Johnson & Johnson’s DePuy Synthes Battled MedStar Surgical Funders Over Price Inflation
September 28, 2015
By Mark Terry, BioSpace.com Breaking News Staff
DePuy Synthes, a Johnson & Johnson company, has accused surgical funders, particular MedStar, of unfairly profiting on hip-replacement surgery patients.
Reuters describes surgical funding this way: “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.”
On Aug. 31, in a federal court case in Toledo, Ohio, DePuy Orthopedics questioned Texas-based MedStar’s practices during litigation of DePuy’s all-metal ASR hip implants. DePuy requested that the court force MedStar to provide details about the liens in order to determine if MedStar’s plan was to “artificially inflate damage claims.”
DePuy claims that MedStar submitted claims for 11 surgeries totaling almost $1.5 million, although the actual costs should have been approximately $336,000. Because of the way the litigation is structured, MedStar is trying to get payment from DePuy instead of from the patients. The bottom line, according to MedCityNews is that if MedStar actually did inflate claims and, as a result, DePuy refuses payment, patients will be responsible for the bill.
In 2013, DePuy agreed to pay approximately $2.5 billion to settle about 8,000 personal injury lawsuits over the ASR hip implants. DePuy had recalled the devices in 2010 when patients claimed the implants caused pain, joint dislocation and possible damage to the central nervous system, thyroid and heart. Each case had an average base payment of about $250,000.
Patients that utilize surgical funders like MedStar either don’t have insurance, or can’t get their insurer to pay for a procedure.
Dan Christensen, founder of MedStar, says his claims to DePuy in this particular lawsuit are “usual, customary and reasonable.” He says that the company hired a medical pricing expert to analyze the bills, and reported they were within four percent of the charges for a typical hip replacement. Christensen also says that MedStar doesn’t determine the charges, the medical providers do.
A related lawsuit involved Boston Scientific and approximately 25,000 lawsuits related to pelvic mesh. In May 2015, a jury in Delaware ordered the company to pay $100 million to a woman claiming injury by transvaginal mesh, which is used to treat pelvic organ prolapse and stress urinary incontinence.
In April 2015, the company announced it had agreed to pay about $119 million to settle about 2,970 of the transvaginal mesh cases. In 2014, Boston Scientific won two related trials before losing three in a row. Boston Scientific is one of seven companies that are facing about 100,000 lawsuits over transvaginal mesh devices, including Johnson & Johnson’s Ethicon, Inc. , and C.R. Bard.
These two cases mark increased interest in surgical funders, particularly over concerns that funders were attempting to recruit doctors to overstate injuries related to various devices, which would increase the lawsuit awards. Some of the medical liens, according to Reuters, “sometimes spiral to as much as 10 times what private insurers or government programs like Medicaid would pay for the same procedures.”
For example, typical insurance reimbursement for removal of pelvic mesh, ranges from $2,000 to $7,000. But some medical lenders have billed up to $62,000 for surgery and related services. There is also concerns that medical lenders are promoting unnecessary surgery.