A federal judge in Minnesota yesterday granted class certification to an investors’ lawsuit brought against Medtronic (NYSE:MDT) over its Infuse bone-growth protein, a little more than a year after an appeals court revived the case.
Approved in 2002 for use in spinal fusion surgery, Infuse at one point had annual sales of nearly $1 billion. The bone-grafting product has since been linked to abnormal bone growth, certain cancers and male reproductive problems. Fridley, Minn.-based Medtronic has been accused of not only downplaying the product’s risks but also promoting it for off-label use.
This lawsuit accuses Medtronic of concealing the negative side effects of Infuse. The plaintiffs claim that investors bought Medtronic shares based on the misrepresentations and were subsequently injured when the stock dropped after Infuse’s safety issues came to light.
In December 2016 the U.S. Court of Appeals for the 8th Circuit revived the case, ruling that a lower court judge was wrong to find that the plaintiffs sued too late in waiting more than two years after learning of the alleged intent to defraud. The plaintiffs include institutional investors West Virginia Pipe Trades Health & Welfare Fund, Union Asset Management Holding AG and Employees’ Retirement System of Hawaii.
The appeals court found that it was not until a Spine Journal issue was published in June 2011 that reasonable shareholders might have inferred that problems with the company’s Infuse studies indicated an intent to defraud.
Yesterday Judge John Tunheim of the U.S. District Court for Minnesota granted certification to anyone who bought MDT shares between Sept. 8, 2010, and June 28, 2011, setting the stage for the case to proceed.
Medtronic agreed to settle another shareholder lawsuit for $85 million in March 2012.