07252017Headline:

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Greg Webb
Greg Webb
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Insurance Companies Take a Hit When Medical Devices Fail

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A recent Reuters’ article reported that when a medical device fails, insurance companies often have to pay the bill. This problem has moved insurers, like Aetna Inc., the nation’s third largest insurer, and others, to hold device manufacturers responsible more often, allegedly increasing the medical device makers’ costs beyond the costs of manufacturing, marketing, distributing and recalling their products.

Firms that provide claims recovery services for the healthcare industry are more active than ever as the number of recalls of medical devices has increased due to concerns certain devices could cause injury or death to patients. Rawlings & Associates, one of the larger firms going after claims, recently has pursued 30 mass tort cases related to healthcare at one time. Rawlings is frequently hired by insurers when there are large numbers of cases filed over device failure and multi-district litigation is required.

Rawlings Chairman Mark Fischer said, “There has been a drastic increase in the number of cases being pursued.” Rawlings has been involved in cases such as Medtronic Inc.’s Fidelis defibrillator lead failure in 2007. Medtronic’s settlement is recorded as having covered more than 9,000 personal injury cases, for a total of $221 million. In Trover Solutions CEO Robert Bader’s opinion, “It’s the fiduciary responsibility of the insurer to recover members’ premiums from the manufacturer.” Even the government is in the act, going after claims for Medicare in order to recover money it paid for recall-related medical services when settlements have been agreed upon.

The next battleground for claims recovery firms could easily be the Riata defibrillator leads manufactured by St. Jude Medical. 79,000 Patients still have these leads implanted in their circulatory systems—and removing them for a recall could be costly and tenuous at best. Annual imaging studies in some cases could be recommended to determine whether the leads are viable, the cost of which is minimal compared to a single fluoroscopy. In any case, monitoring, recalling and replacing the leads will be costly—both to the patients, the device industry, the health community and the insurers.

In summary, not only do defective medical devices harm the patient (recipient), but the insurance companies who often pay for the devices do not like losing money in the process either.