Health Care Professionals and Certificates of Medical Necessity Under FDA Consent Decrees

19 April 2011 Publication
Author(s): Lawrence W. Vernaglia Nathan A. Beaver Nathaniel M. Lacktman Judith A. Waltz

Legal News Alert: Health Care

Increased FDA Vigilance

Hospital legal counsel and compliance officers are familiar with the legal ramifications of certifying to medical necessity in the context of Medicare, Medicaid, and other payor reimbursement rules. Indeed, recent changes under the federal Patient Protection and Affordable Care Act (PPACA) underscored the importance of thoughtful and informed certifications by physicians ordering many services, including home health and durable medical equipment, now requiring a face-to-face visit with the physician or nurse practitioner prior to the certification. But a different type of Certificate of Medical Necessity (CMN) is much less known in the general health care compliance environment: certifications in the FDA context.

Recent consent decrees by the FDA against a diverse group of drug and device manufacturers have demonstrated the FDA’s increased use of consent decrees to address regulatory violations, especially of good manufacturing practices. Enforcement is increasingly extending beyond the sales and marketing of pharmaceuticals and medical devices, and into their regulatory and manufacturing functions. In an era of increased vigilance and enforcement activity by the FDA, it is not only corporations that face tough consequences, but also health care providers as they struggle to comply with restrictions on regulated products and to address the challenges and decisions sometimes placed on them as to whether to continue using such products. 

In practice, even an injunction against the manufacture and sale of products for which the FDA has issued a consent decree does not necessarily mean that these products may not be used in hospitals and other health care facilities. The FDA often permits the continued use or maintenance of such products and devices in certain cases, but will often require providers, such as physicians, surgeons, and other professionals, to sign a CMN so shipping to existing customers can continue even from “quarantined sites.” In many cases, the providers may believe these products and devices are necessary, but other times the provider may not understand why they are being asked to sign the CMN. We will provide some perspective for providers considering the use of such products and devices as well as the implications and consequences of signing a CMN.

What Is a Consent Decree?

A consent decree is a legally enforceable settlement agreement entered into between an agency such as the FDA and a manufacturer of drugs or devices, often in connection with a misbranded or adulterated drug or device. A consent decree will typically be signed by the ranking executive at the manufacturer and may contain various terms and conditions permitting limited continued distribution and use of the product in special circumstances. Consent decrees will be used in particular after other less onerous methods such as warning letters and repeat audits have failed to bring manufacturing standards up to the FDA's required levels.

As an example of a recent widely publicized consent decree impacting the hospital industry, consider the Consent Decree of Permanent Injunction entered on April 20, 2010 (the “Consent Decree”) between the FDA and the STERIS Corporation. See The injunction required STERIS to stop selling its STERIS System 1 (SS1) device, alleged by the FDA to be misbranded. The Consent Decree provided a transition period for health care providers to replace their devices with a legally marketed alternative. To provide the STERIS products under the Consent Decree, STERIS must obtain a signed CMN from each health care provider who wants STERIS to continue providing the STERIS sterilant, services, and accessories to that provider during an 18-month transition period. After the transition period ends on August 2, 2011, Steris will no longer provide service, parts, accessories, or consumables for the SS1.

In addition to requiring CMNs, health care facilities are required to report suspected device-related deaths to the FDA and the manufacturer, and serious injuries to the manufacturer or to the FDA. The FDA has indicated that it may take enforcement action against a health care facility that fails to submit required reports in this context.

What Is a CMN? 

A CMN is a document required to be signed by a “user” and delivered to the manufacturer of the drug or device under a consent decree that describes and justifies its "immediate and continued medical necessity." Under the CMN, a user is required to “certify” to the immediate need and continued medical necessity of the use of the recalled product, as well as to state specific reasons supporting the certification. Often consent decrees will require CMNs be signed by a chairman of an institutional review board (IRB), hospital CEO, chief medical officer, president, chief operating officer, or other knowledgeable persons.

Several recent FDA consent decrees have defined “medically necessary” to mean that the use is “necessary to treat or prevent a serious disease or medical condition and that there is no other available source of that product or alternative product that is judged by the FDA to be an adequate substitute.” The first element is easily satisfied; however, if there are alternative sources of medical equipment or medical devices that are equally efficacious in the market, the certification perhaps cannot be made.

Liability and Risk Management Considerations in Signing CMNs

There is no bright-line answer as to the potential liability and risk management concerns for providers signing CMNs for continued use of recalled devices. This fact does not, however, deter rapid mobilization by plaintiff’s lawyers after a consent decree is posted on the FDA web site. If the terms of the consent decree with the FDA are met, it is legal for a provider to use such a device. But there are important considerations providers ought to take into account before continuing to use such a drug or device. If the CMN is signed without proper considerations of the underlying factual basis, market alternatives, and risks to patients, both the individual signing and the facility may face allegations of liability for negligence, especially in the event there are adverse events associated with the use of the product. There are other theories of liability that could result in even more significant exposure to users executing CMNs either “knowing” that they are inaccurate or with “reckless disregard” of the underlying facts certified to in the CMN.

Practical Advice Regarding CMNs and FDA Determinations of Misbranding

Before signing a CMN and continuing to use a drug or device after the FDA has determined the drug or device to be misbranded, facilities and institutions should consider the following practical steps and compliance advice:

1. Ensure that only authorized individuals sign the CMN. If the consent decree requires a senior executive of the organization to sign the CMN, other persons may not execute the certificate. 

2. Determine whether or not there are any readily available alternatives that are equal in quality and efficacy. If so, such alternatives should be considered.

3. Ensure that the individual executing the CMN has either personally conducted due diligence on the medical necessity and lack of alternatives or has received a responsible internal professional report demonstrating such due diligence on the issues. As part of that due diligence/report process, institutions should consider the following issues:

  • Verify that the CMN is justified in indicating that there are no alternative products available.
  • Determine whether or not the deficiencies were “repeat” or serious deficiencies. If a financial penalty was imposed on the supplier by the FDA, determine the amount and severity of the penalty. Research whether or not the FDA issued a statement as to the safety or efficacy of the products. This information will help companies assess the seriousness of the deficiencies.
  • Ascertain if the deficiencies were related to processing of documentation and reporting requirements, or if they were, instead, based on serious quality or safety concerns. Deficiencies based on quality or safety concerns can indicate a higher risk.
  • Determine if all the products impacted by the FDA investigation/order/injunction are already in use at the institution. If not, a general CMN covering miscellaneous products may be inappropriate.
  • Confirm if the supplier will guarantee the sustainability of the supply of the products in the future, and be certain inventory managers were involved in the decision to sign a CMN. Institutions should also note the length of time the FDA restrictions are in place. Similarly, institutions should investigate whether or not there been a complete or partial shut-down of manufacturing in the supplier’s location. If there is a transition plan, evaluate whether or not it has been considered in connection with the CMN.

4. Financial relationships between the individual executing the CMN and the drug or device company under the consent decree represent an area of increased risk. In light of this risk, these financial relationships should be discussed with legal counsel.

5. In all cases, individuals signing CMNs should confer with internal risk management, chief operating officers, compliance officers, and legal counsel as to whether use of products pursuant to a CMN requires IRB approval, specialized informed consent or disclosures to patients, or whether there are potential impacts on insurance premiums or malpractice coverage.

6. Many hospitals will sometimes have millions of dollars invested in the use of a particular medical device. These investments are put at risk as a result of the manufacturer’s actions resulting in the FDA’s consent decree and underlying potential safety risks. In certain situations, it may be appropriate to send a demand or “holding statement” to such manufacturers indicating that the user reserves all rights to proceed against the manufacturer and that the certification made under the CMNs should not be taken as any waiver of such rights. Additionally, subsequent purchase orders, shipping documentation, or other correspondence should be carefully reviewed with legal counsel to ensure they do not contain any waiver or other prejudicial language. These steps can help protect institutions’ rights to seek indemnification or other damages from manufacturers and other responsible parties.


Consent decrees are an increasingly prominent example of enforcement action by the FDA and need to be taken seriously by users. Hospital risk management professionals may not appreciate the implications to their organizations in the execution of CMNs, but they need to be aware of the issue presented in this alert. In addition to the important steps to be taken prior to certifying to the FDA’s essential test of immediate medical necessity, there are multiple internal players within the organization who need to be involved in a decision by a health care provider to execute a CMN.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Lawrence W. Vernaglia
Boston, Massachusetts

Nathan A. Beaver
Washington, D.C.

Nathaniel M. Lacktman
Tampa. Florida

Heidi A. Sorensen
Washington, D.C.

Judith A. Waltz
San Francisco, California

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