Medtronic (NYSE:MDT) is facing a suit from its insurer Medmarc Casualty Insurance alleging that the medtech giant inappropriately handled settlements related to pelvic mesh claims and is not entitled to $17.3 million in coverage from the company.
In the suit, filed in the U.S. District Court for the Eastern District of Virginia, Medmarc and subsidiary Noetic Specialty Insurance Company claim that Fridley, Minn.-based Medtronic, and its acquired subsidiary Covidien, repeatedly disregarded its obligations towards Medmarc and conditions necessary to ensure payment of judgements and settlements.
Medmarc said that Medtronic and Covidien breached four conditions that are part of the insurer’s coverage, according to court documents.
These include providing copies of bills paid and checks and drafts in payment of bills within 90 days of payment, not engaging, except at its own cost, in voluntarily making payments, assuming obligations or insuring expenses without Medmarc’s consent, cooperating with Medmarc in the investigation or settlement of claims and failing to “do nothing after loss to impair” rights Medmarc has to recover all or part of payments it makes under its policies, court documents read.
Medmarc goes on to argue that Medtronic paid higher than the average settlement value for pelvic mesh claims, saying that the company has never taken such a claim to trial and has no “reasoned basis for concluding that the average settlement value of the claims asserted against it is substantially higher than the average settlement value of claims settled by other mesh manufacturers,” according to court documents.
Medmarc is seeking to exclude itself from responsibility in the payment claims, saying that “as a result of [Medtronic]’s breach of its obligations to Medmarc, the Court should enter a judicial declaration that the claims payments made by [Medtronic] to date do not and cannot erode the SIRs in the Medmarc Policies.
The firm is also seeking a declaration that it has “no duty to indemnify [Medtronic] for settlements”, including past or present settlements for mesh claims over its breach of duties to cooperate with the firm during its investigation and during the settlements themselves.
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