Medtronic Inc. (NYSE:MDT) agreed to pay $268 million to settle multiple lawsuits stemming from the recall of its Sprint Fidelis defibrillator leads without admitting any liability.
Medtronic pulled the leads from shelves worldwide in October 2007, but not before they were implanted in an estimated 268,000 patients. Because of fractures in the wires, defibrillators could either fail to deliver the shock needed to regulate a haywire heartbeat or send unneeded shocks. The defective leads are implicated in more than 100 deaths, although Medtronic has said that only 13 fatalities had the leads as a “possible or likely contributing factor.”
The agreement is aimed at settling U.S. lawsuits pending as of today and will cover legal and administrative fees. Medtronic and the plaintiffs will file joint requests to end a multi-district case and lawsuits in Minnesota state court; they’ll also move for the dismissal of cases in the U.S. Court of Appeals for the Eighth Circuit and the Minnesota court, along with other cases around the country.
Lawsuits against Medtronic over the Sprint Fidelis leads have not fared well since the 2008 preemption rule enshrined by the Supreme Court in Riegel vs. Medtronic (PDF). In that case, the Supremes held that once a medical device has been approved by the Food & Drug Administration, product liability lawsuits based on state tort laws have no standing — in other words, the federal approval preempts state law. In October 2009, a Minnesota state judge dismissed 600 personal injury lawsuits against the Fridley, Minn.-based medical device monolith.
And last month the U.S. Appeals Court for the Eighth District shot down the appeal of a ruling dismissing a shareholders lawsuit, saying the plaintiffs failed to prove that Medtronic deliberately concealed problems with the leads.
Medtronic said it expects the latest settlements to hit the books as a special charge in its second fiscal quarter ending Oct. 29.