Shareholders of Intuitive Surgical (NSDQ:ISRG) late last month filed a class action lawsuit accusing the robot-assisted surgery giant and its executives of artificially inflating the company’s stock price with misleading statements and "disreputable" sales practices.
The lawsuit claims that Intuitive and a 9 of it executives concealed safety and efficacy problems with the da Vinci surgical system while posting "quarter after quarter of record financial results," a scheme that the plaintiffs say allowed company leadership to cash in on their personally held stock at "fraud-inflated" prices worth hundreds of millions.
"The da Vinci robot is the subject of a growing number of personal injury lawsuits, while at the same time, regulatory scrutiny of the device has also increased," according to the law firm of Bernstein Liebhard LLP, which is not involved in the shareholder suit but is offering services to patients who believe they suffered injuries as a result of treatment with the da Vinci system. "It’s not surprising that these developments have sparked shareholder concerns."
The shareholder lawsuit claims that Intuitive knew or "recklessly disregarded" and concealed from the public information relating to adverse events associated with use of the da Vinci system and possible FDA restrictions on sales of the device, and that the company failed to properly set aside funds to cover potential liabilities in patient lawsuits.
"Due in large part to what the public has recently learned were disreputable and unsafe practices, the number of U.S. procedures done with the robots grew to approximately 367,000 in 2012, up from 292,000 in 2011 and 228,000 in 2010," the lawsuit claims. "Meanwhile, the price of Intuitive stock soaring, nearly every senior executive of Intuitive cashed in, collectively selling close to 410,000 shares of their personally held Intuitive stock into the open market at fraud-inflated prices during the Class Period, reaping more than $218.6 million in proceeds."
The device maker recently won the 1st lawsuit to go to trial when a jury ruled 10-2 that the company was not liable in the death of Fred Taylor or responsible for any damages to his family. The company isn’t out of the woods yet – that was the 1st of at least 26 different lawsuits filed across the country involving the company’s da Vinci robotic surgery device.
ISRG shares were modestly down 0.1% to $496.97 as of about 10:45 a.m. today.