J&J puts the heat on medical funder over hip implant surgeries

Johnson & Johnson's ASR all-metal hip implant--Courtesy of Johnson & Johnson

Johnson & Johnson ($JNJ) scored a victory in its battle against a surgical funder that allegedly profiteered on personal injury settlements for patients suing over J&J's all-metal hip implants, as a federal judge granted the company's request to see information about the funder's questionable payments for plaintiffs' surgeries.

Back in August, J&J's DePuy Orthopaedics unit asked a federal court to make Texas-based surgical funder MedStar pony up information so it could see whether or not the funder tried to squeeze excessive profits from liens it made against settlements for 11 ASR hip implant plaintiffs. U.S. District Judge David Katz greenlighted DePuy's motion, saying that its "request for billing and payment information is necessary to properly assess the validity of the liens," Katz wrote, as quoted by Reuters.

The way DePuy sees it, MedStar submitted claims for about $1.5 million for medical care that should have totaled no more than $336,000--four times the amount that DePuy considers reasonable, Reuters reports. The company wants to know what MedStar paid healthcare providers to help determine what part of the lien relates to surgeries over plaintiffs' ASR hip devices, and which parts come from unrelated medical costs.

But MedStar is standing by its practices. MedStar founder Dan Christensen said last month that the company's claims in the DePuy hip implant litigation are "usual, customary and reasonable." Plus, many patients would not be able to afford surgeries without MedStar's help, some funders argue.

Medical funding companies like MedStar typically cover underinsured or uninsured individuals involved in mass litigation cases by buying medical bills at steep discounts from providers, then agreeing to pay for patients' surgeries as long as individuals accept a lien on settlements. But liens are often larger than expected, leaving patients or companies paying for corrective surgeries with a large bill.

In August, information surfaced about the medical funding industry's dealings with patients suing over vaginal mesh devices. At least several hundred women with claims against vaginal mesh providers have used funders to pay for surgeries, Reuters reported. In one case, MedStar and its affiliates charged mesh plaintiff Tracy Rizzo more than $60,000--about three times the amount that the company paid to have her implant removed.

"I don't begrudge anybody their share," Rizzo said at the time. "But when businesses are abusing already injured people, it is greedy, it is wrong and it shouldn't be allowed.

Meanwhile, DePuy continues to resolve litigation over its all-metal hip implants. In 2010, the company said it would shell out $2.5 billion to settle thousands of claims of pain and injuries stemming from its all-metal ASR hip implants. But J&J/DePuy still face more than 6,000 lawsuits over its Pinnacle line of hip implants, including some cases consolidated before a district court in Texas. At the end of the day, J&J will likely pay more than $4 billion to lay its implant cases to rest, Carl Tobias, a product-liability law professor at University of Richmond, said earlier this year.

- read the Reuters story

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