Medtronic Inc. said Tuesday that it will pay $22 million to end product liability lawsuits involving 950 people who used its controversial Infuse bone graft product.
But that appears to be only the beginning. The Fridley-based medical device company said 3,800 similar claims, some of them not yet filed, could create settlement costs for it of $120 million to $140 million. It plans to take a special charge for those costs against the results of its recently completed fiscal fourth quarter.
Plaintiffs’ attorneys allege that the Infuse bone graft caused injury after being used in ways that weren’t approved by the U.S. Food and Drug Administration.
When the FDA approved Infuse in 2002, it was for use in the lower back. But many of the claims against Medtronic allege that patients suffered ill effects when Infuse was used on bones in other parts of the body, such as the neck.
In addition, some of the suits allege that Medtronic misled doctors about the safety of using Infuse for these so-called “off label,” or non-FDA-approved uses. Doctors are free to use medical products as they see fit, but medical device makers such as Medtronic are not supposed to market the product for off-label purposes.
In one of the product liability suits filed in Minnesota, Hennepin County District Judge Laurie Miller noted that a doctor was willing to testify that Medtronic-affiliated physicians misrepresented the safety of Infuse in non-FDA-approved uses.
The settlements follow a report last year that two independent university studies had found that Medtronic overstated the benefits of Infuse.
And in 2012, Medtronic agreed to an out-of-court settlement in which it paid $85 million to disgruntled investors who said the company had illegally inflated its stock price by not disclosing that Infuse was being used largely in ways that were not approved by the FDA.
The product-liability settlements also are occurring at a time when Medtronic had begun losing one of its most effective arguments for avoiding trials in the Infuse cases. It had invoked U.S. Supreme Court decisions that usually exclude people injured by federally approved medical devices from suing their makers, convincing judges that the company was protected by law from the Infuse suits.
But judges in some state and federal courts decided to let Infuse cases go forward because of the special circumstances involved: the bone grafts were used in ways not approved by the FDA.
Still, Medtronic last month avoided trial in the first Infuse product-liability case to get that far. It won a summary judgment after the plaintiff dropped Medtronic from her lawsuit in California Superior Court; she continued to sue other medical companies in connection with her injuries.
The university studies critical of Medtronic came about after spine experts and U.S. lawmakers charged that Medtronic-sponsored studies of Infuse overstated the product’s benefits and downplayed its risks.