Recent Blog Posts in August 2009

It has come to our attention that some defense firms and insurance providers are now claiming that CMS requires MSAs in liability cases pursuant to Section 111 reporting requirements included in the Medicare, Medicaid & SCHIP Act of 2007 (MMSEA), Public Law No. 110-173. This is false.

Section 111 contains reporting requirements for responsible reporting entities (RREs) only. Section 111 does not impact or change the requirements for plaintiffs' attorneys.

Moreover, statements from CMS, and other federal entities, make clear that the agency does not require set-asides for liability claims. Since the MMSEA's passage, CMS has held several Town Hall teleconferences to discuss the Section 111 requirements. During the March 24, 2009 call, Barbara Wright, CMS' Acting Director of the Division of Medicare Debt Management, made several statements reiterating that Section 111 has no impact on liability MSAs. For example:
- In response to a question as to whether liability set-asides will be required under Section 111, she said "the point is the set-aside process is totally separate from the Section 111 reporting process. As we've said in more than one call we don't anticipate changing our routine recovery process." (Transcript, pg. 24)
- When explaining that worker's compensation agreements use a formal review process which makes set-asides recommended, she said that was in contrast to liability agreements. Liability "does not have the same formal review process although our regional offices will consider review of proposed liability set-aside amounts depending on their particular work load and whether or not they believe significant dollars are at issue." (Transcript, pg. 24).

In addition, CMS also has released several Alerts explaining Section 111, which do not indicate any intent to require MSAs for liability claims. For example:
- "Unless you are a business entity which qualifies as [a required reporting entity (RRE) for purposes of Section 111, you do not need to initiate any specific actions in connection with Section 111." (CMS Alert, 2/23/09).
- "The new Section 111 requirements do not change or eliminate any existing obligations under the MSP statutory provisions or regulations." (CMS Alert, 2/23/09).

Moreover, the Congressional Research Service (CRS) provided Congress with an "objective and non-partisan analysis" analysis of the MMSEA. As there was no legislative history regarding the bill, the CRS research report is the most reliable analysis of the MMSEA, including the Section 111 reporting requirements.

CRS' analysis of the Section 111 reiterates that it is a reporting requirement, and makes no mention of the need for set-asides in liability cases. The Section 111 analysis states, in part: This provision requires an insurer or third-party administrator for a group health plan (and in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary) to (1) secure from the plan sponsor and participants information required by the Secretary for the purpose of identifying situations where the group health plan is or has been a primary plan to Medicare, and (2) submit information specified by the Secretary. If an insurer or third-party administrator for a group health plan fails to comply, then a $1,000 per day civil monetary penalty will be imposed for each individual for which information should have been submitted.

His nightmare continues because he cannot hold the manufacturer of his faulty medical device accountable for their faulty product because of a U.S. Supreme Court decision last year that gave the manufacturer complete immunity. Today, Mulvihill will testify before the U.S. Senate Health, Education, Labor, and Pensions Committee, asking for Congress to pass the Medical Device Safety Act (MDSA), legislation that would restore the right of patients to hold manufacturers of medical devices accountable in court when their devices have malfunctioned.

Mulvihill had an irregular heartbeat, and was implanted with a defibrillator in 2006 to control his heart rhythm and pulse. The device intended to save his life nearly killed him and his wife when it malfunctioned while he was driving. The anxiety from the episode led Mulvihill into taking early retirement because his job required so much interstate travel.

A representative from Medtronic confirmed the device had shocked Mulvihill 22 times in 53 minutes. The wire that connects the defibrillator to the heart was recalled four months later after over a hundred reports of the lead malfunctioning had been reported to the Food and Drug Administration (FDA). However, because of a U.S. Supreme Court ruling last year, Mulvihill does not have any recourse to hold the manufacturer accountable.

In February 2008, the U.S. Supreme Court ruled in Riegel v. Medtronic that because the Food and Drug Administration (FDA) had approved a medical device through the pre-market approval process, patients injured by medical devices do not have any recourse to hold the manufacturers accountable. The Supreme Court ruled earlier this year in Wyeth v. Levine that patients harmed by prescription drugs can hold manufacturers accountable in state courts, creating a double standard between prescription drugs and medical devices.

"I relied on this medical device to save my life. Instead, the trauma I experienced because the device was not safe cost me my career and crippled my lifestyle," said Mulvihill. "Medical device companies should be held accountable for the safety of the products they produce and profit from. I am asking Congress to restore my right to seek justice for myself and medical device patients everywhere."

"Medtronic put profits ahead of patient safety. They were aware the device was failing at abnormally high rates but continued to market it, as alleged in lawsuits filed against the company," according to Wendy Fleishman, Mulvihill's attorney with Lieff Cabraser Heimann & Bernstein, LLP. "Medtronic should not receive the benefit of a judicial doctrine granting the company immunity."

Medtronic's Sprint Fidelis' lead, like Mulvihill's, is the subject of multidistrict litigation in U.S. District Court in Minnesota. In January, U.S. District Court Judge Richard Kyle dismissed over 1,400 patients' cases, citing the Supreme Court decision in Riegel v. Medtronic. The ruling stated, "The Court recognizes that at least some Plaintiffs have suffered injuries from using Sprint Fidelis leads, and the Court is not unsympathetic to their plight. ... Plaintiffs' remedy, therefore, lies with Congress, and not with this Court."

MDSA, sponsored by Sen. Edward Kennedy (D-MA), Rep. Frank Pallone (D-NJ) and House Energy and Commerce Committee Chairman Henry Waxman (D-CA), would restore the right to seek justice in state courts for victims of faulty medical devices like heart defibrillators, prosthetic knees, and hips.

But "FDA marketing clearance or approval of a medical device does not guarantee its safety," said William Maisel, MD, director of the Medical Device Safety Institute and a cardiologist at Beth Israel Deaconess Medical Center in Boston.

Dr. Maisel -- who chairs the FDA's Circulatory Advisory Committee -- said the FDA does an "exceptional job" of monitoring the safety of medical devices. However, the post-marketing data is an issue. He said it is "simply impossible" for the FDA to continue to monitor the safety of every medical device it has approved.

Sen. Tom Harkin (D-Iowa), who chaired Tuesday's hearing, agreed.

"No matter how diligently and effectively the FDA does its job, it simply cannot guarantee that no defective, dangerous and deadly medical device will reach consumers," Harkin said.

The device company immunity stems from a 2008 Supreme Court interpretation of a 30-year-old law making the FDA the final arbiter of device safety.

In that 8-1 decision (Reigel v. Medtronic), the Supreme Court ruled that if a device received premarket approval from the FDA, individuals injured by the device may not sue the manufacturer for damages.

Drug companies do not enjoy the same protection. In March, the Supreme Court ruled 6-3 in Wyeth v. Levine that FDA approval of a drug does not shield its maker from lawsuits brought by patients injured by use of the drug.

So patients who are injured by a faulty medical device often have to cover the costs of their resulting medical treatment. The federal government would foot the bill if patient was covered by Medicare or Medicaid, Maisel said.

"Some might argue that we have two cash for clunkers program and this is one of them where the government is paying for defective devices," he said.

But Peter Barton Hutt, a food and drug attorney in Washington, disagreed with Maisel's view and said the FDA is in a better position to decide the safety and efficacy of a device than a jury.

"FDA is not perfect, but certainly a jury is going to be less perfect," he said.

Besides, he said, risk is inherent in all medical devices, and small numbers of patient injuries do not mean a device is defective.

"The fact that it hurts someone doesn't mean there's a defect. It may save 999 lives, but hurt the thousandth life. That doesn't mean it's defective," said Hutt, who served as chief counsel for the FDA from 1971 to 1975.

Allowing individuals to sue device companies at the state level -- which is what identical bills in the House and Senate would do -- would not improve device safety, Hutt said.

But giving injured patients the ability to sue provides a "powerful incentive to manufacturers to use the utmost care," Harkin countered.

Sen. Orrin Hatch (R-Utah) argued that exposing device makers to litigation would make the companies, particularly the small companies, afraid to produce new, innovative products.

The witness panel was lacking a representative from the device industry. However, a race car driver from Missouri told the committee how a spinal implant gave him a new lease on life, and urged the committee not to do anything that would stifle such innovation.

In a release, a spokesperson for Advanced Medical Technology Association (AdvaMed) said the bill would not improve patient safety.