In 1984 a woman named Maria Stern won $211,000 in compensatory damages and $1.5 million in punitive damages from a silicone breast implant manufacturer based in Memphis, Tennessee.
Ron Pickard, the eventual CEO of Sofamor Danek (now Medtronic Spine) was then president of the orthopedic division of Richards Manufacturing.
That Memphis manufacturer of breast implants had been founded 34 years earlier by a former Richards Manufacturing’s salesperson Frank O. Wright.
Wright Medical was at the time a division of Dow Corning Corporation. In addition to orthopedic products, Wright made silicone breast implants. Frank O. Wright had died in February 1974 and his stepson, Robert (Bob) Rylee, ran the company.
The $1.5 million Stern ruling went largely unnoticed.
A Lawsuit for Television
Eight years roll by.
A popular network tv program, “Face to Face with Connie Chung,” resurrected the Stern ruling and crafted a salacious story of greedy manufacturers, unethical surgeons, and victimized patients. It was a sensational program which led Congress to hold hearings. More women filed lawsuits. Through their attorneys they claimed that leaking silicone breast implants caused cancer, autoimmune disorders, and other illnesses—despite, it should be noted, literally no scientific evidence.
In July 1991 Brenda Toole won a $5.4 million settlement. In December, Mariann Hopkins received $7.3 million. Then things really got going.
CBS’ powerhouse investigative program, “60 Minutes” aired the cases. Talk show host, Phil Donahue interviewed women who were suing manufacturers. “Court TV” broadcast an entire silicone breast implant trial. The plaintiff’s attorneys hired PR firms to keep the momentum going.
All over television breast implant manufacturers were painted as evil, greedy, and blind to patient suffering. Surgeons were incompetent at best, heartless at worst. The jury awards kept rising—reaching, by the end of 1992, $25 million ($20 million in punitive damages) per case. By the end of 1993, 12,359 breast implant cases were working their way through the courts.
In September 1993, the four breast implant manufacturers, desperate to end the onslaught negotiated a massive $4.75 billion settlement. But the new cases kept coming. The settlement deal collapsed. Dow Corning, Wright Medical’s parent company filed for Chapter 11 bankruptcy. The remaining three manufacturers settled for $3.4 billion, the largest class action settlement up to that point.
Then scientific evidence began to emerge in the peer-review literature (not exactly mass media).
- Plastic and Reconstructive Surgery published a study that found no increase in the incidence of breast cancer in women who had received breast implants
- The New England Journal of Medicine followed with a study that concluded that breast implants did not substantially increase a woman’s risk for breast cancer
- New England Journal of Medicine published a study by Mayo Clinic epidemiologists that found no increased risk of connective tissue disease in women with silicone gel breast implants
- American College of Rheumatology issued a statement saying that the evidence is “compelling…silicone implants expose patients to no demonstrable risk for connective-tissue or rheumatic disease,” and that “anecdotal evidence should no longer be used to support this relationship in the courts or by the FDA”
- American Academy of Neurology reviewed existing silicone gel breast implant studies and concluded that there was no link between the implants and neurological disorders
- Journal of the National Cancer Institute published a review of studies and concluded that breast implants did not cause breast cancer
- After receiving input from a panel of impartial scientists, a federal judge from Oregon ruled that plaintiffs’ evidence linking silicone implants to disease was scientifically invalid
- An Alabama judge appointed a panel of scientific experts which, after two years and $800,000, concluded that breast implants did NOT cause disease.
Ultimately, the breast implant manufacturers won 80% of the cases. But it was too late for Dow Corning and its Memphis based medical products manufacturer, Wright Medical.
Bob Rylee, who’d been promoted to Chairman of Dow Corning’s medical products business had fought the good but losing fight as the company’s principal spokesman trying to make the case that silicone breast implants were NOT causing disease.
Rylee had grown up on a farm in Denison, Texas, served in the U. S. Army and following a law degree from the University of Texas became a partner in a Corpus Christi law firm. During his years there, he was also a director of The Salvation Army, director of Preferred American Life Insurance Company and Casey & Glass Inc.
When Frank Wright died in 1974, Rylee pulled up stakes and relocated to Memphis to run the family business.
After Dow Corning declared bankruptcy, 64-year-old Rylee decided it was time to retire. He walked out of Wright Medical for the final time and with his wife Kay, moved to Sarasota, Florida for a much calmer life.
Then Sofamor Danek’s Ron Pickard called.
The Mass Tort Playbook
Breast implant manufacturers did win 80% of the cases. But the plaintiff’s attorneys, who extracted billions of dollars and bankrupted a major corporation, won the war. Science, it turned out, wasn’t the key to winning; prime time, network television was.
As the breast implant litigation settlements were being crafted (and cases wound down), the plaintiff’s bar looked for another mass tort gold mine.
They found it in the very new field of spine surgery and a small Louisiana spine surgery lawsuit.
The opening move was, of course, a prime time network reveal—over the 1993 Christmas holiday season (December 17 to be exact), on the popular investigation program ABC’s “20/20”, starring the legendary journalist Barbara Walters and her side kick Hugh Downs.
Fifteen million people watched. The program, titled “The Secret of the Back Screws”, followed the Mass Tort Playbook to a tee.
Hugh Downs opened the program saying that “20/20” had uncovered “shocking facts” about bone screws. He and Barbara Walters described cases where bone screws broke, bent, or loosened after being implanted in people’s backs. To make matters worse, they said, screws were not approved by the FDA and were, therefore, “experimental” and certain surgeons, in cahoots with the manufacturers, were destroying patient’s lives.
The only manufacturer mentioned by “20/20” was AcroMed.
Pickard and members of his senior staff watched the program, and their main impression afterwards was “Poor AcroMed” because, as Pickard said at the time, what “20/20” had portrayed was totally wrong.
Still, Pickard was cautious, and he discussed the program with his mentor and friend, LD Beard over the next few days. They also talked to Mike Cody, a Memphis attorney and former Tennessee Attorney General and, again, by general consensus it seemed to everyone that the allegations raised in the “20/20” program would not affect Sofamor Danek.
That sense of security ended abruptly with a late night knock on the front door of Ron Pickard’s Memphis home. It was the Sheriff. He came to serve the first of what would eventually be thousands of lawsuits against Sofamor Danek.
“If you’re right, you’re right. And you’ve got to stick by that.”
Ron Pickard, Alan Olsen (Danek’s founder) and Bob Rylee had known each other for years. “So, I called Bob,” recalls Pickard, “and I said, ‘Bob, I’ve got this problem.’ I told him about the pedicle screw litigation, and I said, ‘Would you be willing to come on board as a consultant in our Litigation Oversight Committee?’ He agreed and he came on board.”
Rylee told Pickard up front, “I can’t tell you what to do, but I can tell you what not to do. The first thing is: if you’re right, you’re right. And you’ve got to stick by that.”
The original pedicle screw case was filed by a Louisiana spine patient named Gosserand who’d been treated in October 1986 with an AcroMed “buttress clamp” and bone screws. Gosserand’s attorney alleged that the spine fusion surgery had failed, and his client was owed damages. The jury agreed. On March 7, 1989, Gosserand was awarded $950,000—which was remitted on January 31, 1990, to $500.000.
Another Louisiana spine surgery lawsuit was filed by a St. Charles, Louisiana, patient, Dorothy Reeves, a former maid who, through her attorney, Darryl Tschim, said that after being treated with spinal fusion, which included using AcroMed’s plates and pedicle screws to stabilize her spine, that she ”hurt constantly” and was unable to work. ”Several screws have broken,” her attorney alleged. Reeves was awarded $475,000 in 1993 (later remitted to $410,000).
Literally two weeks after the “20/20” expose, on New Year’s Eve 1993, the plaintiff’s attorneys filed the first putative class action against AcroMed.
Very quickly, that complaint was updated to include Sofamor Danek, and the sheriff turned up at Pickard’s home late one night to serve the summons and complaint.
The second putative nationwide class action, representing over 100 class representatives as plaintiffs and targeting literally every supplier of bone screws in the world, was filed in the U.S. District Court for the Eastern District of Louisiana just weeks later.
The explicit threat to the ten relatively small spinal implant manufacturers was that these cases could balloon into more than 500,000 lawsuits which, if class actions, would create an overwhelming “asymmetrical” risk” for each company.
The goal of the plaintiff attorneys, of course, was to win by forcing massive settlements regardless of the science or merits of any individual patient’s claim.
Sofamor Danek needed a lawyer. What they were looking for was an unconflicted battlefield general. What they got was a born and bred Philadelphia lawyer who, they would learn, had a street fighter’s instincts and grit—Pepper Hamilton’s Stephen Phillips.
Don’t Let the Other Side Get Between You and Your Customer
“It finally dawned on us what was happening with litigation about pedicle screws. We as a company made a couple decisions that I think were really instrumental in the outcome,” recalls Pickard.
The first decision was to keep the legal fight bottled up and away from company operations and surgeon customers. Ironically, when the plaintiff attorneys decided to go after the surgeon societies (AAOS, NASS, SRS, and others) and the surgeons themselves, it strengthened the ties between Sofamor Danek and the surgeon community. The goodwill that engendered, to this day, is one of the reasons Medtronic Spine is the #1 supplier in the industry.
“We formed a legal oversight committee separate from the management committee.”
The committee consisted of LD Beard (Danek co-founder and board member), Ron Pickard (Chairman and CEO), Alan Olsen (Danek co-founder), Bob Rylee (former Chairman of Dow Corning Healthcare, atty and Chairman of the Legal Oversight Committee), Ken Kramer (Atty, Sherman & Sterling), Ed Basile (Atty, King & Spaulding) and Stephen Phillips (Sofamor Danek lead litigation attorney, member of the National Coordinating Council, EVP and General Counsel for Sofamor Danek).
“We didn’t talk about the litigation outside of the legal oversight committee. We were very strict on that fact,” remembers Pickard.
When the plaintiffs started suing individual spine surgeons, Sofamor Danek’s customers and their attorneys would call the company asking for help. Remembers Pickard, “Patient’s doctors and their attorneys were calling us saying ‘look, can you help us with discovery information.’”
“Of course, our attorneys were saying ‘no, no, you’ve got to shield yourself. You’ve got to let them run their litigation, you run ours.’”
But Bob Rylee stepped up and told Pickard and everyone else on the litigation committee “That’s the biggest mistake we made at Dow Corning. We actually had a separation between us and the customer. Even though the science was not on plaintiff’s side. They were able to divide us from our customer.”
Pickard told his lawyers, “Yes, we’re going to share information, yes, we’re going to work with them. Figure out a way to do it. If there is a risk associated with that, we’ll take that risk.”
One surgeon in particular, Hansen Yuan, who was also at the time president of North American Spine Society, placed a late night call to Pickard personally. He told him, “I’ve run up all these bills at NASS. I’ve got more than $1 million of legal expense. NASS needs help.”
The first thing Pickard told Dr. Yuan was, “Hansen, don’t worry about it, I’ll cover it.” He hung up and thought to himself, “What in the devil did I just do?” He went the next morning to talk to his chief financial officer, Laurance Fairey, and told him what he’d done. Fairey reminded Pickard, “Don’t you need board approval for that?” To which Pickard replied, “Probably, but it’s done now.”
Looking back, Pickard makes the point that while Sofamor Danek and NASS may have had different strategies, where it made sense, and when the strategies coincided, then “We were executing on the most important strategy of all, the one we had from Day One—the customer is #1.”
‘Burn the Ships’—There Is no Settlement
The plaintiffs’ bar organized their cases around simple, powerful, and intuitively sensible arguments:
- The surgeries were unsuccessful. Patients, as the juries could plainly see, were experiencing terrible pain and too often permanently disabled.
- The pedicle screws were not FDA approved. An official FDA letter said that AcroMed’s screws were “not substantially equivalent” to other spinal fixation devices. Further, said the FDA, they posed “potential risks not exhibited by other spinal fixation systems,” including “screw failure.”
- Pedicle screws, said the FDA, required “premarket approval” before they could “be legally marketed” for spinal indications.
- Pedicle screw manufacturers, therefore, knowingly sold experimental, unapproved, and therefore illegal implants which left patients permanently disabled.
- The companies, other surgeons, and the surgeon societies participated in this illegal activity by teaching surgeons to use these investigational, unapproved devices.
Plaintiffs’ lawyers across the country competed with one another to gather clients, running newspaper advertisements, setting up toll-free telephone numbers to solicit patients. In a particularly outrageous move, the plaintiffs’ attorneys even tried to exhibit at NASS’ annual meeting as a subcontractor in another vendor’s booth!
The Judicial Panel for Multidistrict Litigation consolidated all federal cases, including the putative class actions, and assigned them to Judge Louis C. Bechtle, Chief Judge Emeritus of the U.S. District Court for the Eastern District of Pennsylvania.
On February 22, 1995, Judge Bechtle denied class certification. The first piece of good news for the manufacturers.
For the defense, Sofamor Danek’s lead counsel, Stephen Phillips, had to recruit a nationwide network of lawyers covering the majority of Federal districts. Early on, he pulled them together at a meeting in Chicago which still sticks in Ron Pickard’s mind.
“We called a meeting of all the lawyers from around the country. It was a lot of people. Lawyers and their associates. I had Alan Olsen come in. He actually did a saw-bones lab for the attorneys. After all, how can anyone represent us if they don’t know what they are representing?”
“All these lawyers filled the auditorium at the Hilton in Chicago,” remembers Pickard. “I was sitting in the back and Steve was running the meeting. For the first 30-45 minutes there were questions like ‘if we enter into a settlement solution we go this route or that route.’”
“I finally raised my hand and said: ‘Steve, can I say something?’”
“Sure”, he said.’”
“So, I walked up front and said ‘I don’t want to be ugly, I don’t want to be nasty, I don’t want to be rude. But, if anyone has any questions or wants to discuss settlement, please leave now. Because that is not on the table.”
“I don’t know how you win if the first thing you talk about is how you lose. So, please, you won’t hurt my feelings, if you want to talk about settlement, get the hell out of the room. Go on back home.’”
Then Pickard walked out of the room, went to the cafeteria and ordered a cup of coffee.
“That,” recalls Sofamor Danek’s General Counsel Phillips, “set the tone for the meeting and the entire litigation.”
NASS, AAOS and Individual Surgeons Are Sued
“I don’t remember exactly when we first were served with the pedicle screw litigation. Probably February of 1995,” recalls Eric Muehlbauer, just six months in his new position as Director of the North American Spine Society. “We started to get boxes of lawsuits served on us. A box literally filled with 200 lawsuits. I had to sign for them. We ended up getting sued 522 times.”
The plaintiff’s theory was that since NASS had sold pedicle screw manufacturer’s booth space, that the Society was party to commercializing unapproved spinal implants and therefore a fraud on the marketplace.
“It was shocking. I didn’t expect to be, you know, under siege in my first six months on the job.”
NASS’ offices were, at the time, still in the American Academy of Orthopedic Surgeons (AAOS) building. NASS was one of AAOS’ affiliate specialty societies and Muehlbauer had been hired by AAOS to transition NASS out of AAOS.
Rick Peterson, AAOS’ attorney, who’d also been served, called Muehlbauer told him that NASS had to find a lawyer by one o’clock that same afternoon. All defendants to the litigation—the manufacturers and the societies—were holding a call in just a few hours.
By pure luck, Muehlbauer had met Shawn Collins, a litigator and CPA a few months earlier. Quick call and in in time for the afternoon meeting, NASS had their attorney.
“At first I was really just scrambling to understand what was going on and then look at what’s our insurance coverage. Credit the Academy, they gave us great advice. At the peak of the litigation, we were getting bills of $125,000 a month.”
Ultimately NASS’ legal bills topped $2 million and all in, the litigation lasted about two years. “We ended up getting about $1.5 million of it back from our insurance carrier—but not without a fight, which is another story,” remembers Muehlbauer.
During the litigation, the mass tort plaintiff attorneys tried to paint NASS’ president, Dr. Hanson Yuan, as the lead surgeon “bad guy.” NASS’ counsel, Sean Collins saw it coming and, as Muehlbauer recalls, “went right at them”, fighting tooth and nail, beating back even, for example, references to Dr. Yuan’s ethnicity.
NASS counsel, Collins, and Director Muehlbauer never talked settlement. The Academy, however, briefly entertained the idea.
One meeting in particular stands out to Muehlbauer. “I remember there was a hearing that I had to attend in Philadelphia in front of a three judge panel. At the court, before proceedings started, the AAOS attorney tried to introduce me to one of the other attorneys. I’m about to shake his hand and he is introduced to me as one of the plaintiff attorneys. I didn’t wanna shake his hand. I said, ‘what are you doing?’”
Turns out, the AAOS attorney had been talking settlement—potentially at the expense of the other medical societies. AAOS’ leadership eventually put a stop to those back channel conversations.
Muehlbauer credits certain surgeon leaders for helping him save NASS. “Hanson Yuan really stood up and was a leader, without a doubt.”
“Jeff Saal, a physiatrist, he understood strategically how important it was for him to be kind of the mouthpiece for the surgeons. He didn’t have a dog in the fight. He’s not a surgeon. He never implanted a pedicle screw. But he was emphatic about medical education. About having exhibit booths. We can have clinical guidelines and things like that, and even talk to industry, but we are in control of our education, industry is not.”
With these leaders, NASS never came close to throwing in the towel.
Finally, in 1996, the litigation ended for NASS. AcroMed negotiated a settlement with the plaintiffs’ attorneys. “Sofamor Danek said they would never settle. We appreciated the fact that AcroMed wanted to extricate us from this,” remembers Muehlbauer, “and we were released from those 522 lawsuits.”
The AcroMed settlement caught the other defendants—Sofamor Danek, the other manufacturers and the surgeons who’d been sued—by surprise. It felt like a betrayal. Up until that point, AcroMed and the other parties had been cooperating in a joint defense.
Most galling, though, was the reality that those settlement dollars, roughly $100 million, would go to fuel the plaintiffs’ continued mass tort extortion attempt.
END OF PART I. Next up: Part II (and final section) of the Pedicle Screw Litigation Story. What were the defense’s answers to the plaintiffs’ arguments? What was the FDA’s role? Ultimately, led by Ron Pickard and Stephen Phillips, the defendants destroyed the Pedicle Screw Mass Tort extortion attempt. How did they rack up more than 3,000 consecutive wins and only 1, small, loss? That is the subject of Part II of this incredible and true Pedicle Screw Litigation chapter of the History of Modern Spine Surgery.
