Mesh Medical Device News Desk, May 9, 2017 ~ According to its quarterly federal filing, Boston Scientific, one of seven medical device manufacturers facing thousands of product liability cases over its pelvic mesh, plans to settle 37,000 cases with certain plaintiff attorneys without admitting any fault.
Quarterly reports that shareholders read are always enlightening as to how a company deals with allegedly defective products. In its latest quarterly report (10-Q), filed with the Securities and Exchange Commission (SEC) May 3, Boston Scientific (BSC) says whether patent infringement, intellectual property rights or product liability, lawsuits are a "normal course of business."
AUGS Exhibit floor
But extraordinary within its pages is the admission that 37,000 of a pending 43,000 product liability cases filed against BSC will be resolved. Of those approximately 12,000 have met the condition of settlement and are final.
BSC likes to point out that the settlements came about through compromise with “without any admission or concessions by us of any liability or wrongdoing.”
The cost of legal matters was $2 billion as of the last day of December. Another $1.75 billion, including the estimated costs of settlement, damage and defense, has been accrued by March 31, 2017.
The 10-Q filing does not specify how much has been set aside specifically for transvaginal mesh settlements.
"We recorded $3 million of litigation-related charges during the first three months of 2017 and $10 million of litigation-related charges during the first three months of 2016."
BSC says it has put aside money for these and future cases and claims which it believes is adequate but, “changes to this accrual may be required in the future as additional information becomes available.”
The pending cases are filed in both state and federal courts and include eight class actions filed in Canada (one certified and three potential class actions) and fewer than 25 class claims in the UK.
These are claims for design and manufacturing defects, a failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium.
The SEC filing specifically points to Teresa Stevens, who in January 2016 filed a RICO claims against BSC on behalf of women who allegedly received mesh made from counterfeit or adulterated resin products imported (smuggled) from China.
RICO stands for Racketeer Influenced and Corrupt Organizations Act, charges of which are usually reserved for organized criminal activity.
On January 26, 2016, the Court issued an order staying the case and directing the plaintiff to submit information to allow the FDA to weigh in. The FDA deferred to Boston Scientific to determine if its resin from China implants were substantially different from resin sources in the U.S. There's been no update from BSC.
The 10-Q continues, “In addition, we are in contact with the United States Attorney’s Office for the Southern District of West Virginia and are responding voluntarily to their requests in connection with that office’s review of the allegations concerning the use of mesh resin in the complaint.”
Another complaint alleging RICO violations was filed February 27, 2017 in the U.S. District Court for the Middle District of Florida, Orlando Division against Boston Scientific. Carolyn Turner also alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and heads a class alleging she was harmed by vaginal mesh made from counterfeit resin brought in from China. This was served against the company April 7, 2017.
Yimao Plastic Molding, did it sell resin to BSC?
"We deny the plaintiff’s allegations and intend to defend ourselves vigorously."
BSC says it has put aside money for these and future cases and claims which it believes is adequate, “changes to this accrual may be required in the future as additional information becomes available.”
In the federal court in Charleston West Virginia, May 5 the court entered PTO Order #160 appointing Cathy Yanni as special master for private settlement agreements between BSC and certain plaintiffs’ counsel, among them Skikos, Crawford, Skikos & Joseph LLP.
Pinnacle Pelvic Floor Kit
TRIALS SO FAR
Trial results have been both favorable and unfavorable but BSC says it does not believe that is an indicator of potential outcomes of all cases related to transvaginal mesh.
There are more than 3,100 cases filed in state court in Massachusetts and certain state attorneys general are also considering actions and have filed discovery requests on BSC.
The Southern District of West Virginia is the federal home of the bulk of transvaginal mesh claims against Boston Scientific. As of today there are 24,751 cases filed with 9,190 that claim to be closed. This includes cases filed as early as May 2011.
The Charleston, West Virginia court is where multidistrict litigation (MDL) assembled more than 102,000 claims against six manufacturers. Boston Scientific is MDL 2326.
March 1, 2017, on the eve of a product liability trial, Sullivan v. Boston Scientific settled. See MND story.
A Mass. appeals court decided last September that the Albright case against Boston Scientific should receive a new trial because of information omitted by the Massachusetts trial court judge. See MND coverage here.
A RICO case was filed last June in federal court in Charleston, WV alleging Boston Scientific purchased counterfeit Marlex to make its pelvic mesh from a Chinese counterfeiter. See MND coverage here.
A North Carolina jury found for Boston Scientific and its Uphold mesh in the trial of Carlson v. Boston Scientific, October, 2015. See MND coverage here.
In September and again in November 2014, Boston Scientific lost two trials, one in Miami and another in Charleston, West Virginia that represented four plaintiffs each. The Eghnayem trial in Miami concerned BSC’s Pinnacle and resulted in a award total of $26.7 million. See MND coverage here.
In the Tyree case, which involved BSC’s Obtryx pelvic mesh, the litigants were awarded a total of $18.5 million. See MND coverage here.
The largest mesh award so far went to plaintiff Martha Salazar who was implanted with the Boston Scientific Obtryx. A Texas jury awarded her $73.46 million, which was later reduced by the trial court judge to $34.6 million under tort reform restrictions. See MND coverage here.
STILL ON THE MARKET
Boston Scientific still sells mid-urethral slings – the Advantage Fit, Advantage, Lynx, Obtryx II, Solyx, according to its website here.
The Pinnacle, pelvic organ prolapse mesh has been removed from the market. The only other pelvic floor mesh includes the Repliform, a human dermal graft, Uphold LITE Vaginal support System, and Upsylon Y-Mesh.
A year ago Boston Scientific bolstered its pelvic mesh warning label. See the MND story here.
The notice also makes changes to the label on the BSC Pinnacle LITE pelvic floor mesh, not current available in the Boston Scientific U.S brochure, but the label changes for the international community indicate it is still being used overseas. Boston Scientific surgical mesh made after 2012 may be made from counterfeit resin smuggled to the U.S. from China. See the background here.
Michael Mahoney, CEO Boston Sci
Michael Mahoney is CEO who reaped a total of $35.7 million in total compensation in 2016, according to bizjournals Boston.
Mahoney was hired away from Ethicon/ Johnson & Johnson in September 2011, (See MND story here) where he worked in sales and marketing selling nuclear medicine cardiology systems to small hospitals in the Carolinas.
While at J&J he worked alongside the president of DePuy Orthopaedics. In 2007, he was promoted to J&J’s knee and hip joint business. By August 2010, the DePuy ASR XL acetabular hip replacement was recalled because it was failing in the patients it was supposed to help. Marketed as an alternative hip replacement for the younger, athletic patient, the metal-on-metal prosthesis led to metal poisoning and repeated revisions. J&J did not warn physicians or patients and J&J paid out nearly $1 billion in legal costs and settlements.
Instead of losing his job, Mahoney was promoted within J&J to the head of J&J’s medical device and diagnostics group.
In 2011, J&J insisted on enforcing a non-compete clause to keep Mahoney from joining Boston Scientific, but then relented allowing the transition if Mahoney agreed not to work in any competing business to J&J such as stents or implantable defibrillators. ###
Mesh News Desk, Boston Scientific Must Pay Salazar $73.5 Million, September 8, 2014
See Mesh winners and losers so far