Humana (NYSE:HUM) leveled a lawsuit against Abbott (NYSE:ABT) subsidiary St. Jude Medical seeking to recoup payments it made for cardiac rhythm management devices that were later recalled due to a battery issue.
In October 2016 St. Jude publicly revealed the risk that the lithium-based batteries used in its implantable cardioverter defibrillators and cardiac resynchronization therapy devices could form “lithium clusters” during high-voltage charging. The clusters could then cause a short circuit and deplete the battery within a day to a few weeks, rendering the device incapable of delivering therapy. At the time the company said that it had received 841 reports of premature battery depletion, including two deaths, in ICDs and CRT-Ds made before May 23, 2015.
Louisville, Ky.-based Humana’s July 26 complaint alleged that St. Jude knew of the problem as early as 2011 and only told the FDA in 2015 when its hand was forced by the then-pending $25 billion acquisition by Abbott. The lawsuit, brought in the U.S. District Court for Southern Florida, seeks reimbursement for “all conditional payments made by Humana in connection with, arising out of, or in any way related to the recalled ICD and CRT-D devices manufactured by St. Jude.”
“For over four years, [St. Jude] marketed pacemakers and other cardiac devices that it knew to be defective. Finally, in 2015, St. Jude issued a recall and acknowledged its primary responsibility for those defective devices. Thereafter, St. Jude and its corporate parent, Abbott, devised a scheme to stick Humana and other secondary payers with the costs of surgically removing and replacing the defective devices that had been implanted in the chests of their insureds. Humana brings this suit to recover the costs it incurred as a result of defendants’ wrongdoing,” according to the complaint.
The Humana suit also seeks double damages, permanent injunctions protecting it from further costs associated with the recalled CRM devices and forcing Abbott to notify healthcare providers that it will cover those costs, pre- and post-judgment interest and legal costs.