With great power comes great responsibility, and more often than not, great controversy. Here are 10 lawsuits and settlements involving orthopedic and spine device companies in 2014.
Settlements:
Smith & Nephew settled Federal Trade Agreements Act lawsuit
The company paid $11.3 million to settle allegations they violated the Federal Trade Agreements Act. The suit claims Smith & Nephew sold devices to the U.S. government saying they were made in the United States when they were made in Malaysia, which doesn't have a trade agreement with the United States. The lawsuit was brought in 2008 by a former Smith & Nephew information technology manager. The whistle blower will receive $2.3 million and the U.S. government will receive $6 million.
Spine 360 settled Anti-Kickback suit
Omni Surgical — a company doing business as Spine 360 — and Jamie Gottlieb, MD, an Indiana-based surgeon were ordered to pay $2.6 million to the United States to settle illegal kickback allegations. The company allegedly made payments to an entity controlled by Dr. Gottlieb between 2007 and 2009. The company claimed that "the payments were purportedly made pursuant to a series of intellectual property agreements," according to an eNews Park Forest report. However, the United States contended that the payments were meant to induce Dr. Gottlieb to use Spine 360 products in his surgeries.
Medtronic settled product liability claims related to Infuse Bone Graft
Under the terms of the agreement, Medtronic, subject to certain conditions, announced it would resolve the filed and unfiled product liability claims of an estimated 950 claimants for a total payment of approximately $22 million. A Milwaukee Journal Sentinel article reported that after the release of the Infuse Bone Graft, clinical studies published in professional journals omitted information about complications. In 2012, the U.S. Senate Committee on Finance issued a report saying that marketing employees at Medtronic were involved in drafting and editing favorable articles about Infuse and that the company paid surgeons whose names lent weight to the studies.
However, according to Medtronic, the company will continue to stand behind Infuse Bone Graft and will defend the product and company actions in the remaining cases.
Sanford Health settled spinal device lawsuit
Sioux Falls, S.D.-based Sanford Health settled the lawsuit alleging Anti-Kickback Statute violations by Wilson Asfora, MD, and Bryan Wellman, MD, both neurosurgeons employed at Sanford Clinic. According to settlement agreement, the defendants will pay the United States and South Dakota governments $625,000. The lawsuit alleged that, from May 2010 to April 2011, Medical Designs, a company founded and co-owned by Dr. Asfora, made payments to Dr. Wellman and two other Sanford employees to allegedly encourage their promotion and use of the Asfora Bullet Cage.
NuVasive resolved patent lawsuit with Cadwell Laboratories
In December 2012, NuVasive filed a lawsuit which claimed that Cadwell infringed on its patented neuromonitoring technology, including the integration of nerve monitoring technology during lateral approach spine surgery. As part of the settlement agreement, Cadwell is expected to exit the lateral spine surgery market, and no longer provide products, services or support for lateral approach spine fusion surgeries. Also, Cadwell's future products that rely on NuVasive patented technology may be required to openly attribute intellectual property ownership to NuVasive and the company may be required to pay a 5 percent fee to NuVasive.
OrthoTec won lawsuit involving Alphatec subsidiary Surgiview
The jury awarded $47.9 million in monetary damages against Surgiview to OrthoTec. The jury found that Surgiview transferred some assets for less than fair market value during a deal in 2006. According to the decision, which has not yet been entered as a formal decision, this asset transfer interfered with certain contractual rights of OrthoTec.
Pending lawsuits:
Humana sued Medtronic
Humana brought a federal racketeering claim against Medtronic over the company's promotions of its spinal biologic product, called Infuse. Medtronic has reportedly paid $210 million to physicians over a 14 year period for consulting, royalty payments and other fees. Humana claims Medtronic has made the payments for the use of the drug in neck and spine surgeries. According to Medtronic, this is for legitimate consulting, royalties and intellectual property.
Covidien, medtronic shareholders filed suits to stop mega-merger
The shareholders of both Covidien and Medtronic sued their respective companies this year in an attempt to block the $42.9 billion acquisition, which was announced early in July. Medtronic shareholder Lewis Merenstein filed the suit objecting to the "reverse merger" structure of the deal, while Richard Taxman, a Covidien shareholder, filed a suit alleging breaches of fiduciary duty. Medtronic stated allegations in the Lewis Merenstein lawsuit are "without merit" and the company plans to defend their position in court.
Despite the lawsuits, the proposed acquisition is moving forward, with Medtronic planning to use around $16 billion in external financing to complete its Covidien acquisition.
Johnson & Johnson faces 6,000 liability lawsuits for hip implant
The company's metal-on-metal Pinnacle implants — created by its DePuy Orthopaedics division — were launched in 2005 and have had a high failure rate, which led to more than 6,000 cases being filed against it, according to a Bidness ETCreport. September 2014 marked the first trial hearing of the pending cases. The lawyer trying the first suit accused Johnson & Johnson executives of knowing about the problem for more than a decade before the company pulled the product.
The Pinnacle implants were pulled from shelves in August 2013. The company, however, may have to pay an estimated $5.78 billion in damages if it loses the lawsuits, according to the Bidness ETCreport.
Spinal implant company Reliance Medical Systems faces lawsuit containing kickback claims
The United States government filed a lawsuit containing kickback claims against Aria Sabit, MD, a Michigan-based neurosurgeon and Reliance Medical Systems. The suit alleges Apex Medical, a Reliance physician-owned distributorship, gave improper payments to Dr. Sabit for using Reliance implants. The company allegedly paid Dr. Sabit $438,570 over a two-year period, in which Dr. Sabit performed around 90 percent of his spinal fusion surgeries using Reliance implants.
Reliance has more than 12 physician-owned distributorships selling Reliance devices. This is one of two lawsuits that the United States recently filed under the False Claims Act related to PODs.
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