Insurer wants out of $28m Biotronik legal loss

An insurance company that issued policies to Biotronik wants a federal judge in Oregon to declare that they don’t have to cover Biotronik’s losses in a pair of lawsuits filed over allegedly unneeded pacemaker implantations.

OneBeacon sued the German heart rhythm management company last week in the U.S. District Court for Oregon, seeking a declaratory judgment that it’s not liable to cover a $28 million ruling against Biotronik and any losses from another case that’s still pending, according to court documents.

The lawsuits allege that Biotronik "provided improper inducements" to Dr. Demosthenes Klonis so that he would use the company’s pacemakers "as part of a conspiracy to increase the number of Biotronik cardiac devices recommended by Dr. Klonis to his patients, including patients who did not need them," according to the documents.

In 1 case, Sowards v. Las Cruces Medical Center, the jury awarded the plaintiffs nearly $67.4 million in damages, including a $60 million punitive damages award that the judge later pared back to $25 million, court filings show.

OneBeacon argued that the provisions of the insurance policies it sold to Biotronik do not apply to "’bodily injury’ or ‘property damage’ included within the ‘products-completed operations hazard,’" according to the filings. That includes "all ‘bodily injury’ and ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product,’" the insurer argued.

"Thus, each plaintiff’s bodily injury is included within and arose from the products-completed operations hazard and, therefore, is encompassed by the PCOH exclusions," OneBeacon argued, according to the complaint. "Accordingly, OneBeacon is entitled to a declaratory judgment that the policies’ PCOH exclusions bar coverage for the pacemaker actions."