Medtronic says it's close to resolving Infuse lawsuits

Medical device giant Medtronic PLC has told investors that the company is ready to close the book on one of its biggest and longest-running legal headaches, involving the controversial back-surgery product Infuse.

Infuse includes a genetically engineered protein that causes bones to fuse rapidly after lower back pain surgery. Thousands of patients claim the chemical was used inappropriately, causing permanent, debilitating injuries. In a securities filing Tuesday, Minnesota-run Medtronic revealed that it has reached agreements to settle "substantially all" of the 6,000 actual and threatened Infuse lawsuits.

Medtronic did not release figures for the confidential settlements. The company reported that it set aside $300 million for all of its legal settlements in the fiscal year that ended in April, according to the Securities and Exchange Commission filing.

The company said it is cooperating with attorneys general in five states that have sent subpoenas and document requests for information on how Medtronic studied, marketed and sold Infuse. Late last year Medtronic set aside an undisclosed amount of money "in connection with" the inquiries from attorneys general in California, Illinois, Massachusetts, Oregon and Washington, the Tuesday SEC filing said.

"We continue to cooperate in the State AG inquiries and are hopeful an acceptable resolution can be reached," Medtronic spokesman Eric Epperson said via e-mail Wednesday. Spokespeople with each of the state offices declined to comment.

Medtronic had previously disclosed reaching settlements in more than 4,000 Infuse patient lawsuits. In December, a judge in St. Louis cleared the way for the first jury trial involving personal injuries allegedly caused by Infuse. Such a trial could have revealed thousands of pages of sealed internal documents that other plaintiffs could have used in their cases.

Medtronic has always denied the allegations in lawsuits from patients, investors and employees-turned-whistleblowers who claimed over the years that Medtronic promoted sales of Infuse for surgeries that were never proven to be safe and effective uses of the chemical. The company says it strictly follows the law on promotion of medical devices, and it cannot control when doctors use it in unapproved ways, like in pediatric surgery.

The so-called "off-label" use of medical devices is legal because the U.S. Food and Drug Administration regulates only products, not the practice of medicine. Many of the injured patients allege in their lawsuits that they found out about the use of Infuse only after their surgery ended with complications. Some say Medtronic sales reps were present in the operating rooms during their surgeries.

Infuse was approved in 2002 by the FDA for use in adults getting a relatively uncommon type of back surgery. Almost immediately after approval, doctors began widely using the product in ways that the FDA never evaluated for safety, according to statistics published in peer-reviewed journals.

In 2007, Medtronic compiled a database of more than 3,600 Infuse surgeries, the vast majority of which were off-label. The Star Tribune reported last year that more than 1,000 of the surgeries resulted in adverse events, which Medtronic did not report to the FDA for more than five years. The data included a pattern of injuries from a particularly risky off-label use of Infuse in neck surgery — a surgery that later prompted an FDA public warning.

Medtronic paid a $40 million settlement to the Justice Department in 2006 to resolve whistleblower allegations that it paid "kickbacks" to induce doctors to use its spine products. The company paid at least $85 million in a settlement to shareholders in 2012 to resolve allegations that it failed to reveal that most sales of Infuse were for off-label surgeries. In 2014, Medtronic said it paid $22 million to 950 injured Infuse patients. The company denied wrongdoing in each settlement.

The SEC filing on Tuesday did not reveal the exact amount of money Medtronic has agreed to pay for its remaining 6,000 Infuse patient cases. The filing says the company wrote off $300 million for "certain litigation charges" including the Infuse settlements in the fiscal year ended in April. That was up from $26 million in litigation charges booked in 2016.

Earlier Infuse settlements broke awards into tiers depending on the severity of the injury, with those who were most badly hurt collecting the largest amounts. The individual amounts received in personal injury cases are reduced by attorneys' contingencies that often range from 33 to 40 percent of the award, as well as insurance company "clawbacks" of money paid to cover surgeries.

Pat Beaudry of Apple Valley was left with chronic pain on his left side after getting Infuse during back surgery. Today he uses a cane and often cannot move his left leg. He says his left hand is numb. He still takes opioids daily. He will never be able to work again.

"My settlement was based on $27,000," Beaudry said Wednesday by phone. "By the time it was done, I got $2,200. ... I am so disappointed in the medical system, but also in the legal system."

Joe Carlson • 612-673-4779

Jim Spencer • 202-662-7432