In 2005, Medtronic recalled more than 87,000 ICDs. Since then, more than 34,000 patients have had surgery to remove the devices. Each surgery is estimated to cost health care plans about $25,000.
Private Insurers: A Class ActionIn an oral order, U.S. District Judge James Rosenbaum validated the health care plans' rights to a civil trial. Justice Rosenbaum's order enables all health plans (including employers, labor unions and commercial insurers) to seek refunds for their costs, even in cases where patients themselves aren't seeking damages.
The health care plans intend to convert their case into a class action on behalf of all private insurers.
Individual Lawsuits Increase
In addition to health care plans, thousands of patients have now filed suits in U.S. courts related to the 2005 recall. In fact, the number of litigants more than doubled in January and February.
On January 4, Justice Rosenbaum rejected Medtronic's bid to block patients from suing the company unless ICD malfunctions hurt them directly. Most lawsuit claims are based on extra medical costs for device removal, and psychological pain due to the risks of the ICDs.
Patients are especially outraged because Medtronic had continued selling some of its Marquis model defibrillators for two years after learning that some may quit without warning.
More Defibrillator Problems
Problems have continued at Medtronic. In January, Physio-Control Inc., a unit of Medtronic, suspended shipments of external defibrillators because of quality-control problems at a factory. Medtronic said that the Food and Drug Administration has identified "quality issues" at the facility, but did not specify what those issues are.
Recent lawsuits have been filed alleging faulty external defibrillators as well. On April 9, Lodi Unified school district filed a suit in San Joaquin County Superior Court alleging that Medtronic is negligent and liable for brain damage that a high school student suffered in 2005.
Senior VP Sells Stocks
In the wake of this announcement, the Associated Press reports that a senior vice president of Medtronic Inc. has sold 5,107 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing.
The stock sale has lead some to speculate that Medtronic may be under financial strain related to the ICD recalls. In the last three years, Medtronic and its two biggest competitors have recalled about 300,000 suspect defibrillators.
Indeed, Reuters reports that high-profile ICD recalls have caused physicians and patients to choose not to use ICDs, in light of concern about device reliability. Sales of ICDs, Medtronic's largest product line, fell 2 percent, below many analysts' forecasts.