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Medical Device Lawsuit Watch - March 2006

March 20, 2006

This summary of key lawsuits affecting medical devices is provided by the Health Care Law Group of Crowell & Moring LLP, in collaboration with the firm’s Torts, Antitrust and Intellectual Property Law Groups.

Cases in this issue:

Medmarc Casualty Ins. Co. v. Angeion Corp.
Case No. 04-cv-04081-DSD-JJG (D.Minn. 2/17/06)

The District Court for Minnesota recently held that Medmarc must indemnify Angeion, its insured, for the bulk of a settlement between Angeion and ELA Medical Inc. Angeion manufacturers implantable cardioverter defibrillators (ICDs); ELA is one of the distributors of Angeion’s ICDs.

In June of 2002, ELA discovered that the batteries in some of Angeion’s ICDs were prematurely wearing out. Angeion and ELA decided to withdraw the affected ICDs, and the two companies and issued a letter to physicians warning of the defect and recommending that patients be examined. In June of 2003, ELA demanded that Angeion reimburse ELA for costs it incurred related to the withdrawal of the defective ICDs. In September of 2004, Medmarc filed suit against Angeion and ELA, seeking a declaration that Angeion’s policy provided no coverage for ELA’s claims. ELA sought to pursue arbitration against Angeion, but Angeion persuaded ELA to file a cross-claim in Medmarc’s suit. ELA also counterclaimed against Medmarc.

Angeion and ELA reached a settlement in June of 2005. Under the settlement agreement, Angeion agreed to have judgment entered against it and to pay ELA $1.4 million in exchange for dismissal of ELA’s cross-claim. Medmarc and Angeion then filed cross-motions for summary judgment on Medmarc’s duty to indemnify Angeion for the amount of the ELA settlement.

Medmarc first argued that ELA’s cross-claim against Angeion was not a “suit”, as required under the policy, because it alleged the cross-claim was manufactured by Angeion and ELA. The court disagreed, finding that the alternative to ELA’s cross-claim – arbitration – also constituted a “suit”, and that the definition of “suit” did not depend on whether the parties agreed to pursue their claims in a particular forum.

Medmarc also argued that two policy exclusions prevented coverage of ELA’s cross-claim. First, Medmarc argued the policy’s “your product” exclusion, which limits coverage of certain property damage, precluded recovery. The court disagreed, finding that ELA’s damages fell under the “bodily injury” exception to the “your product” exclusion. Next , Medmarc argued that coverage was barred by the policy’s “sistership” exclusion, which precluded coverage for losses based on “a known or suspected defect.” The court disagreed in part, finding that the undisputed evidence for most of the devices showed that the ICDs “failed in use”, and thus met an exception to the “sistership” exclusion. The court did agree with Medmarc as to thirty-two of the devices at issue, for which evidence showed that the devices did not “fail in use” and were thus excluded from coverage.

Finally, Medmarc argued that even if Angeion’s policy provided coverage, it should not be required to reimburse Angeion for the settlement because the terms were unreasonable, collusive, and not based on evidence that Angeion was liable to ELA. The court again disagreed, found that Medmarc failed to show that ELA would not have recovered from Angeion, that Angeion and ELA legitimately considered the pros and cons of further litigation, and that the settlement was made in good faith.

Finally, the court awarded Angeion defense fees, and dismissed claims between Medmarc and ELA for lack of subject matter jurisdiction.

Dunn v. Ethicon, Inc.
No. 04-3826 (6th Cir. 2/16/06)

On February 16 2006 the Sixth Circuit, in a divided opinion, reversed summary judgment for defendants in a products liability case involving Ethicon Vicryl sutures. The Court held that the two-year statute of limitations did not start running until plaintiff, Ms. Dunn, was alerted to the fact that sutures used during her hysterectomy might be defective. The sutures were manufactured by Ethicon, Inc., a division of Johnson & Johnson.

In determining when the applicable statute of limitations began to run, the Court explained that Ohio follows a “discovery rule” in products liability cases, meaning that the accrual date for statute of limitations purposes is delayed until plaintiff knows or should have known she was injured and that the injury was caused by defendant. In Ms. Dunn’s case, although she had experienced post-operative bladder symptoms in February 2001, five months after surgery, the Court found that she had no reason at that time to believe her symptoms were the result of defective sutures. However, in August 2002, Ms. Dunn learned that new bowel troubles she was experiencing were caused by the sutures. The Court found that it was at that point, when Ms. Dunn experienced intestinal rather than bladder problems, that she should have been aware of her duty to investigate and determine whether the sutures were defective.

The majority of the Court rejected defendant’s request to apply the “cognizable event” test. Under this test, which has been applied to medical malpractice cases in Ohio, the occurrence of a cognizable event imposes upon plaintiff the duty to (1) determine whether the injury suffered is the proximate cause of malpractice and (2) ascertain the identify of the tortfeasor. The Court opined that, even if the cognizable test applied to Ms. Dunn’s case, because she did not become aware of her injury until she experienced intestinal problems in August 2002, her complaint was timely filed.

Medinol Ltd. v. Guidant Corp.
-- F. Supp. 2d --, 2006 WL 346013 (S.D.N.Y. Feb. 15, 2006)

On February 15, 2006 the District Court for the Southern District of New York decided a patent infringement suit brought against Guidant Corp. by Medinol Inc. Medinol sued Guidant Corp. and its subsidiary, Advanced Cardiovascular Systems, Inc., for alleged infringement of plaintiff’s “Flexible Expandable Stent” patents.

The Court characterized Medinol’s patents as describing “a family of flexible, expandable stents that ‘achieve the objectives and flexibility during delivery, compensation for foreshortening, continuous uniform scaffolding, and resistance to radial deformation and collapse upon expansion.’”

The Court granted Medinol’s motion for summary judgment of literal infringement as to one patent. The Court found that the accused products all contained a “flexible cell” which the Court defined as “an arrangement of structural elements that defines an enclosed space. The cells must be substantially flexible prior to expansion of the stent and substantially rigid after expansion of the stent.”

Guidant won summary judgment on two other patents. These patents describe stent features formed by two types of meander patterns intertwined with one another . While there were notable similarities, the court found enough distinctions between Guidant’s products and the allegedly infringed patent s to warrant judgment for Guidant. The Guidant products entailed a periodic pattern of intertwining, but there was not a pattern around a center line that would have been key to showing infringement. As a result, the Court ruled that the accused products did not literally infringe one of plaintiff’s remaining patents. For another, the court rejected plaintiff ’s infringement claim under the doctrine of equivalents. The Court ruled that Medinol was estopped from pursuing that claim by virtue of the arguments it had made during prosecution of the patents in front of the U.S. Patent and Trademark Office.

In re Biomedical Tissue Services, Ltd., Human Tissue Litigation
MDL No. 1763 (2/2/06)

On February 2, Regeneration Technologies, Inc. (RTI) requested that the Judicial Panel on Multidistrict Litigation (JPMDL) create a MDL for two pending individual actions and five pending class actions involving the use of tissue allegedly taken illegally from cadavers. The tissue was procured by BioMedical Tissue Services Ltd. (BTS) and sold by tissue banks and tissue resellers to hospitals. RTI is one of approximately ten defendant companies listed in the complaints.

Among the suits targeted for consolidation are three actions that purport to define seemingly overlapping classes of plaintiffs. One of the class actions, originating in the District of New Jersey, defines an alleged class comprising all persons in receipt of human tissue products harvested, distributed, and supplied by defendants, and who were “adversely affected and harmed by” defendants’ wrongful acts. The second class action, brought in the Northern District of Oklahoma, defines a purported class of all persons who received allograft tissue harvested by BTS and distributed by one of seven named defendants during the period from January 1, 2002 to the present. The third class action, originating in the Southern District of Ohio, defines an alleged class of Ohio citizens who are part of an implant-patient population that was exposed to tissue illegally harvested by BTS.

RTI urges consolidation of the cases due to the similarity of factual allegations in the complaints and the substantial overlap of the purported classes. Plaintiffs generally allege that defendants obtained human tissue without donor consent, failed to screen the donors of tissue, and failed to properly test the donor tissue for infectious disease. Among the claims against defendants are civil conspiracy, strict products liability, fraud, negligence, beach of express and implied warranties, and loss of consortium. In addition, two of the class actions request medical monitoring, so that plaintiffs can determine whether they have contracted infectious diseases, such as HIV, hepatitis, and syphilis.

RTI argues that absent consolidation, the company will likely be subjected to inconsistent schedules, conferences, and hearings, as well as duplicative discovery demands. It claims that inconsistencies in discovery proceedings may be particularly burdensome for witnesses. Finally, RTI argues that centralization would promote justice and efficacy by preventing conflicting pretrial rulings and by facilitating the consistent resolution of class action issues. It states that consolidation is especially warranted because newly filed lawsuits arising out of the same facts are expected, and an MDL proceeding would provide a ready forum for additional actions.

RTI requests that the cases be consolidated before Judge William Martini in the District of New Jersey, where five of the relevant cases are pending. Judge Martini currently presides over three of the five lawsuits. The JPMDL is expected to take up RTI’s petition sometime in March.

In a related matter, on February 23, 2006, four defendants were indicted by a New York grand jury on charges of enterprise corruption, body stealing, unlawful dissection of a human being, various counts of forgery, falsifying business records, grand larceny, fraud, reckless endangerment, and opening graves. Two of the four criminal defendants, Michael Mastromarino and Joseph Nicelli, operated BioMedical Tissue Services and are named defendants in the civil cases. The indictment alleges that defendants harvested tissue and bone from corpses without consent and sold them to tissue banks and processors. It also alleges that defendants falsified death certificates and other documents to indicate consent, age and cause of death.

Davis v. Iowa Health System
Case No. 05771 LACL 097213 (Polk County District Court, Iowa)

According to a February 9, 2006 copyright story in the Des Moines Register, Iowa Methodist Medical Center has settled a lawsuit that accused it of pressuring physicians to use a specific brand of pacemaker. The suit was filed by Kathleen Davis in 2004, after she began having complications from her recently-implanted Medtronic pacemaker. Ms. Davis alleged that her cardiologist confessed to her that she would have benefited from a different brand of pacemaker, but that hospital administrators had pressured him to use the Medtronic device in order to collect up to $1 million in rebates.

The Des Moines Register also reported that court records include internal e-mails by Iowa Methodist administrators, in which they discuss ways to force Davis’ physician to use the Medtronic pacemaker. A hospital spokesperson admitted that managers substituted a Medtronic device for the Guidant model that Davis’ physician had ordered, but denied that administrators ever overrule a doctor’s judgment, saying that the physician always makes the final decision.

The terms of the settlement are confidential, and according to Ms. Davis’ attorney, also prohibit Ms. Davis from discussing any of the facts surrounding the case.

Utah Medical Products, Inc. Federal Tort Claims Act administrative claim
Administrative Claim (7/15/2005)

The Department of Health and Human Services recently dismissed Utah Medical Product s’ Federal Tort Claims Act claim against the Food and Drug Administration.

Utah Medical manufacturers a wide range of devices for use in labor and delivery, neonatal intensive care, gynecology, urology, and blood pressure monitoring. In 2004, the Food and Drug Administration (“FDA”) filed suit against Utah Medical, alleging various violations of the Quality System Regulation and seeking a permanent injunction against the company. The suit was the culmination of months of contentious interaction between Utah Medical and the FDA, regarding Utah Medical’s compliance with relevant safety regulations. Utah Medical insisted it had consistently complied with the regulations, that FDA was asking the company to undertake compliance activities not required by law, and that the company was the victim of persecution and retaliation by FDA employees. The district court dismissed the case against Utah Medical in October of 2005, finding that the company was in fact complying with the regulations FDA sought to enforce.

Utah Medical Products filed its Federal Tort Claims Act claim in July of 2005, alleging that the misconduct of certain FDA employees constituted the tort of abuse of process. The claim cited various instances of FDA employees allegedly using their inspectional authority for non-inspectional purposes. The claim alleges that such misconduct cost the company over $7 million in lost profits, executive time, and consultant, expert, and attorneys’ fees.

According to a PR Newswire article, the company received a letter from Health and Human Services dated February 10, 2006. In it, HHS found that the company’s claim was not cognizable, and was therefore denied. The company says it is now considering whether to file suit against the FDA in federal court.

SDGI Holdings, Inc. v. EBI, L.P.
Case No. 2:06-CV-490 (D. N.J. 2/1/06)

On February 1, 2006 Medtronic Sofamor Danek, Inc. (the spinal business of Medtronic, Inc.) filed suit against Biomet Inc. and its subsidiary EBI Spine, L.P. for infringement of seven U.S. Patents. Three of the patents-in-suit, U.S. Patent No. 6,916,320 (entitled “Anterior Cervical Plate System”) and U.S. Patent Nos. 6,592,586 and 6,428,542 (both entitled “Single-Lock Anterior Cervical Plating System”), relate to single-lock anterior cervical plating systems used in cervical spinal fusions. The complaint alleges that Biomet’s VueLock ® Anterior Cervical Plate System with its “Secure One Step Locking” mechanism, infringes these three patents.

The other four patents-in-suit, U.S. Patent Nos. 5,810,878 and 6,036,692 (both entitled “Rod Introducer Forceps”), and U.S. Patent No. 6,440,133 and 6,790,209 (both entitled “Rod Reducer Instruments and Methods”), are directed to rod introducer instruments and surgical implantation methods commonly used in spinal surgeries. The complaint alleges that Biomet’s Cannulated Rod Reducer and Left or Right Rod Rockers, which are part of its “Array Spinal System”, infringe these patents.

Jesberg v. Baxter Healthcare Corp.
No. 97-1062 (D.Minn. 1/30/06)

On January 30, the District Court in Minnesota granted summary judgment in favor of latex glove manufacturer Ansell Inc. on three claims by distributor Sherwood Medical Co, including breach of warranty. Ansell will face trial on three other issues, including whether Ansell had a duty to indemnify and defend Sherwood in a products liability suit.

This lawsuit was originally filed in 1997 by Nadine Jesberg as a product liability action against several latex glove manufacturers and distributors. Ms. Jesberg allegedly developed allergies from the gloves. The case was eventually transferred to the latex glove multidistrict litigation. Upon remand to the District of Minnesota, Sherwood was dismissed from the action, but the court allowed Sherwood to maintain its third party claims against Ansell.

Sherwood claimed that Ansell breached its contractual duties to Sherwood, breached its implied duty of good faith and fair dealing, breached express warranties, was liable under a theory of successor liability, and was obligated to indemnify and defend Sherwood pursuant to the terms on the back of purchase orders.

The court found that Sherwood failed to create a genuine issue of material fact regarding the breach of warranty issue. According to the court, the record indicated that the gloves were fit for their particular purpose and there was no evidence that they were unsafe. Moreover, because Sherwood signed a “Pierringer” release, it could not recover against Ansell under its common law indemnity and contribution claims.

However, the court did hold that because the parties disputed whether the purchase order was an original offer and whether the parties had a previous oral agreement, there was a genuine issue of material fact that could not be decided on Ansell’s motion for summary judgment.

Thornburg v. Stryker Corp.
Case No. 1:05-cv-01378-RLY-TAB (S.D. Ind. 1/27/2006)

A federal magistrate judge recently ruled that the Indiana medical malpractice law prevents a plaintiff from relying on the defendant physician’s citizenship to obtain remand to state court.

Plaintiff Vickie Thornburg filed a medical malpractice complaint against her surgeon, following her hip replacement surgery. She simultaneously filed a products liability case against Stryker Corp., Howmedica Inc., and Osteonics Corp., the alleged manufacturers of Thornburg’s artificial hip.

Indiana’s medical malpractice law precludes a plaintiff from naming the physician defendant while a claim is pending before the state medical review panel. Thus, Thornburg’s complaint named the physician as “Anonymous Doctor A”.

After Thornburg filed her suit, Stryker and the other manufacturing defendants removed the case to federal court on the basis of diversity of citizenship. Thornburg moved to remand, on the basis of common citizenship between herself and the physician defendant. Stryker argued that under federal law, courts may not consider the citizenship of anonymous defendants when conducting a diversity of citizenship analysis. Thornburg argued that her intent to amend her complaint to name the anonymous defendant, when legally permitted to do so, should defeat Stryker’s diversity argument.

The magistrate judge agreed with Stryker, and said that to hold otherwise would deprive the manufacturer defendants of their right to removal. The judge found that the timing of the completion of the medical review panel process was uncertain, and that defendants’ right to removal was constrained by a statute of limitations. Also, the court found there was no guarantee that Thornburg would ever amend her complaint to name the anonymous defendant, since she may face an unfavorable ruling at the medical review panel level, or decide to settle her claims against the physician. Thus, the judge found that removal was proper.

In re St. Jude Medical, Inc., Silzone Heart Valves Products Liability Litigation
MDL No. 01-1396 (Plaintiffs' motion filed 1/10/06)

On January 10, 2006, Plaintiffs in the St. Jude Silzone heart valve litigation renewed their motion for class certification. In October 2005 the Eighth Circuit had vacated two classes – a medical monitoring class and a consumer fraud class – that had been certified by the U.S. District Court for the District of Minnesota. The purported classes were certified after five plaintiffs filed a consolidated amended class action complaint that allegedly represented over 11,000 Silzone prosthetic heart valve recipients, including many out-of-state plaintiffs. After the FDA approved St. Jude Medical’s (“SJM”) devices, the company eventually recalled all unimplanted Silzone valves upon finding that the valves increased the risk of paravalvular leaks.

With respect to the consumer fraud class, the Eighth Circuit found that the district court did not adequately analyze the contacts between Minnesota and each plaintiff class member’s claims, before deciding that it would apply Minnesota consumer protection law to the entire class. A thorough conflicts-of-law analysis with respect to each plaintiff class member is necessary, said the Court, to satisfy the Due Process and Full Faith and Credit Clauses.

After the Eighth Circuit’s ruling, Plaintiffs renewed their motion for class certification of a class of patients who are recipients of Silzone heart valve implants, have not yet been injured, and have not had their devices explanted. Plaintiffs state that the case should be certified to proceed under Minnesota’s consumer protection laws. Among plaintiffs’ claims are that SJM never properly tested Silzone before it was employed as a coating to the mechanical heart valves, and that SJM hid data and made misrepresentations about the devices.

Plaintiffs also argue that Minnesota has sufficient contacts with each class member’s claim to meet the “significant contacts” standard for due process, including that SJM has its headquarters in Minnesota; that virtually all of corporate acts implicated by plaintiffs’ claims occurred in Minnesota; that the Silzone heart valves were substantially created and manufactured in Minnesota; and that SJM invited heart valve purchasers and recipients to solicit more product information from Minnesota.

Plaintiffs also maintain that because the district court sits in Minnesota, the court should apply the forum state’s conflict of law rules. They argue that under Minnesota conflict-of-law principles, the court must apply procedural and remedial law of the state of Minnesota, even if such rules conflict with other states’ procedural and remedial laws. Finally, if there is a true conflict of substantive law, plaintiffs argue, the court should apply Minnesota law because, for example, Minnesota has an important interest in monitoring and policing the conduct of its local corporations. With regard to state consumer protection laws, plaintiffs identified 17 states which have outcome determinative conflicts of substantive law.

Synergetics, Inc. v. Peregrine Surgical, Ltd.
2:06-CV-00107 (E.D. Pa. 1/10/06)

On January 10, 2006, Synergetics, Inc. filed suit against Peregrine Surgical, Ltd. and Innovatech Surgical, Inc. The complaint alleges that the defendants’ “Adjustable Intuitive Probe” infringes Synergetics’ U.S. Patent No. 6,984,230, entitled “Directional Laser Probe,” which was also issued on January 10, 2006. The ‘230 patent is directed to a microsurgical laser probe with a movable optic fiber for use in ophthalmic surgery.

AngioDynamics, Inc. v. Diomed Holdings, Inc.
No. unavailable (D. Del. 1/3/06)

On January 3, 2006 AngioDynamics, Inc. filed a complaint against Diomed, Inc. in the District of Delaware. AngioDynamics is seeking a declaratory judgment that the claims of Diomed’s U.S. Patent No. 6,981,971 “Medical Laser Device” are invalid, unenforceable and not infringed by AngioDynamics’ VenaCure system. U.S. Patent No. 6,981,971 issued on January 3, 2006 and is directed to a medical laser device with an introducer sheath to control the rate of withdrawal of an optical fiber during an intravenous laser procedure. Diomed and AngioDynamics are currently engaged in patent infringement suit in the District of Massachusetts related to AngioDynamics’ VenaCure endovenous laser treatment system and Diomed’s U.S. Patent No. 6,398,777, entitled “Endovascular Laser Device and Treatment of Varicose Veins.”

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This material was prepared by Crowell & Moring LLP attorneys Chandra Westergaard Snyder, Jennifer Burdman, Jessica Hall, Lauren Kim and Heather Good. It is made available on the Crowell & Moring website for information purposes only, and should not be relied upon to resolve specific legal questions. If you have questions or want additional information, please call your regular Crowell & Moring contact or you may contact the editor of Medical Device Lawsuit Watch.

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