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 The claim by DePuy Orthopaedics marks the first time that a device
maker in the multibillion-dollar litigation over faulty hip
replacements has publicly raised concerns about the controversial
business of surgical funding, which has increasingly become a part
of mass litigation over medical devices.
Surgical funders essentially invest in operations on injured
plaintiffs. If a litigant can’t afford surgery to correct problems
allegedly caused by medical devices, the funders will step in to
purchase medical bills at a deep discount from physicians, hospitals
and others who have provided care to the patient. When the patient's
lawsuit settles, the funder reaps a profit by placing a lien on the
settlement for the full amount of the patient's surgical bill.
Following a Reuters report about the role of Texas-based medical
funder Medstar in pelvic mesh litigation, DePuy Orthopaedics has
raised new questions about Medstar in litigation over its all-metal
ASR hip implants.
In an Aug. 31 filing in federal court in Toledo, Ohio, the defendant
asked the court to compel MedStar to turn over more information
about the liens, so it can investigate whether the funder schemed to
“artificially inflate damages claims."
 According to DePuy, MedStar submitted claims for nearly $1.5 million
for 11 surgeries that should have cost no more than $336,000. DePuy
contends MedStar is attempting to collect twice as much as it paid
to acquire the medical bills and four times what DePuy considers a
reasonable cost for the patients’ care.
DePuy's filing cites the Reuters report on MedStar's actions in the
mesh litigation.
Because of an unusual feature of DePuy's settlement, MedStar is
seeking payment directly from DePuy, rather than from the 11
patients whose hip-replacement surgery it funded. DePuy says it
needs access to the funder's records before it will pay. If the
claims are ultimately determined to be improper, DePuy might refuse
to pay, possibly leaving plaintiffs on the hook for the full cost of
their medical care.
MedStar founder Dan Christensen said his claims in the DePuy hip
implant litigation are “usual, customary and reasonable.” According
to Christensen, a medical pricing expert retained by MedStar deemed
the bills it submitted to DePuy to be within four percent of typical
hip replacement charges. He also said medical providers, and not
MedStar, determine such charges.
Last month Reuters reported that in cases involving pelvic mesh,
another medical device that is the target of mass litigation,
funders' liens on patients' settlements sometimes spiraled to as
much as 10 times what private insurers or government programs like
Medicaid would pay for the same procedures
In such cases, patients wind up recovering much less from
settlements than they might have if funders weren't involved.
Patients who rely on medical funders tend to be uninsured or unable
to afford cash deductibles or out-of-network fees charged by their
doctors.
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In the pelvic mesh litigation, manufacturers American Medical
Systems, Johnson & Johnson's Ethicon subsidiary, Boston Scientific
and C.R. Bard obtained records and deposition testimony on the
Texas-based surgical funder MedStar after learning a MedStar
representative was soliciting physicians to perform mesh removal
surgery.
DePuy agreed in 2013 to pay about $2.5 billion to settle
approximately 8,000 personal injury suits over ASR hip implants. The
company had previously recalled the metal-on-metal devices in 2010,
after patients alleged they caused pain and joint dislocation and
could even damage the central nervous system, thyroid and heart. The
average base payment per case was about $250,000.
DePuy also agreed to pay health insurers' liens for hip implant
revision surgery directly so the costs would not come out of
plaintiffs' recoveries. That provision explains why MedStar
submitted its liens to the defendant.
Texas attorney Tom Rhodes, whose law firm represents seven of the
hip patients whose surgery was funded by MedStar, said his clients
turned to MedStar because their preferred surgeons would not accept
their insurance and would not operate at the reimbursement rate
DePuy offered. All of the MedStar-funded plaintiffs received
treatment from the same San Antonio medical providers.
The surgeon, Dennis Gutzman, did not respond to a request for
comment faxed to his office. The other four plaintiffs who used
MedStar funding are represented by Watts Guerra. That firm did not
respond to multiple requests for comment.
Christensen said that if DePuy does not pay MedStar's liens, he will
have "no other choice" but to demand payment from the patients whose
surgery his company funded, an outcome he described as “extremely
unfair.”A spokesman for DePuy’s parent company, Johnson & Johnson,
declined to comment.
(Reporting By Alison Frankel and Jessica Dye; Editing by Amy Stevens
and Sue Horton)
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