Ethicon Media Monitoring 09/23/2015

Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Online Sources

1. J&J's Ethicon Unit Defends Pelvic Mesh In Dallas Trial

   Sep 22, 2015 | Law360

   By Jess Davis
   
   
   Johnson & Johnson’s Ethicon Inc. unit told a Texas state court jury on Tuesday it is not responsible for injuries sustained by a woman who had the company’s Prosima pelvic mesh implant, in the country’s first trial involving the Gynecare Prosima Pelvic Floor Repair System.
2. Ethicon Mounts 4th Circ. Appeal Of $3M Pelvic Mesh Verdict

   Sep 22, 2015 | Law360

   By Steven Trader
   
   
   Johnson & Johnson subsidiary Ethicon Inc. has notified a West Virginia federal court of its plan to appeal to the Fourth Circuit a $3.27 million jury verdict handed down last September in a bellwether trial over allegedly defective transvaginal pelvic mesh implants.
3. Opening Argument Lays Doubt to Cavness’ Claim of Pelvic Mesh Injury

   Sep 23, 2015 | Mesh Medical Device News Desk

   By Jane Akre
   
   
   In this product liability and medical malpractice trial, Carol Cavness was implanted with the Ethicon Prosima Pelvic Floor Repair System, a polypropylene mesh used to treat pelvic organ prolapse. The Prosima was taken off the market by parent company, Johnson & Johnson in 2012.
4. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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5. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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6. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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7. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

   Sep 22, 2015 | Courtroom View Network

   By David Siegel
   
   
   A state court jury heard opening statements Tuesday in the first case to go to trial over allegations that Johnson & Johnson subsidiary Ethicon Inc.’s Gynecare Prosima Pelvic Floor Repair System was defectively designed and severely injured a woman who had the mesh implanted to treat pelvic organ prolapse.
8. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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9. J&J’s Ethicon appeals $3m loss in pelvic mesh case

   Sep 23, 2015 | MassDevice

   By Brad Perriello
   
   
   Johnson & Johnson (NYSE:JNJ) subsidiary Ethicon last week appealed a $3.3 million loss in product liability lawsuit brought over its TVT-O pelvic mesh.
10. Litigation Finance predators: champerty loves company

    Sep 22, 2015 | Boing Boing

    By Cory Doctorow
    
    
    Litigation Finance involves loaning people money in return for the right to finance a lawsuit in their names.
11. Coloplast warns on profit after taking $448 million US lawsuit charge

    Sep 23, 2015 | Reuters

    By Annabella Pultz Nielsen
    
    
    Danish healthcare products maker Coloplast issued its third profit warning this year after setting aside 3 billion Danish crowns ($448 mln) for a U.S. lawsuit, sending its shares 7 percent lower.
12. European Stocks Rise After Factory Data as Volkswagen Rebounds

    Sep 23, 2015 | Bloomberg

    By Camila Russo
    
    
    Optimism over the European recovery and a gain in commodities is spurring a rebound in the region’s shares after their worst decline in a month.

Full Text of Stories Below

Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Online Sources

1. J&J's Ethicon Unit Defends Pelvic Mesh In Dallas Trial

   Sep 22, 2015 | Law360

   By Jess Davis

   Law360, Dallas (September 22, 2015, 9:29 PM ET) -- Johnson & Johnson’s Ethicon Inc. unit told a Texas state court jury on Tuesday it is not responsible for injuries sustained by a woman who had the company’s Prosima pelvic mesh implant, in the country’s first trial involving the Gynecare Prosima Pelvic Floor Repair System.
   
   In opening statements Tuesday afternoon, Ethicon told Dallas County District Court jurors that plaintiff Carol Cavness is suing the company for injuries its product did not cause, and defended the safety of its device. Cavness is seeking unspecified damages, including a punitive award, against Ethicon, which she says pushed an unsafe and defectively designed product to market despite knowing it had a high risk of complications like the years of pain she has been suffering.
   
   Cavness' attorney, David Matthews of Matthews & Associates, told jurors they would be the first in the country to see evidence of Ethicon’s internal development documents for the Prosima device and the warnings he said the company’s own doctors and consultants issued about the safety risks of the device. Excerpts from the documents he showed during the opening described Prosima as a “reckless product,” said “Prosima is not needed” and said the doctors had “low confidence in the data.”
   
   "This company had multiple opportunities to stop a product they knew was dangerous but they didn't because they pushed it for profits,” Matthews said.
   
   He said Ethicon was told the Prosima’s plastic was too stiff for the vagina and that it was an unnecessary device because an existing surgical technique was available that achieved the same result with lower risk.
   
   Cavness, an aircraft mechanic, was lifting a heavy object at work in April 2012 when she felt a groin strain, Matthews said. Within days, a doctor diagnosed her with pelvic organ prolapse and she had surgery to repair the prolapse with a Prosima implant, along with several other procedures.
   
   Cavness filed suit two years after the surgery and claims that within a month of the Prosima implant, she began to have severe pain and difficulty walking. In the years since, she has had continued pain, chronic inflammation and massive scarring in the pelvis, makes weekly trips to her doctor and has developed depression and anxiety, Matthews told jurors.
   
   Ethicon attorney Kat Gallagher of Beck Redden LLP largely steered clear of the safety of the Prosima device in her opening statement, instead concentrating on Cavness’ medical history and telling jurors the pain Cavness suffered was never caused by the Prosima mesh.
   
   Gallagher said the pain was likely caused by “pelvic floor disorder,” a disease she was diagnosed with in May by a specialist who Cavness had not previously seen. Gallagher said an expert witness will testify that the pelvic floor disorder was triggered by the 2012 injury Cavness suffered at work.
   
   She told jurors that though it took years to discover and that the company empathized with the pain Cavness had suffered, it was the pelvic floor disorder and not the Prosima mesh that caused her so much pain.
   
   Gallagher did address Ethicon’s decision to pull the Prosima and other pelvic mesh devices from the market, but denied it was because they were unsafe. She said that health notices issued by the FDA about pelvic mesh scared women and made doctors fear litigation, translating to plummeting sales of the Prosima device.
   
   Low sales figures caused by negative publicity about pelvic mesh, combined with the $4 million to $5 million cost of performing a safety study, is what made Ethicon pull the product, she said.
   
   “This was a business decision by Ethicon in the face of what was happening,” Gallagher said. “A business decision.”
   
   The first witness in the case will take the stand Wednesday morning.
   
   Cavness is represented by Bill Blankenship of William F. Blankenship III PC, Tim Goss and Rich Freese of Freese & Goss PLLC, Richard Capshaw of Capshaw & Associates, Kevin Edwards and Peter de la Cerda of Edwards & de la Cerda PLLC, and Julie Rhoades and David Matthews of Matthews & Associates.
   
   Ethicon is represented by William Massie Gage and Helen Kathryn Downs of Butler Snow LLP and Kat Gallagher of Beck Redden LLP. The doctor is represented by Philipa Remington and Cathryn Paton of Thiebaud Remington Thornton Bailey LLP.
   
   The case is Cavness v. Kowalczyk et al., case number DC-14-04220, in the 95th District Court of Dallas County, Texas.
   

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2. Ethicon Mounts 4th Circ. Appeal Of $3M Pelvic Mesh Verdict

   Sep 22, 2015 | Law360

   By Steven Trader

   Law360, New York (September 22, 2015, 8:46 PM ET) -- Johnson & Johnson subsidiary Ethicon Inc. has notified a West Virginia federal court of its plan to appeal to the Fourth Circuit a $3.27 million jury verdict handed down last September in a bellwether trial over allegedly defective transvaginal pelvic mesh implants.
   
   In its one-page notice of appeal filed last Friday, the company said it will ask the Fourth Circuit to rethink the final judgment entered by U.S. District Judge Joseph R. Goodwin in favor of lead plaintiff Jo Huskey in mid-August, as well as all other interlocutory orders giving rise to that judgment dating back to April 2013, including orders denying the exclusion of expert testimony and partial denials of summary judgment.
   
   Huskey sued Ethicon in 2012, claiming the polypropylene mesh in her TVT-O sling eroded, causing her severe, ongoing pain as the mesh could not be entirely removed through surgery. Her husband, Allen, also sued for loss of consortium.
   
   The suit was the first bellwether case to go to trial in the massive multidistrict litigation against Ethicon over its mesh implants. The trial concluded on Sept. 5, 2014, with the jury deliberating for about three hours before returning its compensatory damages verdict.
   
   In its renewed motion for judgment as a matter of law, which the judge said he had deferred ruling on during the trial, Ethicon argued against the failure to warn claim, saying Huskey's doctor testified she would use the TVT-O again.
   
   But Judge Goodwin solidified the jury’s verdict in mid-August, refusing to throw out the verdict as a matter of law, or alternatively to allow a new trial, finding that the plaintiffs had brought sufficient evidence that Ethicon failed to warn Huskey’s doctor of certain risks in implanting the company’s TVT-O polypropylene mesh product, and even stronger evidence that there were defects in the product’s design.
   
   The judge also shot down Ethicon’s argument against the failure to warn claim, pointing to the doctor’s testimony that she would not have implanted the device in Huskey had she known it carried a higher risk of causing pain in physically active women.
   
   Judge Goodwin also ruled that Huskey had presented “significant evidence” of the risks of the device, such that a reasonable jury could find that the risks outweighed the device's benefits, a major pillar of the design defect claim.
   
   Ethicon argued that the design defect claims were barred by a product liability doctrine known as “comment k,” which holds some products are unavoidably unsafe though not unreasonably dangerous given the harm they are meant to abate. The company also argued that the jury should have been instructed to use the criteria in its consideration.
   
   Pointing to his earlier consideration of the doctrine in another mesh case, the judge said thatcomment K is redundant under Illinois law, which was applied in the case because Huskey is an Illinois resident. Like West Virginia, the state has adopted a risk-utility standard for weighing whether a product is defective. That standard was incorporated into the jury instructions, the judge said.
   
   Judge Goodwin also failed to be swayed by Ethicon's argument that it should get a new trial because the weight of the evidence was in its favor and the court had undermined the company's success by allowing prejudicial evidence. Ethicon had not shown there were “exceptional circumstances” or “grievous error” that warranted overruling the jury, the judge said.
   
   Representatives for both parties late Tuesday did not immediately return a request for comment.
   
   Huskey is represented by Edward A. Wallace and Mark R. Miller of Wexler Wallace LLP, Fidelma L. Fitzpatrick of Motley Rice LLC, and Thomas P. Cartmell and Jeffrey M. Kuntz ofWagstaff & Cartmell LLP.
   
   Ethicon and J&J are represented by Christy D. Jones of Butler Snow O'Mara Stevens & Cannada PLLC and David B. Thomas of Thomas Combs & Spann PLLC.
   
   The case is Huskey et al. v. Ethicon Inc. et al., case number 2:12-cv-05201, in the U.S. District Court for the Southern District of West Virginia.
   

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3. Opening Argument Lays Doubt to Cavness’ Claim of Pelvic Mesh Injury

   Sep 23, 2015 | Mesh Medical Device News Desk

   By Jane Akre

   In this product liability and medical malpractice trial, Carol Cavness was implanted with the Ethicon Prosima Pelvic Floor Repair System, a polypropylene mesh used to treat pelvic organ prolapse. The Prosima was taken off the market by parent company, Johnson & Johnson in 2012.

   Courtroom View Network will begin providing a live feed to Mesh News Desk (MND) Wednesday.  Court watcher Joleen Chambers provided the following observations toMND.

   Tuesday, the group of 60 potential jurors was honed down to a dozen and two alternates after questions posed by both sides such as – have you ever had a surgical procedure, would you consider yourself conservative, moderate or liberal and do your rent or own your home, among other questions.

   Richard Capshaw asked jurors if they could use the standard to find for the Plaintiff in a civil case – “the preponderance of the evidence” rather than beyond a reasonable doubt, the standard for a criminal action.

   DON’T ACCESS THE INTERNET

   There was some discussion with jurors about accessing the internet before Judge Ken Molberg. He told the jurors to only consider evidence presented at trial not what they might read elsewhere. In these days of on-line news, jurors are always cautioned against accessing the internet but J&J attorney Kat Gallagher, a partner with Houston-based Beck Redden LLP, made a special point of discouraging jurors from watching the news or conducting research online. In a courtroom discussion, the Defense objected to the blog, The Mesh Warrior. Blogger Aaron Horton had attended the Linda Batiste trial in the same courtroom last year and befriended the Batiste family.

   Do not allow anyone to investigate on your behalf, warned Judge Molberg. Mistrials are expensive.

   Cavness is represented by Tim Goss and Richard  Freese of Freese & Goss PLLC, Bill Blankenship of William F. Blankenship III PC, Richard Capshaw of Capshaw & Associates, Kevin Edwards and Peter de la Cerda of Edwards & de la Cerda PLLC, and Julie Rhoades and David Matthews of Matthews & Associates.

   Ethicon is represented by William Massie Gage and Helen Kathryn Downs of Butler Snow LLP and Kathleen Gallagher of Beck Redden LLP.  Dr. Kowalczyk is represented by Philipa Remington and Cathryn Paton of Thiebaud Remington Thornton Bailey LLP.

   A jury was finally selected after the late lunch break with an approximate even number of men and women.

   Judge Molberg told the jurors that the Plaintiff will go first to present its case, followed by the Defense.  A rebuttal phase will be allowed. Jurors will be allowed to take notes. Only six were willing to do so.

   Carol Cavness was brought into the court after the jurors were seated. Chambers says she was nicely dressed in a dark pantsuit with stylish dark hair and small gold hoop earrings. You could tell from her face she was experiencing pain, observed Chambers.

   She appeared to be able to sit and did so without any special accommodations.

   PLAINTIFF OPENING- DAVID MATTHEWS  

   Opening arguments got underway around 4 pm with both sides given about an hour.  Dave Matthews opened for Cavness. According to Chambers, Matthews told the jury that J&J had had several meetings with the U.S. Food and Drug Administration about the Prosima pelvic floor mesh to treat pelvic organ prolapse. By June 2012, the company said it would “de-commercialize” (ie no longer sell)  Prosima. (See the letter Butler Snow taking four meshes off the market 2012).

   Why would a company do that unless there were problems with the product, he asked.  One year earlier, the FDA had issued a Safety Communication that mesh used for POP repair had complication rate that was “not rare” and that it might not be more effective than a non-mesh repair of pelvic organ prolapse (POP).” 

   By January 2012, the FDA ordered three years of safety studies to be conducted by mesh makers, J&J among them.   

   When the Prosima was lifted from the market, J&J asked the FDA to lift its requirement to study the safety of the Prosima, despite the fact the polypropylene mesh had already been permanently implanted in countless women.

   The FDA agreed.

   Safety studies for the Prosima were not ordered and its safety and efficacy had not been established, something Ms. Cavness doctor did not know, according to her deposition.  She had already implanted 25 to 30 women with Prosima. A sales representative from Ethicon was even in the room during some surgeries.

   That sales rep will be one of the witnesses called.

   Mr. Matthews described the Prosima as a 4 inch by 4.5 inches piece of polypropylene with two arms that are pushed into a blind area of the pelvis. Much of it remains in Cavness’ body. The damage has been done, he said.

   Matthews told jurors that Ms. Cavness was trying to keep up with the demands of her job as a Class A aviation mechanic. Juries tend to grant greater awards to women who work in demanding jobs, such as the Martha Salazar case against Boston Scientific that resulted in a $73 million verdict for Ms. Salazar last year.

   Chambers say the attorney for Ethicon did not introduce herself to the jury.

   DEFENDANT OPENING- KAT GALLAGHER

   Kat Gallagher indicated the problems with pain Ms. Cavness experienced were due to her pelvic floor muscles giving out. Laying a foundation of doubt as to what ended Cavness in the emergency room during an episode of intense pain, she indicated previous pelvic floor problems were the cause. Pelvic organ prolapse (POP) is generally uncomfortable but not painful.  The demands of her job require her to lift all the time and Ms. Cavness is working with a physical therapist to address the pain issues.

   Ms. Cavness has had a partial removal of her Prosima mesh. The arms remain behind and she experiences pain UTI’s and difficulty voiding. Still she is trying to remain on the job. She sees Dr. Michael Carley, a urogynecologist at Baylor Medical Center for the pain.

   Ms. Cavness shouldn’t have tried to take out the mesh, Gallagher told jurors.

   FDA expert Peggy Pence should appear on the stand Wednesday. As she has in the Linda Gross case and the  Budke case heard in Missouri earlier this year, Ms Pence will outline the introduction  of the mesh used for pelvic meshes, Prolene. It was too stuff for the vagina insiders warned.  Still it was cleared in February 2007 after J&J found a substantial equivalent already on the market, allowing the company to bypass clinical trials.

   Ethicon is facing 29,000 other product liability cases consolidated in multidistrict litigation in Charleston, West Virginia and thousands more defective product cases filed by women from around the globe.   The company indicates it will continue with litigation rather than to begin to offer settlement to resolve the outstanding actions.

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4. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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5. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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6. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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7. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

   Sep 22, 2015 | Courtroom View Network

   By David Siegel

   Dallas — A state court jury heard opening statements Tuesday in the first case to go to trial over allegations that Johnson & Johnson subsidiary Ethicon Inc.’s Gynecare Prosima Pelvic Floor Repair System was defectively designed and severely injured a woman who had the mesh implanted to treat pelvic organ prolapse.

   To date Ethicon has only taken five other pelvic mesh cases to trial out of nearly 70,000 suits pending against mesh manufacturers in state and federal court throughout the country, with juries awarding plaintiffs’ verdicts on four of those occasions. The current case also marks the fourth time video of a pelvic mesh trial will be webcast live by Courtroom View Network, after the first Ethicon mesh trial was recorded in 2013, along with a trial against Boston Scientific Corp. in 2014 and another Ethicon trial earlier this year.  

   Plaintiff Carol Cavness sued Ethicon in 2014 after having the Prosima device implanted to treat pelvic organ prolapse, a condition which occurs when muscle weakness causes organs to drop from their usual positions in the abdomen. She claims to have experienced pain, infection, scarring and incontinence since the implantation in 2012, and alleges that Ethicon failed to provide adequate warnings about the mesh’s potential side effects.

   
   

   That same year Ethicon halted sales of the Prosima amidst mounting suits over the device and increasing scrutiny from the U.S. Food & Drug Administration.  

   Ethicon knew the mesh used in the Prosima could prompt an immune system response that would cause degradation of pelvic tissue, according to Cavness’ suit, but they withheld information about the risks associated with the device while continuing to market is as “safe and effective.”

   “Contrary to the representations and marketing of defendants J&J and Ethicon, the pelvic mesh products have high failure, injury, and complication rates, fail to perform as intended, require frequent and often debilitating revision surgeries, and have caused severe and irreversible injuries, conditions, and damage to a significant number of women,” Cavness’ complaint states.

   The suit also includes claims against the physician who implanted the mesh in Cavness, Teresa Kowalczyk.  

   Cavness is seeking damages for disfigurement, impairment, past and future medical expenses and mental anguish. She will also be allowed to pursue punitive damages against Ethicon, after Judge Ken Molberg nixed the company’s attempt to scuttle those claims with a summary judgment motion.

   Ethicon has argued that its mesh products are safe, and that treatment of pelvic organ prolapse with the Prosima device is often preferable to surgical procedures that the company claims can fail to permanently correct the condition.

   Company spokesman Matthew Johnson said in a statement that clinical studies have shown the Prosima system to have a low rate of postoperative complications when used with appropriate patient selection and proper surgical technique.

   “Ethicon will vigorously defend itself in this trial,” Johnson said. “The evidence will show that Ethicon acted appropriately and responsibly in the research, development and marketing of its Prosima device for the treatment of pelvic organ prolapse.”

   While manufacturers like Ethicon and Boston Scientific have taken numerous cases to trial, other companies have chosen to settle their pelvic mesh cases en masse rather than risk being saddled with massive jury verdicts. Endo International PLC subsidiary American Medical Systems Inc. struck an $830 million deal in 2014 to settle most of the 22,000 suits overs its mesh products.

   Plaintiffs’ verdict against Ethicon have ranged between $1.2 million and $11.1 million, according to court records. Boston Scientific has notched more wins in state court, but been hit with substantially larger verdicts. A trial in 2014 before Judge Molberg resulted in a $73 million verdict, later reduced to $11 million, and in May a Delaware state court jury rocked the company with a $100 million verdict.

   The current trial in Dallas will be webcast gavel-to-gavel by Courtroom View Network, from the start of witness testimony onward, including closing arguments and the verdict. CVN also hopes to webcast another pelvic mesh case against Ethicon scheduled to go to trial in Travis County, Texas on October 26.

   Cavness is represented by Tim Goss and Rich Freese of Freese & Goss PLLC, Bill Blankenship of William F. Blankenship III PC,, Richard Capshaw of Capshaw & Associates, Kevin Edwards and Peter de la Cerda of Edwards & de la Cerda PLLC, and Julie Rhoades and David Matthews of Matthews & Associates.

   Ethicon is represented by William Massie Gage and Helen Kathryn Downs of Butler Snow LLP and Kathleen Gallagher of Beck Redden LLP. Kowalczyk is represented by Philipa Remington and Cathryn Paton of Thiebaud Remington Thornton Bailey LLP.

   The case is Cavness v. Kowalczyk et al., case number DC-14-04220, in the 95th District Court of Dallas County, Texas.

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8. High-Stakes Suit Over J&J’s ‘Prosima’ Pelvic Mesh Goes To Trial In Texas

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9. J&J’s Ethicon appeals $3m loss in pelvic mesh case

   Sep 23, 2015 | MassDevice

   By Brad Perriello

   Johnson & Johnson (NYSE:JNJ) subsidiary Ethicon last week appealed a $3.3 million loss in product liability lawsuit brought over its TVT-O pelvic mesh.

   Last month a federal judge shot down Ethicon’s bid to overturn the verdict and denied the company’s move for a new trial.

   A jury in the U.S. District Court for Southern West Virginia awarded Jo Huskey and her husband damages of $3.3 million, finding in September 2014 that the TVT-O transvaginal sling caused her injuries and that the company failed to warn about the stress urinary incontinence treatment’s risks.

   Ethicon had asked Judge Joseph Goodwin, who’s overseeing 10s of thousands of product liability lawsuits brought over pelvic mesh products, to overturn the verdict or, alternatively, to grant a new trial.

   In a Sept. 18 filing with Goodwin’s court, Ethicon said it would ask the U.S. Court of Appeals for the 4th Circuit to review the case.

   Goodwin had declined to disturb the jury’s verdict, finding that “[t]he evidence on the defective design claim is particularly strong and is capable of upholding the verdict on its own.”

   A reasonable jury, Goodwin ruled, could conclude that the risks of the TVT-O product “are not justified by the benefits, and as a result, the TVT-O cannot, as a matter of law, qualify as an unavoidably unsafe product.”

   “In short, while Ethicon produced evidence of the TVT-O’s usefulness and benefits, the plaintiffs countered with evidence of the TVT-O’s high risks of injury and how Ethicon could have mitigated those risks through alternative designs,” Goodwin wrote, according to court documents. “Taking the evidence as a whole and viewing it in the light most favorable to the plaintiffs, it is clear that reasonable persons could balance the risks and benefits against Ethicon. As a result, I cannot displace the jury’s verdict on these grounds.”

   Goodwin also cited evidence produced at trial that Huskey’s physician would not have used the TVT-O device had she been warned that it was contra-indicated for active patients like Huskey. The doctor was also unaware of other risk factors from the product, the judge ruled, including that the mesh itself could cause infection and that the amount of mesh material in the product could cause more complications.

   “The plaintiffs presented sufficient evidence on Ethicon’s knowledge of dangerous propensities of the TVT-O and failure to warn about those propensities such that a reasonable jury could conclude that Ethicon was negligent,” Goodwin wrote.

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10. Litigation Finance predators: champerty loves company

    Sep 22, 2015 | Boing Boing

    By Cory Doctorow

    Litigation Finance involves loaning people money in return for the right to finance a lawsuit in their names. On its face, there's lots to love about this: it's a financial jiu-jitsu that turns every abusive act from a giant company into a target for an investor. The bigger the bully -- the deeper its pockets -- the more financiers there'll be waiting to sue it on your behalf when it screws you over.

    This practice, called champterty, has a checkered legal reputation. I used it as a major plot element in my novel Makers, and I've proposed it as aserious strategy for slaying copyright and patent trolls.

    Modern litigation financing is dominated by rapacious, hedge-fund-backed players who target really vulnerable people (a favorite: poor old women who live in agony thanks to a discredited surgery called "transvaginal mesh implantation"). These companies make deals with their surgeons to overcharge for the surgeries and then sue recalcitrant insurers for the inflated bill.

    The article outlines the following scheme: financiers find women who need this surgery, based on a defective medical part, but don’t have the money for it and whose insurance companies won’t immediately cover it. They offer them the financing now in return for part of the eventual settlement with the company that was responsible for the faulty mesh. But then they make a deal with a surgeon to overcharge for the surgery, and they inflate the costs as well, and at the end of the whole thing they take a large part of the settlement which the woman was entitled to, and sometimes the woman even ends up owing them money.

    It’s horrible, but it’s really just one example of a large industry of what is known as litigation finance, which just means the world where people with lots of money decide to bet on outcomes of court cases.

    Mathbabe's scorching denunciation of the practice prompted a defensefrom the CEO of a lawsuit funding company who says that the industry may be dominated by bad actors, but that the good ones do something important and useful.

    Funding does more than ensure fair and complete compensation for the injured—it ensures that our justice system is blind to an individual’s economic standing.

    Pre-settlement funding empowers small plaintiffs against big insurance companies. Just as attorneys litigate and treatment centers heal, the funder adds value to the case by granting the plaintiff financial stability. Solid financial footing helps them reject early lowball settlement offers from insurance companies, who always seek to take advantage of a person’s vulnerable economic position.

    No matter how obvious the negligence or big the damages, insurance companies always delay compensation. It’s the oldest and most effective trick in the book: gain leverage by inducing desperation. The adjuster capitalizes on this desperation by offering the plaintiff a lowball offer in exchange for a quick and early payout. Funding the plaintiff takes the leverage away from the adjuster, which results in a big win for the small guy.

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11. Coloplast warns on profit after taking $448 million US lawsuit charge

    Sep 23, 2015 | Reuters

    By Annabella Pultz Nielsen

    Danish healthcare products maker Coloplast issued its third profit warning this year after setting aside 3 billion Danish crowns ($448 mln) for a U.S. lawsuit, sending its shares 7 percent lower.

    Coloplast slashed its full-year earnings before interest and tax (EBIT) margin to 11 percent from 32 percent in local currencies after it was forced to raise the amount set aside to settle legal claims related to its mesh products designed to treat the collapse of pelvic organs and urinary incontinence.

    The company had already set aside 1.5 billon Danish crowns, taking the total provision to cover the costs to 4.5 billion.

    "Three profit warnings this year have dampened sentiment, but we think our thesis remains intact given the one-off nature of the events behind the warnings and what is ultimately a limited impact to our valuation," Barclays analysts said in a note.

    "This amount exceeds our expectations, although we saw a risk of the outcome being worse than the initial provision of

    1.0 billon Danish crowns plus insurance of 500 million Danish crowns," Nordea wrote in a note to clients.

    Coloplast had issued two profit warnings this year due to the lawsuit and weak sales inRussia.

    The company said the provision is not expected to have an impact on the dividend for 2014/15.

    ($1 = 6.6895 Danish crowns)

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12. European Stocks Rise After Factory Data as Volkswagen Rebounds

    Sep 23, 2015 | Bloomberg

    By Camila Russo

    Optimism over the European recovery and a gain in commodities is spurring a rebound in the region’s shares after their worst decline in a month.

    The Stoxx Europe 600 Index gained 0.7 percent at 10:25 a.m. in London after a report showed the euro-area economy probably maintained its 0.4 percent rate of expansion in the third quarter and will continue to grow.

    Energy and commodity producers led the advance, while carmakers rebounded after their worst three-day drop in four years. Volkswagen AG added 3.7 percent after closing at its lowest price since 2011. Its Chief Executive Officer Martin Winterkorn will get a chance to make his case before the executive committee of the company’s supervisory board on Wednesday.

    “European data have been reasonable,” said James Buckley, who helps oversee about $43 billion at Baring Asset Management in London. “Investors have been favoring more domestic European stocks, and I expect this trend to continue. We have sold off quite heavily, and we could have a day or two more of gains.”

    Europe’s benchmark gauge is rebounding after tumbling 3.1 percent yesterday, the most since the Aug. 24 selloff -- its worst since 2008. A rout in automakers after Volkswagen admitted cheating on pollution controls was the latest to hit the region’s shares. The benchmark index closed down 16 percent from its April record, giving up almost all of its gains for 2015.

    The Stoxx 600 earlier fell as much as 0.5 percent after a report showed that a Chinese manufacturing gauge slid to its lowest level in more than six years. It also rallied as much as 1.2 percent.

    Elekta AB jumped 8 percent after a report that it could exceed 450 million kronor ($53.5 million) in cost reductions in the next two years. PostNL NV rallied 8.6 percent after Bank of America Corp. recommended buying the stock. Smiths Group Plc gained 2.7 percent after reporting an increase in profit.

    Coloplast plunged 6.6 percent after the world’s largest maker of ostomy products tripled its estimate for costs relating to lawsuits over its vaginal-mesh inserts. BBA Aviation Plc fell 2 percent after it agreed to buy Carlyle Group LP’s Landmark Aviation for $2.07 billion to expand in flight services for business and general aviation.

    
    

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