Significantly, the government believes that Park stands for the proposition that strict criminal misdemeanor liability can be imposed on a responsible corporate officer regardless of whether that individual knew of the violation.  In contrast, the CMPs in the TMJI case were imposed for “knowing” violations.  While the facts may have well shown that Dr. Christensen knew of the violations, that was not the basis for the Tenth Circuit’s decision.  Rather, it extends Park’s rationale to CMPs.