Shares of Cyberonics (NSDQ:CYBX) are up some 6% today after the medical device company said an ex-sales rep voluntarily dismissed a wrongful termination lawsuit.
Andrew Hagerty sued the Houston, Texas-based company last August, alleging that Cyberonics canned him after he refused to sell unneeded replacement batteries for implanted pulse generators designed to treat epilepsy.
The lawsuit, filed in the U.S. District Court for Massachusetts, accused Cyberonics of changing its sales policy to allow commissions on the sale of replacement batteries. Hagerty, whose son was implanted with 1 of the devices to control his epileptic seizures, alleged that the Cyberonics procedures "not only had been illegal, in violation of FDA policy and regulations, and contrary to the FDA’s summary of approval but also subjected patients to unnecessary surgery," according to court documents.
"Many Cyberonics salespersons simply disregarded the health and welfare of patients who would receive replacement batteries. They subjected these individuals to unnecessary surgery only as part of an effort to earn more money," according to the lawsuit. "In fact, Cyberonics had indicated that salespersons should not do so. Cyberonics had issued an email setting forth that very direction. The email stated: ‘Important reminder: it is the neurologist’s decision to determine if a patient is at End of Service or may need a prophylactic replacement. This report should not be used to make any suggestions or assumptions as such by Cyberonics.’"
After Hagerty was allegedly told to boost his sales of replacement batteries using allegedly illegal practices, Cyberonics fired him, according to the lawsuit.
But last week Hagerty withdrew the lawsuit, according to the documents, which did not provide a reason for the voluntary dismissal.
"The company has asserted that, under the terms of his employment, Mr. Hagerty’s claims are subject to binding arbitration. Mr. Hagerty has the right to re-file the lawsuit or to pursue a resolution through binding arbitration," according to a Cyberonics press release.
CYBX shares were up 6.2% today on the news, trading at $47.11 as of about 2:45 p.m.
