A former Smith & Nephew (NYSE:SNN) executive wants a Tennessee federal court to force the company to cough up documents detailing its sales to the U.S. government as part of his whistleblower lawsuit accusing the firm of breaking the Trade Agreements Act.
Samuel Adam Cox III, formerly the Information Technology Global Director of Enterprise Resource Planning for Smith & Nephew’s Tennessee operations, filed the lawsuit last year. It alleges that SNN sold products in the U.S. it falsely claimed were made here, in violation of the TAA, according to court documents.
Cox worked for SNN from mid-December 2007 to September 2008, when the company allegedly fired him "in retaliation for his repeated attempts to bring Smith & Nephew’s illegal activities to the attention of his superiors," according to the documents. The TAA requires goods sold to the U.S. government, as they were under a contract SNN had with the Veterans Administration, to be manufactured in designated nations; Malaysia is not on that list.
A number of Smith & Nephew executives, including CIO Sal Chiovari, were allegedly aware of the violations, according to the documents. One executive allegedly joked that selling the Malaysian products was "go to jail activity," according to the lawsuit, and others allegedly told Cox that they knew the company could get in hot water if the sales were ever disclosed. Global Vice President of IT Jon Schauber allegedly warned Cox not to rock the boat, saying Cox had better "get on the ‘bus,’ meaning that he better ‘shut-up and go-along,’" according to the documents.
Another SNN executive, vice president of quality Steve Kahn, "was so concerned about Smith & Nephew’s illegal conduct that he had raised the issue with the presidents of the orthopedics division, Mark Augusti and Joe Devivio," according to the lawsuit.
"Kahn even started holding internal meetings with several Smith & Nephew departments, in hopes of raising internal awareness of the violations that were occurring on a daily basis at the company. Kahn’s meetings were attended by some of Smith & Nephew’s senior management, but Kahn’s concerns were never given any priority among the company’s business objectives," according to the complaint. "When Plaintiff-Relator Cox refused to aid Smith & Nephew in its illegal practices, he was berated and cursed by CIO Chiovari. In addition, Jon Schauber threatened Plaintiff-Relator Cox, saying that he would give Mr. Cox a very poor grade on his performance review."
After reporting the allegedly "fraudulent practices and retaliatory actions" to Smith & Nephew’s whistleblower hotline, Cox was fired in September 2008, allegedly "for refusing to participate in defendant’s illegal practices and for attempting to end those practices by bringing them to the attention of his supervisors."
Cox now wants SNN to produce documents detailing sales of about 107 products to the U.S. government, according to his motion to compel supplemental discovery responses:
- “An Excel or Access spreadsheet detailing all sales by all S&N divisions to the federal government from December 2002 through the present. For each sale, the data should include: (a) the S&N product number, (b) number of units sold, (c) extended price, (d) purchasing agency, (e) agency procurement number, and (f) transaction date."
- "An Excel or Access spreadsheet listing all of the country or countries of origin of all products that S&N offered for sale to the federal government from December 2002 through the present, including the dates of any changes in countries of origin."
- "An Excel or Access spreadsheet, and all related documents or records, identifying and supporting all of S&N’s grounds for contending that any particular sales to the government from December 2002 to the present were not subject to the country-of-origin regulations implementing the Trade Agreements Act."
- "And any spreadsheets that S&N provided contemporaneously to the federal government from December 2002 to the present, listing the countries of origin of S&N’s products."
Cordis seeks appeals court review in stents loss against BSX
Johnson & Johnson’s (NYSE:JNJ) Cordis Corp. subsidiary may be getting out of the coronary stents game, but it’s still hoping to overturn a court decision ruling that four of its drug-eluting stent patents are invalid.
In June, the U.S. Court of Appeals for the Federal Circuit upheld a federal judge’s ruling in favor of Boston Scientific’s claim that J&J’s patent covering the sirolimus (also called rapamycin) used in Cordis’ Cypher stent doesn’t cover the everolimus drug BSX uses in its Promus device. Everolimus is made by modifying the sirolimus molecule at a single location.
Judge Susan Robinson of the U.S. District Court for Delaware also found that the fourth patent wasn’t specific enough in describing exactly which drug formulations it covered to be valid, because the patent didn’t include a written description of at least one example of such a formulation.
The patents in question are at the heart of complicated legal wrangling involving the Natick, Mass.-based medical device giant, its new Brunswick, N.J.-based rival, Abbott (NYSE:ABT) and Wyeth (NYSE:WYE-). The dispute centers around Boston Scientific’s Promus stent, a private-label version of Abbott’s Xience V stent, and the Cordis Cypher.
Now J&J wants a Federal Circuit Court panel to review that court’s decision to uphold Robinson’s decision, according to a petition for en banc review filed with the court last week.
Emdeon shareholder sues to stop Blackstone buyout
The $3 billion deal by private equity giant Blackstone Group to take HIT provider Emdeon Inc. private hit a snag when a group of investors sued last week to stop the deal.
The lawsuit, filed the suit in the Court of Chancery for Delaware, alleges that the deal is structured to benefit two other PE firms that together own about 70 percent of Emdeon, Hellman & Friedman LLC and General Atlantic LLC.
"Defendants H&F and General Atlantic, who together own approximately 70 percent of [Emdeon’s] outstanding shares, have agreed to vote in favor of the proposed transaction. H&F and General Atlantic, by virtue of their large stake in the company and the large number of shares they control, have interests divergent from those of Emdeon’s public shareholders," according to the lawsuit. "H&F will maintain a significant minority equity interest in Emdeon after the proposed pransaction is consummated. Under the terms of the proposed transaction, each issued and outstanding share of Emdeon common stock, other than any shares owned by Blackstone, by the company as treasury stock, or by any shareholders entitled to, and who properly exercise, appraisal rights under Delaware law, will be cancelled and automatically converted into the right to receive $19.00 in cash, without interest. Thus, Emdeon’s public shareholders are being forced out of Emdeon while its largest shareholder will receive preferential treatment and maintain a significant equity interest in the company."
Caliper, Carestream settle patent infringement spats
Carestream Health and Caliper Life Sciences agreed to put a pair of patent infringement lawsuits to bed last week.
Caliper slapped Carestream with a lawsuit in February 2010 in the U.S. District Court for Eastern Texas over a suite of seven patents it licenses from Stanford University. That lawsuit alleged that Carestream’s In-Vivo Molecular Imaging Solutions and Image Station Molecular Imaging Solutions lines, including a series of Kodak-brand devices Carestream acquired from Eastman Kodak Co. in 2007, infringes the patents covering Caliper subsidiary Xenogen Corp.’s IVIS imaging system. The IVIS devices are used for preclinical non-invasive imaging of mammals covered by the Caliper patents.
In July 2010 Carestream struck back in the U.S. District Court for Western Wisconsin, alleging that Hopkinton, Mass.-based Caliper infringed Carestream’s patent for “Apparatus and Method for Multi-Modal Imaging” with its Ivis Lumina XR imaging system. Rochester, N.Y.-based Carestream alleged that the willful infringement also included the intent to cause others to infringe the patent, according to court documents. The company is seeking an injunction against further sales of the device, triple damages and attorney’s fees.
The settlement mandates that Carestream "will not market and sell in-vivo optical imaging systems for certain applications covered by patents licensed from Stanford by Xenogen and Caliper" and that Carestream "will not assert that the Lumina XR system as currently configured and sold by Caliper infringes any of Carestream’s patents," according to a press release.
Lawsuits over Zimmer’s NexGen knee implant go to Illinois
A raft of 28 product liability lawsuits filed against Zimmer Holdings (NYSE:ZMH) around the country are being rolled into a single case in the U.S. District Court for Northern Illinois.
"All of the lawsuits involve allegations that plaintiffs experienced problems following knee replacement surgery as a result of design defects with certain Zimmer NexGen components. Plaintiffs claim to have suffered catastrophic implant failures, often resulting in the need for revision surgery to remove or replace the implants because they failed far in advance of their projected lifespan. Zimmer allegedly downplayed and understated the risk of Zimmer NexGen knee problems," according to AboutLawsuits.com. "Zimmer opposed consolidation of the lawsuits, arguing that it will not promote the efficient litigation of the cases, as there are at least eight different artificial knee products made by the company that are included in various lawsuits. The medical device manufacturer argued that each Zimmer NexGen knee model would have to go through its own discovery process, and that consolidated discovery would be made harder by the requirement to protect the company’s trade secrets."
KFx Medical sues Arthrex after positive patent review
A positive review of a patent held by KFx Medical Corp. by the U.S. Patent & Trademark Office prompted the San Diego-based orthopedic device maker to sue Arthrex Inc. for infringing the patent.
KFx alleges that Arthrex is in violation of its patent for knotless double-row rotator cuff repair.
“According to court documents issued in 2011, an anonymous party filed a request that the U.S. Patent Office re-examine the KFx Medical patent. During 2010, only 780 patent re-examination requests were filed, while in that same year over 200,000 patents were issued. The U.S. Patent Office rejected all arguments made by the anonymous party and upheld the KFx Medical patent," according to a press release.
Health Robotics wins lawsuit against McKesson
Italian robotics maker Health Robotics srl won the dismissal of a lawsuit filed by McKesson Corp. (NYSE:MCK) seeking to end its distribution contract with the Bozen, Italy-based firm.
McKesson sued Health Robotics in February in a effort to spike its exclusive, $5 million U.S. distribution agreement for the Italian firm’s CytoCare robot. After spending more than $6.9 million on the deal (including $3.6 million in licensing fees paid to Health Robotics), McKesson discovered that Health Robotics did not have the authority to ink an exclusive deal, according to court documents.
Judge Joseph Spiro of the U.S. District Court dismissed the case August 2, ruling that the contract’s arbitration clause takes precedence over McKesson’s right to sue over the deal (the case is slated to be decided by an arbitrator in Geneva, Switzerland).
"At best, the license agreement is ambiguous as to whether McKesson’s claims fall within the scope of the arbitration requirement," Spero wrote. "Although the court finds strained McKesson’s argument that the license agreement creates a separate exception for equitable claims without limitation – including claims that seek money damages and therefore, arguably, should be classified as legal rather than equitable – to the extent that this interpretation might be found reasonable, the policy in favor of arbitration nonetheless requires that the arbitration clause be enforced as to McKesson’s claims because HRSRL’s interpretation of the contract is also reasonable.
“This McKesson dismissal resolves all pending and past litigation against Health Robotics in the United States of America with a 100 percent winning record in our favor," Health Robotics executive vice president Gaspar DeViedma said in prepared remarks. "As a small European company, we are indeed very pleased to see our motion to dismiss McKesson Corporation’s lawsuit granted by the court, similarly than we had successfully defeated every past attempt by other third parties to engage Health Robotics S.r.l in groundless American lawsuits."
A McKesson spokeswoman did not immediately return a call seeking comment.