Medtronic settles suits for $268M

Medtronic Inc. has agreed to pay $268 million to settle thousands of lawsuits that patients filed after a 2007 recall of a faulty heart defibrillator wire that caused at least 13 deaths.

The settlement announced Thursday covers some 8,100 personal injury lawsuits in both federal and state courts over Medtronic's popular Sprint Fidelis lead, which was implanted in some 235,000 people when the company recalled the device after a small number fractured. The malfunction could cause the defibrillator to stop working or to inappropriately shock patients -- a frightening and uncomfortable experience, but usually not life-threatening.

The cases had been lingering in a kind of legal limbo that began with a 2008 U.S. Supreme Court decision involving another Medtronic case that prevented many patients with faulty medical devices from filing suit against the makers of those products.

Rather than wait for a definitive resolution to various legal appeals, the Fridley-based medical technology giant agreed to end the three-year legal battle with a settlement. Spokesman Christopher Garland said, "Medtronic is pleased it was able to negotiate terms that were mutually agreeable to the parties."

Charles Zimmerman, a Minneapolis attorney who chaired the Plaintiffs' Steering Committee, called the settlement "an excellent example of what people can do when they act together to do the right thing for the public and for public health."

Part of a $5.8 billion global market that is firmly entrenched in Minnesota, implantable cardioverter defibrillators (ICDs) are stopwatch-sized devices that shock an errantly beating heart back into rhythm. Defibrillators have been a major segment for Medtronic, which brought in $15.8 billion in revenue in its last fiscal year. But sales of the devices have slowed in recent years due in part to industry-wide product recalls, as well as overall economic woes that have dampened demand.

The device is implanted in the chest and connected to the heart with one or a series of wires called leads. Since the recall, Medtronic has maintained that the best course of action for most patients with the potentially faulty lead is to leave it in the body -- and the company estimates that 170,000 leads are still implanted.

'I have really suffered'

Liz Fossum of Golden Valley is one of the plaintiffs who will get a portion of the impending settlement. Her defibrillator zapped her 54 times after her Sprint Fidelis lead malfunctioned. Fossum, now 70, eventually had the lead removed, but she says she's been emotionally scarred ever since.

"I have no idea when this thing will go off, I have really suffered," she said. "I'm glad the case just wasn't written off. Medtronic has had some fault here."

Once the recall was announced, thousands of patients with the leads and, in some cases, the families of patients, filed lawsuits alleging negligence, fraud, breach of warranties and other claims.

But the lawsuits stalled in the wake of the Supreme Court ruling. In January 2009, U.S. District Judge Richard Kyle cited the decision when he dismissed hundreds of patient lawsuits that had been aggregated in federal court.

Settlements not uncommon

Before the Supreme Court ruling, it wasn't uncommon for patients to file personal injury lawsuits against medical device companies like Medtronic, and settlements to occur as a result. In 2007, the company paid $114 million to settle about 2,700 lawsuits that had been filed in federal court after the recall of its Marquis line of defibrillators.

Regarding the Sprint Fidelis settlement, Edward Jones analyst Aaron Vaughn said "the dollar amount may seem significant to you and I, but it's clearly something Medtronic can handle fairly easily. From an investor's standpoint, it's good for Medtronic to have this behind them."

Medtronic said in a news release that the settlement will result in a special charge in its second fiscal quarter, which ends Oct. 29. The company's shares fell 28 cents Thursday to $33.27.

It's unclear how much each plaintiff will receive. Hunter Shkolnik, a New York attorney who represented patients in the case, said "it's very hard at this point to do the math, not everyone will get the same amount." The agreement provides for settlement of all suits pending as of Oct. 15.