Dive Brief:

• Humana filed a complaint against Abbott alleging the medical device maker’s St. Jude Medical unit allowed thousands of patients to be implanted with heart devices it knew to be defective and then devised a plan to have the insurer pay for expensive surgeries to remove them. 
• The lawsuit, filed Friday in the U.S. District Court in Miami, accuses St. Jude of knowing the cardiac defibrillators had defective batteries that could deplete prematurely, and suppressing evidence of the problem from 2011 through 2015, before ultimately recalling the devices from the market.
• Humana is seeking to recover the costs it incurred as a result of St. Jude’s actions, including for surgeries that costs tens of thousands of dollars to have the devices removed from patients' chests.

Dive Insight:

Abbott paid $25 billion in 2017 to acquire St. Jude, a major player in the cardiac device market, for its portfolio of technologies to treat heart failure, atrial fibrillation, structural heart disease and chronic pain.

Humana accuses St. Jude of knowing that its devices were defective for four years and only issuing a recall in 2015 after reassessing the matter during negotiations with Abbott for the merger. Abbott and St. Jude then "devised a scheme to stick Humana and other secondary payers with the costs of surgically removing and replacing the defective devices that had been implanted in the chests of their insureds," the lawsuit alleges.

The defendants offered to compensate patients for the cost of replacing their heart devices and their out-of-pocket medical expenses up to $2,500 but then "secretly stuck Humana and other secondary payers with the remainder of the bill, which in most cases totaled tens of thousands of dollars," the suit contends.

"We believe this lawsuit is without merit," an Abbott spokesperson told MedTech Dive.

The payments demonstrate the defendants’ responsibility for the costs arising from the defective devices, the lawsuit states.

The complaint indicates that Abbott publicly assumed control over the recall and that the court has jurisdiction over the matter under the Medicare Secondary Payer Act.

The suit also accuses the defendants of misleading healthcare providers to invoice for procedures to avoid their own liability and shift the costs to insurers such as Humana. Had it known about the "false, misleading, excluded or incomplete information," it would not have reimbursed the providers, Humana said in the suit.

Humana also asserts it made payments for costs exceeding $75,000 and is entitled to recover double damages and has the right to recover amounts it paid for third-party claims.

A previous attempt by third parties to sue Abbott over the battery depletion issue with its heart devices was dismissed by the court due to a federal law involving preemption that protects medical device makers from product liability litigation.