The largest litigation in the history of Modern Spine Surgery, which would eventually engulf all 10 (at the time) manufacturers of spinal implants, every single surgeon society, the American Medical Association, thousands of individual spine surgeons, and even the United States government, started as a fairly typical malpractice case.
A St. Charles, Louisiana, patient, E.D. Gosserand, already suffering debilitating and disabling back pain, elected to have spinal fusion surgery in October 1986. The surgeon chose to implant a buttress clamp and bone screws, manufactured by Cleveland, Ohio-based AcroMed Corporation as a method to stabilize Gosserand’s spine, support fusion between the diseased vertebrae, and relieve pain.
It was not a successful surgery. Gosserand not only reported continuing pain and loss of function, but, as the attorney claimed in the resulting lawsuit, one or more of the implanted screws had broken causing, he claimed, various complications. It was, in strictly legal terms, a fairly typical malpractice lawsuit.
The issues were straight forward: Did the surgeon act negligently or in any material way breach their professional duty? Were the implants defective?
Ultimately, the court ruled in favor of the patient, setting the award at $950,000, which was later reduced to $500,000.
Intended Use
During the discovery phase of that first trial, the plaintiff’s lawyer noticed that although the screws and plates used in the surgeries had been FDA cleared for marketing, their “intended use” and, therefore, labeling was limited to the “long bones” of the body (e.g., arms or legs). Not spine.
The FDA had even issued an official form letter stating that AcroMed’s metal plates and bone screws were “not substantially equivalent” to other spinal fixation devices and posed “potential risks not exhibited by other spinal fixation systems,” including “screw failure.” AcroMed’s pedicle screws, said the FDA, required premarket approval and were “investigational” devices.
Spotting a novel theory of liability—namely, illegal marketing for an untended use—the Louisiana-based lawyers, who had experience with mass tort litigation, were sure they’d stumbled across the next major class action case.
Steven Phillips, Sofamor Danek’s lead counsel at the time recalls, “That FDA letter provided the plaintiffs with a simple and alluring explanation of why the screws in a number of patients had broken. At the same time, it suggested that AcroMed’s devices were being illegally marketed in the United States.”
One lawsuit for every pedicle screw based spine surgery in the United States meant upwards of 500,000 cases—nearly 600 lawsuits per employee of the defending manufacturers.
Brandishing the “intended use” argument plaintiffs’ attorneys began aggressively soliciting spine fusion cases from around the country. So aggressive were their tactics that, as we will see later, many of the lawsuits filed were without the knowledge or even consent of their putative “clients.”
The plaintiff’s attorneys goal was clear, turn a fairly typical malpractice case into a mass class tort litigation. Had they succeeded in that effort and certified any of the putative classes, they would have created an overwhelming, asymmetrical advantage of more than half million pedicle screw lawsuits.
As Phillips remembers, “The sheer magnitude of the financial risk facing all of the companies would have been overwhelming. Creating such “asymmetrical” risk—which is precisely the objective of the lawyers asserting such claims—that the industry would have been forced to agree to a ‘global’ settlement regardless of the merits of any individual claim.”
The First Major Plaintiff Loss: Class Certification Denied
Within two weeks of the “20/20” broadcast, the first of eight putative class actions was filed. The federal cases were consolidated in 1994 assigned to 72-year-old U.S. District Judge Louis C. Bechtle in Philadelphia. Judge Bechtle was nationally recognized for his ability to organize, drive, even bully, complex mass tort cases to resolution.
In order to qualify litigation as a “class” attorneys have to prove that there exists a natural commonality among the plaintiffs. Each claim, essentially, has to assert the identical theory of liability. For example, if the lawsuit is about buying stocks, then, while the amount of an individual investment might vary, the individual investor liability question can be identical. Identical plaintiff theories of liability are pre-requisite for class certification.
The identical liability test failed before Judge Bechtle—for three reasons. First, no two patient pathologies or circumstances are exactly alike. Second, there were widespread differences between individual surgeon diagnosis and treatment plans—even for the same pathology, again reflecting the unique combinations of patient and surgeon. Finally, as Phillips explained, “Every one of these manufacturers who makes these orthopedic bone screws had a different regulatory history. They were simply not identical.”
There was no alternative for Judge Bechtle and on February 22, 1995, he denied the plaintiffs’ attorneys motion for class certification.
With the possibility of a class action gone, a cascade of individual lawsuits against the ten manufacturers of bone screws, plates and rods rolled in. Cases were filed in both federal and state courts.
Now the lawyers representing patients had to argue theories of liability for each patient’s case individually—which, as it would turn out, made facts, Sofamor Danek’s asymmetrical advantage, the determinant of the bone screw litigation outcomes.
Judge Louis C. Bechtle Takes Charge
As L. Stuart Ditzen wrote in his excellent August 2000 article in the Philadelphia Inquirer Magazine, “[Judge Bechtle] has wrestled several mass cases to resolution over the years. One of Bechtle’s techniques is to drive the litigation toward trial on a brutally strict timetable. That pressure can be the catalyst that brings on a settlement.”
Steven Phillips remembers: “Judge Bechtel ordered for discovery purposes that we complete over 1,200 depositions in four months! At one point we had 42 law firms working under my direction as the National Coordinating Counsel. These 42 law firms were doing 2, 3, 4 depositions a day for four months straight.”
“Keeping track of every single deposition, which attorneys were going where and getting witnesses and others prepared and producing the documents…was, no pun intended, back breaking. Which was, actually, Bechtle’s objective.”
Phillips, who’d appeared before Bechtle in other mass tort cases, recognized the tactic immediately. “Bechtle’s tactic was to make unreasonable demands as a way of facilitating early collapse by the defendants and forcing a settlement.”
Phillips and his army of attorneys did it. Four months later, 1,200 depositions—and ALL the critical information that they brought to the defense lawyers—were completed, catalogued, analyzed, and ready.
“I don’t think there are many people who would have gotten through that gauntlet in that interval of time,” says Phillips today.
Attacking the “Defective Device” Claim
By 1995, the plaintiffs had filed 3,238 cases against Sofamor Danek alone—nearly 2,000 at the state level (more than 1,700 in Tennessee and more than 200 in Oklahoma). Bechtle’s order to depose 1,200 litigating patients over four months had given Phillips and his team a treasure trove of information about the plaintiff’s clients and their cases.
Remembers Phillips, “We obtained tremendous amount of information. We learned about the plaintiffs’ attorneys clients and each case. We analyzed the data. We looked at all the medical records of the people in the cases and we found out, well, wait a minute, only 11% of these plaintiffs have broken devices.”
In other words, 89% of the patients did not have broken screws—which was the basis for the defective device theory of liability. Furthermore, Sofamor Danek Group’s (SDG) medical consultants were certain that broken screws in most patients were asymptomatic.
According to Sofamor Danek’s experts, pain, when it did manifest, was generated from movement between the vertebrae—which were intended to fuse and, therefore, not move.
In more than two-thirds of the cases, the devices, the bone screws, performed as expected. “Why, we wondered, are we in a lawsuit with an army of patients who got the result that they expected?” recalls Phillips.
Even with a broken screw, a significant number of patients nonetheless went on to experience fusion. Furthermore, the medical records of 26% of Sofamor Danek’s plaintiffs showed that their devices had loosened, but most of them also eventually obtained fusion. The devices in the remaining 63% of its plaintiffs experienced no failures or malfunctions and in most of these cases the plaintiff went on to obtain fusion.
Phillips and his team countered the defective device argument with the plaintiffs’ own data that Sofamor Danek’s bone screws were not responsible for the harm plaintiffs were claiming.
To put a final nail in the argument, Phillips and his team of 42 attorneys argued successfully that these lawsuits were an inappropriate attempt to convert manufacturers into guarantors of successful surgical outcomes.
Phantom Cases
In January 1998, surprisingly, 600 of the approximately 1,700 plaintiffs who’d filed lawsuits in Shelby County Circuit Court in Memphis asked Judge John R. McCarroll, Jr. to dismiss their cases. As Ditzen wrote in his superb August 2000 Philadelphia Inquirer article, “Lawyers for Sofamor Danek decided to find out why: Pepper Hamilton’s [the lead law firm representing Sofamor Danek and Steven Phillip’s firm] investigators interviewed and took written statements from 60 [of the patients who’d abandoned their cases].”
“Most of the 60 said they had been prompted by newspaper ads to call lawyers. Twenty-eight said they didn’t know their names had been used in the lawsuits. Several of those individuals were interviewed for this story and confirmed that they did not know they were named as plaintiffs.”
Here are three examples from Ditzen’s article:
- “Phyllis Gaske of Sunnyvale, California, said she and her husband had seen a newspaper ad and called to get more information. “We never spoke with an attorney on the phone or in person,” Gaske said, “They pursued us…. We wrote a letter back informing them we were not interested…. We have never sued anyone…. We didn’t intend to pursue a lawsuit because I was doing well and it would have seemed fraudulent. We wouldn’t do that.”
- “I never had a face-to-face meeting with any attorneys,” said Mark K. Halverson of Coon Rapids, Minnesota, whose chronic back pain had led to four surgeries. “There was no difference between when the screws were in and when they were out, no difference whatsoever. So the screws weren’t the problem. The screws saved me from being in a body case for six months…I was surprised to learn I had been part of a lawsuits…”
- “Deborah Scheers of McDonald, Pennsylvania. said she responded to a newspaper ad and filled out some papers mailed to her. “I also included a statement saying that I didn’t want to be part of a lawsuit. I told them the screws worked for me and I was very happy with them. They gave me my life back…”
Then, in the Federal court in Philadelphia two of the plaintiff’s lawyers, Roy E. Amedee, Jr. and Andrea S. Lestelle, submitted hundreds of plaintiff questionnaires that contained false or obviously omitted information. Again, as Ditzen wrote in his Philadelphia Inquirer magazine article: “For example, one question was, ‘Do you smoke?’ The answer entered on numerous questionnaires was ‘no’, though many claimants, evidence would show, the answer should have been ‘yes.’”
Judge Bechtle imposed a $126,500 fine and sanctioned both Amedee and Lestelle saying, “I think it’s unprofessional and I think it could violate the professional code of ethics.”
Separating FDA Myth From FDA Reality
The plaintiffs’ lawyers wanted to label the cases: “Unapproved Use Litigation”—which played on a widespread public misconception that the FDA approved the ways in which medical products are used. The FDA does not do that.
The FDA did not go to medical school, does not diagnose or treat patients, does not engage in the practice of medicine.
Eventually, Bechtle agreed to name the lawsuits “Bone Screw Litigation.”
“The argument that was being made was first that the FDA had not approved—keyword ‘approved’—orthopedic bone screws for use in the spine,” recalls Phillips. “The way that sentence was structured, we knew, was false and very misleading.”
“The FDA does not approve the use of medical devices. The FDA is only authorized to and has statutory authority to regulate the marketing and the labeling of devices, not how they are used.”
Under the plaintiff’s attorney malpractice theory, each spine surgeon had an obligation to inform their patients that they planned to make an off-label use of a device. Absent that explanation, the plaintiffs’ attorneys argued, the surgery lacked informed consent. It was battery.
The plaintiffs’ attorneys, therefore, pushed to expand informed consent to include FDA labeling issues as well as medical risks.
That, in turn, put manufacturers—potentially—at odds with their customers, spine surgeons.
FDA marketing clearances or approvals are negotiated between manufacturers and the FDA. Surgeons are not involved. Potentially, then, surgeons could be liable for something they weren’t part of nor had control over.
To take that issue off the table, Ron Pickard, Sofamor Danek’s CEO, decided to support any spine surgeons who’d been sued.
Defending Spine Surgeon’s Ability to Practice Medicine
“Under Pickard’s direction, Sofamor Danek collected every authoritative legal source concerning ‘off-label’ use, no matter how far afield,” recalls Phillips, “and compiled these into legal arguments in support of spine surgeon’s ability to practice medicine and defeat the false claims of lack of proper informed consent.”
Phillips advanced these defenses of spine surgeon’s rights in amicus curiae briefs in Ohio and California and in a partial summary judgment motion filed on behalf of surgeons in the federal Multi-District Litigation (MDL) proceedings before Judge Bechtle. Phillips then converted the extensive off-label use research generated by the litigation into an authoritative law review article, the first ever on the subject (Beck & Azari, “FDA Off-Label Use, and Informed Consent: Debunking Myths and Misconceptions.” 53 Food & Drug L. J. 71 (1998) (Tab 300)).
According to Phillips, “Sofamor Danek’s effort to help surgeons defeat the plaintiffs’ attorneys unprecedented regulatory informed consent claims with amicus curiae briefs on critical issues, while unusual, was essential to the successful defense of surgeons and device manufacturers alike.
“Starting with the regulatory informed consent issue and expanding into preemption and class action tolling of the statute of limitations issues, Sofamor Danek made its attorneys available, at considerable expense, to advocacy organizations interested in appearing as amicus in selected cases.”
“Among the amici Sofamor Danek assisted in this fashion were the American Medical Association (and several state affiliates), the American Hospital Association, the Medical Device Manufacturers Association, the Product Liability Advisory Council, and in one case, the American Civil Liberties Union.”
The strategy worked extremely well.
The Ohio Court of Appeals cited one of Sofamor Danek’s earliest amicus briefs when they approved the first appellate decision rejecting regulatory informed consent.
That opinion, then, led to a summary judgment against the same theory in the federal MDL proceedings and was soon followed by similar decisions in California, Minnesota, Florida, Wisconsin, North Carolina, Tennessee, Pennsylvania, and New Jersey. The only appellate court that ever adopted plaintiffs’ regulatory informed consent theory was subsequently reversed.
Goofball “Experts”
Having made the claim that bone screws caused their client’s injuries, pain and suffering, the plaintiffs’ lawyers were, naturally, required to present evidence. They needed experts.
The lawyers were able to dredge up a small platoon of experts who would support their claims: Dr. Merrill Reuter, Dr. Lance Yarus, Dr. William Mitchell, Dr. Robert Pennell, Dr. Trobiani, Dr. Richard Bennett, and Dr. Antonio Aldrete.
Of them all, the most catastrophic—for the plaintiffs’ side—was Dr. Merrill Reuter, an orthopedic surgeon from West Palm Beach, Florida, who’d been recruited by a Sherman, Texas-based former dermatologist, John S. Ferguson.
Ferguson, whose medical license was revoked following his conviction for illegal drug prescribing, served jail time in the 1980s and thereafter made a living finding medical experts for lawyers.
About 20 of the plaintiffs’ attorneys engaged Ferguson to recruit medical experts. He found Merrill W. Reuter. For $200 per case, Ferguson agreed to provide Reuter’s expert medical opinions for individual plaintiffs the lawyers represented.
As Ditzen described in his 2000 Philadelphia Inquirer article: “He [Reuter] cranked out about 550 of them [reports]. He did not examine the surgery patients. He did not speak with them. He did not talk to their doctors. He [Reuter] testified in depositions that he formed his opinions from medical records sent to him by Ferguson.”
A woman working in Reuter’s office, Cynthia Adams, discovered tape recordings of John Ferguson dictating bone screw reports to Reuter. Adams, who had been involved with correspondence between Dr. Reuter and John Ferguson, called Ferguson to ask about the tapes. In her subsequent court deposition, she testified that Ferguson said to her: “Oh, my Lord, destroy those MF’ing tapes. If anyone gets ahold of those tapes, that’s going to be the end of this…”
When Judge Bechtle found out, he barred all 550 of Dr. Reuter’s opinions from being introduced as evidence in the bone screw litigation.
“The loss of Dr. Reuter as a witness was a significant blow to plaintiffs and severely impaired their ability to raise the triable issues needed to oppose our motions for summary judgment,” remembers Phillips.
Ending 1,200 Tennessee Lawsuits With a Single Letter
The Federal cases in Judge Bechtle’s court in Philadelphia were cranking forward in their own bureaucratic eco-system, but down in Memphis, in Judge John R. McCarroll’s court, a different strategy was emerging—one that would end 1,200 bone screw lawsuits with a single, shocking, out-of-left-field letter.
As it happened, roughly 1,200 individual cases had been filed in the Shelby County Clerk’s office as 4 separate “class-action” lawsuits—which meant that the plaintiffs’ paid only 4 filing fees to cover approximately 1,200 cases.
Sofamor Danek’s lead attorney, Steven Phillips, was reluctant to call out his counterpart for gaming the system. “Judge John McCarroll was a southern gentleman of the first order,” remembers Phillips. “And he was of the personal opinion that if you were a lawyer appearing before him, he would per se assume you are a person of integrity.”
Phillips had earlier challenged the integrity of one of the plaintiff’s attorneys and Judge McCarroll made his displeasure known.
So, Phillips found himself in an awkward position of knowing that the plaintiff’s attorneys had misfiled approximately 1,200 cases—but felt he could not raise the issue in McCarroll’s court.
But he had remembered that the county clerk’s staff were struggling with the sheer magnitude of all these cases, and it occurred to him that they might well NOT be aware of the misfiling, intentional or not.
Phillips called his Memphis co-counsel, Sam Blair, a long-time Memphis attorney (a Baker Donelson partner) who knew his way around the Shelby County Court. He asked Blair to have what amounted to an off-the-record “chat” with the County Clerk, Jimmy Moore, which Blair did.
Moore, in turn, investigated the “putative” class-certified bone screw cases and, sure enough, found they’d been misfiled. Furthermore, he confirmed that Shelby had been shorted hundreds of thousands of dollars in unpaid filing fees.
His response was an instant classic.
Under the official imprimatur of the Clerk of Circuit Court, Shelby County, Tennessee, Jimmy Moore and five senior members of his staff, including the Chief Accounting Officer, Administrator, two Deputy Administrators and Manager of the Cost Department, wrote a letter to Judge McCarroll on March 25, 1999, saying:
“The Spinal Screw Litigation has not been established as a class-action lawsuit. Therefore, each case should be filed separately and filing fees collected for each file opened.”
“The current cases should be dismissed with costs assessed. All court costs incurred up to the filing of this dismissal order would be included in this order and would be assessed against one or more of the parties. When this order is entered, the Circuit Court Clerk would create a complete bill of costs. These costs would be due and payable to the Clerk of Circuit Court within 30-days of the date of this order.”
As Phillips remembers today, “Jimmy Moore’s letter was like the declaration of independence. He was saying, ‘Dear judge, it’s come to our attention that these cases are all misfiled. Here’s what you gotta do. You gotta dismiss ’em all. Then let them refile one by one.’ It was really cool.”
Judge McCarroll issued an order shortly after receiving Moore’s letter, dismissing all of the cases without prejudice with permission to be refiled individually, plaintiff by plaintiff…and pay the required filing fees.
None were ever refiled—1,200 cases disappeared.
Game, Set, Match
From the very start, the plaintiffs’ lawyers said that they would not settle for any amount less than a billion dollars. One of the lead plaintiff’s attorneys, John Cummings, literally demanded from Sofamor Danek “all the money” the company could possibly raise in return for which he would allow SDG “to remain in business.”
When Judge Bechtle dealt the plaintiffs their first major defeat by denying class certification in February 1995, the settlement amount changed. In the summer of 1996, the plaintiffs’ lawyers offered $150 million to both AcroMed and Sofamor Danek ($300 million total) to settle. Sofamor Danek, under Ron Pickard’s leadership, flatly rejected the offer. AcroMed, who was buckling under the financial strain of the litigation, in December 1996, agreed to settle for $100 million.
The plaintiffs, thinking that they had the advantage, raised their settlement demand to Pickard and his company to $250 million. That was also rejected.
In 1997, lead plaintiff attorney John Cummings proposed that Sofamor Danek settle all of its cases by issuing $225 million of convertible debentures. It was, given the gains Phillips and his litigation team were achieving in court, a ludicrous demand and flatly rejected.
In the summer of 1997, Judge Bechtle decided to use the power of the bench to drive the parties to a settlement and asked Phillips, “How much would Sofamor Danek be willing to pay to settle these cases?”
Sofamor Danek’s litigation team calculated, essentially, the nuisance value of the outstanding claims and gave Judge Bechtle a dramatically reduced settlement number.
The plaintiffs responded by saying that the verdict value of all the outstanding federal cases was more than $2.4 billion. On March 20, 1998, Pickard, through Phillips, gave the plaintiffs 10 days to accept the company’s offer. The plaintiffs missed the deadline.
Court decisions kept mounting in Sofamor Danek’s favor, week after week. Of the more than 3,700 bone screw cases filed in state and federal courts around the United States, only 176 made it to a judicial conclusion and of those, only one went against Sofamor Danek. That occurred in state court in Houston, Texas, where the plaintiff won a verdict of $413.000—which was affirmed on appeal. In one other case, Sofamor Danek lost, but that was later reversed on appeal.
Every other case was either withdrawn or dismissed.
Summary judgement decisions in favor of Sofamor Danek were rendered by 91 different judges, 73 in federal court (143 cases), 18 in state court (32 cases) and more than 50 appeals were initiated of which 14 were affirmed and 36 were pending at the time the plaintiffs capitulated.
Of the 3,200 individual claims that were filed against SDG, more than 70% were voluntarily dismissed.
The plaintiffs’ lawyers basically surrendered. They agreed to end virtually all of the federal and related individual cases for a small fraction of the cost of litigating any of them.
The Long-term Effect of the Pedicle Screw Litigation
There were, arguably, six significant long-term effects of the pedicle screw litigation:
- Once and for all, the legal right of physicians to use medical devices and prescription drugs off-label without fear of exposure to liability was affirmed. In 1997, three years before the cases were resolved (!), under CEO Ron Pickard’s leadership, Sofamor Danek lobbied Congress to amend the FDCA [Food, Drug & Cosmetic Act] to state explicitly that nothing in the Act gave the FDA authority to regulate the practice of medicine by physicians. In 2001, the United States Supreme Court relied upon both this statute and the law review article written by Sofamor Danek’s legal counsel to put to rest any doubt regarding the propriety of off-label use:”[O]ff- label” usage of medical devices (use of a device for some other purpose than that for which it has been approved by the FDA) is an accepted and necessary corollary of the FDA’s mission to regulate in this area without directly interfering with the practice of medicine. [citing article]. Indeed, a recent amendment to the FDCA expressly states in part that “[n]othing in this chapter shall be construed to limit or interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease within a legitimate health care practitioner-patient relationship.”
- Sofamor Danek’s unflinching support of surgeons and their professional societies cemented Sofamor Danek (later Medtronic Spine’s) reputation as the most trusted supplier in the spine and neuro sectors of medicine.
- Competition from much larger, wealthier orthopedic suppliers like DePuy, Stryker, Zimmer or Biomet was effectively delayed during the 4-years of this litigation.
- Ron Pickard’s decision to isolate the litigation from day-to-day operations of Sofamor Danek preserved customer relations and allowed the company to continue to innovatively move the practice of spine surgery forward—notably to develop the first surgical navigation system (Stealth Station) and to develop the first practical bone morphogenic protein (BMP2).
- Ron Pickard’s steadfast commitment to a simple rule: “If you’re right, you’re right and stick by that.” gave focus, backbone, and inspiration to his team of lawyers and they, in turn, literally saved the practice of spine surgery.
- Many of the frontline executives at Sofamor Danek, individual spine surgeons and executives of the surgeon societies remember this experience with enduring anger. They were slandered and liabled. At one point, when his patience finally broke, CEO Pickard characterized the entire lawyers’ activities as extortion—which it clearly was.
Next: The Final Chapter in the remarkable history of Sofamor Danek.
