I love this popular movie called, How to Succeed in Business Without Really Trying.  This story is called, How to Get Sued Without Really trying.  In today’s video, we discuss how a distributor of a health and wellness consumer product (it could be you) bought themselves a lawsuit, when they purchased an FDA-registered, Class 1 medical device and promote it on their website.

What happened here, in a nutshell, is that the manufacturer, represented to the distributor, the buyer of the product, that the medical device was a Class II medical device and had FDA clearance, pursuant to a 510(k).

Now, that all sounds great; the problem is that after selling the product successfully for a year, the distributor got sued.  It turns out that one of their customers hired a lawyer who found out that the product really hadn’t been FDA cleared, and there was no 510(k) supporting an FDA determination of substantial equivalence, and it wasn’t class I either.

If that sounds like a lot of jargon, remember this: if a medical device is 510(k) exempt, then you don’t need FDA “clearance,” but you do no need to register as a medical device establishment, and you do need to list your product with FDA.  If a medical device is NOT 510(k) exempt, then you have to establish that your medical device is “substantially equivalent” to what’s called a “predicate device,” and you have to get FDA clearance under a 510(k) submission.

The problem here is that the buyer just didn’t do their due diligence on the seller’s representation that the medical device had FDA clearance.

If the buyer billed commercial insurance or Medicare for using the device, then the plaintiff could possibly add insurance fraud to their list of their claims, on top of that, false advertising.  And there also might be federal statutes involved that provide for criminal penalties.  All very dangerous territory for an innocent mistake, or possibly an oversight.

I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients navigate healthcare and FDA legal issues and launch or successfully grow their health and wellness product or service.

The little glitch I just talked about is simply one example of many ways a company can get in trouble for false advertising.  A lot of healthcare practices and companies believe the claims made by the person who sold them a healthcare product.  And this has happened multiple times, we’ve seen it. Sure, it’s easy to get a revenue from buying a product.  Yes, it’s supposed to be  FDA cleared, registered, listed, approved… And, if you believe that, I’ll throw in the Brooklyn Bridge on top of the sale items.

The point is, you’ve got to be very careful when you buy something and/or distribute it. The law is, whenever you sell a health and wellness product, you’re responsible to ensure that every claim you make for the product is truthful and not misleading.  This includes any claims about the FDA classification of the product.  And further, all claims must be substantiated.

And if you claim that your product is superior to another similar product on the market that claim too, must be substantiated, or supported by a high level of evidence, as well.

There are lots and lots of takeaways here and, I guess I’ll make them on the video.

1. Whenever you put a healthcare product on the market, have legal counsel review all your marketing collateral for potential false advertising exposure.
2. If you think you’re safe because the person who sold or is selling you those products is making certain claims to you, you’re not safe. Don’t trust the claims.  You have to figure out for yourself whether any particular claim, is potentially unsubstantiated, problematic and thus could get you in legal trouble with FTC, private plaintiffs, lots of people.
3. Remember that your exposure is at least double: once to the Federal Trade Commission or FTC, and once to a private plaintiff. Private plaintiffs are watching, and, they hire lawyers and law firms to comb the Internet for potential violations they can go after. So even if the government doesn’t catch you, another lawyer could.

Thanks for watching, I hope you enjoy those recommendations. We’d love to hear from you, send us a message or book an appointment. Here’s to the success of your healthcare venture, I know we’ve given you the bad news, the good news is we love what our clients are doing, we love working with people and we look forward to speaking with you soon.