Reuters: Medical funding industry gets boost from vaginal mesh litigation

As companies such as Boston Scientific ($BSX), Johnson & Johnson ($JNJ) and C.R. Bard ($BCR) continue to face claims over allegedly defective vaginal mesh devices, new evidence is mounting against an industry that profits off women undergoing surgeries to remove the implants.

The medical funding industry, which traditionally covers underinsured or uninsured patients involved in workers' compensation or slip-and-fall cases, has gotten a boost as mass litigation rages on over vaginal mesh devices, Reuters reports. At least several hundred women with claims against vaginal mesh manufacturers have used medical funders to finance surgeries, according to court records and interviews seen by the news outlet. But the system often works to a patient's disadvantage.

Funders typically purchase medical bills at steep discounts from doctors, hospitals or other providers who offered care during mesh suits. The funders then agree to front patients some money to get their implants removed, as long as individuals accept a medical lien on any settlement they receive.

Even though medical lenders say patients are made aware of the lien before they accept a loan, the final lien is often larger than anticipated, according to the Reuters story. For example, medical funding company MedStar paid a surgeon $17,000 to remove an implant from a mesh plaintiff, Tracy Rizzo. But the company and its affiliates then charged Rizzo more than $60,000 for its services--an amount well above what she expected to pay, she told the news outlet.

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

MedStar eventually agreed to cut down Rizzo's claim from $60,000 to $32,500. But Rizzo said the amount is still too high--especially in light of continuing medical problems after she received the surgery, Reuters reports. MedStar owner Daniel Christensen did not respond to the news outlet's requests for comment.

Still, medical lenders are standing by their business. The system allows underserved patients to get treatment and provides access to top surgeons, lenders told Reuters. And the profits that companies make are fair payment for settlements that might never materialize, they argue. "Where else is the patient going to go?" Otto Fisher, a broker who connects lenders with physicians and medical centers, told the news outlet. "The only way to get surgery with top doctors is medical funding."

Plus, devicemakers are not paying for removal procedures after their products are found defective, leaving many women with few alternatives, James Lee, an attorney for mesh plaintiffs including Rizzo, told Reuters in an email. "Even today, with multiple verdicts finding these mesh products defective and the manufacturers liable, not one of the mesh defendants have helped any of the women absent a lawsuit and a settlement," Lee said.

But devicemakers and other industry advocates are striking back, saying that funders may push unnecessary surgeries or take advantage of desperate or ill-informed patients. "The plaintiff is the only one who cares" about the size of the lien, "and by the time she finds out, it's too late," Mark Fischer, a Kentucky lawyer who represents insurers, told the news outlet. "It's outrageous."

- read the Reuters report