A short-seller’s report that cardiac rhythm management devices made by St. Jude Medical (NYSE:STJ) are vulnerable to hackers has “major flaws” and doesn’t prove its allegations, according to researchers from the University of Michigan.
Muddy Waters, the firm founded by well-known short-seller Carson Block, last week aimed to disrupt the pending, $25 billion acquisition of St. Jude by Abbott (NYSE:ABT); in addition to his bet that STJ share prices will fall, Block is long on ABT shares. His shop and a startup cybersecurity business called MedSec alleged last week that St. Jude’s implanted cardiac rhythm management devices pose a cybersecurity risk due to vulnerabilities in the Merlin@home monitor.
The Little Canada, Minn.-based company immediately denied the charges and fired off a detailed rebuttal the next day; in response, Muddy Waters yesterday claimed that St. Jude instead proved the short-seller’s assertions. Today St. Jude said that the latest salvo from Muddy Waters, a video purporting to show a Merlin@home device succumbing to a hack, actually shows that the device functioned just as designed.
The U-M researchers said they reproduced the experiments cited in the MedSec report, reproducing error messages Muddy Waters cited as evidence of a “crash attack.”
“But the messages are the same set of errors that display if the device isn’t properly plugged in,” according to the researchers.
“We’re not saying the report is false. We’re saying it’s inconclusive, because the evidence does not support their conclusions. We were able to generate the reported conditions without there being a security issue,” explained Kevin Fu, an associate professor of computer science & engineering and director of the Archimedes Center for Medical Device Security.
When a CRM device’s leads are disconnected, Fu said, the device generates the series of error messages detailed in the Muddy Waters report as evidence of a security breach.
“But really, we believe the pacemaker is acting correctly,” he said. “To the armchair engineer it may look startling, but to a clinician it just means you didn’t plug it in. In layman’s terms, it’s like claiming that hackers took over your computer, but then later discovering that you simply forgot to plug in your keyboard.”
The allegations were barely a day old when a patient in Illinois filed a purported class action lawsuit on behalf of all Illinois residents implanted with “every pacemaker, implantable cardioverter-defibrillator, and cardiac resynchronization therapy pacemaker and/or defibrillator with radiofrequency (‘RF’) telemetry capability that was designed, manufactured, marketed, distributed or sold by the defendants,” according to the complaint, filed August 26 in the U.S. District Court for Central California.
Plaintiff Clinton Ross Jr. was implanted with a Quadra Assura cardiac resynchronization therapy defibrillator last November and used the Merlin@home device, according to the complaint.
“Plaintiff Ross was told that the Quadra Assura would be remotely monitored by his physician using the Merlin@home transmitter. Mr. Ross was additionally told that remote monitoring would not in any way affect the performance of the implanted device and that remote monitoring was safe and secure,” the complaint alleges. “Since learning of the security issues with his Quadra Assura and the Merlin@home transmitter, plaintiff Ross has, based on the recommendation of his physician, discontinued using the Merlin@home transmitter by unplugging the unit from the electrical outlet. Plaintiff Ross, again on the recommendation of his physician, does not intend to use the Merlin@home transmitter until the security issues with his Quadra Assura and the Merlin@home transmitter are resolved and will, therefore, be required to go in person to his doctor’s office to have his cardiac device monitored.”
Ross asserts claims for breach of express warranty, fraudulent concealment, negligence and unjust enrichment. He’s asking the court for class certification; restitution, damages and disgorgement “in an amount to be determined at trial;” pre- and post-judgment interest; and legal costs and fees, according to court documents.
“We want to emphasize that patient safety is and has always been our top priority. In this situation, we believe there are numerous inaccuracies in the complaint,” a St. Jude spokeswoman said in an email.
