Intuitive Sued by Shareholders over Adverse Events, Recalls Associated with da Vinci Surgical RobotMar 25, 2014
Shareholders are suing Intuitive Surgical for allegedly hiding problems it was having with the da Vinci surgical robot. The lawsuit alleges that the company under-reported adverse events and hid at least 3 recalls from the U.S. Food and Drug Administration (FDA), Mass Device reports. The shareholder derivative lawsuit was filed on behalf of the City of Birmingham Relief & Retirement System in the U.S. District for Northern California. According to court documents, Intuitive and its board failed “to make a good-faith effort to ensure that Intuitive complied with applicable laws and FDA regulations governing the safety of medical devices designed to protect the health of the American public."
According to da Vinci’s website, this surgical system enables surgeons to offer minimally invasive surgery, but there have been numerous safety concerns about the system since it has been on the market. There have been reports of burns and/or tears, punctured blood vessels, bowel injuries, excessive bleeding, vaginal cuff dehiscence and death associated with the surgical robot.
The suit alleges that "Defendants caused the company to (i) grossly underreport adverse events and complications caused by da Vinci; (ii) mischaracterize the events that it did report by improperly classifying many events as in the benign category of 'other,' rather than as a 'serious injury' or even 'death'; (iii) concealing from the FDA at least 3 voluntary recalls the company instigated to warn hospitals about the tendency of a part of the da Vinci device, known as the 'tip cover,' to malfunction, resulting in burning of the patient’s internal tissue."
Intuitive CEO Gary Guthart, CFO Marshall Mohr and chairman and former CEO Lonnie Smith are also accused of some $113 million in insider trading in ISRG stock. The suit alleges that these three executives were able to sell their stock at an artificially inflated price because they knew the price would drop as soon as investors found out about the numerous safety and quality issues associated with da Vinci.
Additionally, at least two insurers are suing Intuitive alleging that they hid legal claims. Last November, the Illinois Union Insurance Co. filed a lawsuit in the U.S. District Court for Northern California alleging that the company only revealed 25 legal claims filed over da Vinci. Navigators Specialty Insurance Co. made similar allegations, according to Mass Device.