Medtronic (NYSE:MDT) said a shareholder lawsuit brought over its Infuse bone-growth protein is over, after the U.S. Supreme Court declined to review 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.
The derivative lawsuit, brought in March 2012 by investor Charlotte Kokocinski in the U.S. District Court for Minnesota, alleged that the company and its management “violated various purported duties in connection with the Infuse bone graft product and otherwise,” according to the regulatory filing. The district court dismissed the case with prejudice in March 2015; two years later, the Eighth Circuit Court of Appeals affirmed that decision.
In September 2017, Kokocinski filed a petition for certiorari requesting a review by the Supreme Court. The petition was denied Jan. 18, according to the filing, “allowing the lower court’s dismissal of the case with prejudice to stand and bringing this matter to a conclusion.”
Medtronic also revealed that it settled subpoenas or requests for documents about Infuse from the attorneys general in Massachusetts, California, Oregon, Illinois and Washington in December 2017, but “admitted no wrongdoing in connection with the agreement.”
Later in January a federal judge in Minnesota granted class certification to an investors’ lawsuit also brought over Infuse, covering anyone who bought MDT shares between Sept. 8, 2010, and June 28, 2011. 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 Eighth Circuit revived the case, ruling that the lower court 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.
