Three Steps to More Effective Product Liability Claim Investigations

Medical device companies face the often high-profile challenge of investigating product liability claims. Increasingly, but reluctantly, device companies find themselves in newspaper headlines and on the front pages of Internet news sites. Medical device firms have become magnets for claims and litigation.
Monthly it seems, plaintiff lawyers form another “special section” to orchestrate claims against another medical device: breast implants, catheters, hip prostheses, pacemaker leads, etc. Today’s regulatory climate and adverse publicity makes claim defense problematic.

Furthermore, the financial stakes for successful claim defense have never been higher. Even under the best circumstances, a liability claim is usually time-consuming and expensive. Regardless of the size of the device firm—startup or Fortune 100—or the sophistication (untouched by claims to seasoned veteran) a device company’s management team must recognize that claims are likely.

These realities, though, should not induce fatalism or passivity. Instead, they should inspire device companies to develop contingency plans to keep small sparks from becoming widespread conflagrations. Recognizing emerging product liability claims may spring from varied feedback loops—formal or informal. These include incident reports from hospitals or physicians, letters or phone calls from patients or users, or simply through “gut feelings.”

When device manufacturers recognize a potential problem, they can ignore it—the “ostrich approach”—and hope that the problem disappears. Alternately, firms can take proactive, aggressive approaches and prevent claims. In addition, the device company can take early steps to ensure that any claim it faces is more defensible.

In choosing a preferred anticipatory approach, device companies often can prevent claims through early intervention. Long before a complaint reaches the courthouse, device firm managers can undertake early stage preparation. These preparation steps apply to self-insured, uninsured, partially insured or fully insured device manufacturers. They apply whether the device company is in critical care, disposables, implants, patient monitoring or durable medical equipment. They are doable for startups as well as jumbo-sized enterprises.

Device companies need a framework for managing claim situations that have financial implications. Most device companies lack full-time risk managers. Thus, the job of claim coordination typically rests with financial, regulatory, product or quality assurance professionals.

Consider a three-step process for managing incipient medical device claims.

Stage One: Fact-Finding
Scenario: An adverse patient outcome has occurred in a hospital that is a large buyer of your critical care equipment. The hospital risk manager learns of the occurrence through the facility’s internal reporting structure. In turn, since your device was involved and possibly implicated, the hospital notifies you of an adverse clinical outcome and possibility of a claim, or litigation.

Understanding the perceptions of patients and their families is helpful here. Their perceptions usually differ from those of doctors, hospitals or device manufacturers. Realizing this can lend a different perspective on the claim process, and into the patients and “significant others” affected by an adverse medical outcome.

Once aware of an incident, a device company representative can try to interview or obtain statements from medical professionals having knowledge of the event. Fact-finding helps to capture an event’s full details while the “trail is warm.” The sooner it is done, the more likely that those persons involved will remember details of the incident. As time passes, memories dim, stories change, recollections become colored by extraneous factors, and witnesses relocate. (Tip: Coordinate such activity with your product liability insurer.)

Frontline clinical care givers have investigative advantages over device companies. Closer to adverse events, they can more quickly gather details about medical occurrences that might generate claims.
Discussion and interviews between the healthcare provider and the patient and family members may enable the device company to assess the mood of potential claimants. This can allow someone from the device company to intervene early and alleviate the potential for a claim due to an adverse outcome.

Early discussion with the patient and family may boost patient satisfaction, resolving concerns and lessening a claim’s likelihood. Ongoing rapport can defuse potential claims and lawsuits. A risk management study conducted by Harvard University showed that doctors who have superior medical malpractice experience were those who had strong communication and “bedside manner” skills with patients. Device company representatives can take heed and improve their communication skills.

This approach also lets a device company assess early whether the incident warrants further intervention. If the situation is volatile and a claim seems imminent, the device company should consider taking further steps to prepare for this eventuality.

Stage Two: Securing Records and Documentation
After discussions with hospital staff, the user/physician or the patient and family, the device company representative may decide that a claim is possible, if not likely. At this point, someone within the firm should flag all applicable records and documents relating to a patient’s care as well as to the device.
The device firm should secure these files until the claim is resolved or the statute of limitations expires.
By this point, the device manufacturer already should have contacted its product liability insurer (or its attorney, if it is self-insured) to notify it of the event and potential risks. Interviews and statements of persons involved in the incident are vital at this stage. Ideally, there should be a collaborative decision as to whether the insurer at this point will create a file and establish a dollar reserve on the case.

Communication here between the device firm and insurer is key. For device companies with insurance, a trust level must exist with the insurer. Insurers must feel confident that device companies promptly report risks and do not ignore problems. The device company management must feel secure that the insurer will not overreact by creating inflated reserves or “hammering” the policyholder on premiums because of vigilant incident reporting. Further, there is a risk of stirring up claims that otherwise might have remained dormant incidents.

Device reps promptly and accurately should describe adverse events and potential liabilities and provide appropriate background information to build trust with the insurer and save time. If attorney retention becomes necessary, the device company management will save time by having appropriate material organized and accessible for counsel’s review and planning.

Stage Three: Follow-up
Once a manufacturer faces a claim, several activities can minimize time and expenses. As soon as a device rep identifies a risk, much time—months or years—can elapse before a claim or lawsuit surfaces. Thus, it is very important to retain all information, such as formal and informal communications, data, medical device reports and other related material in chronological order in protected files. Keep these files organized and current.

Also, keep track of employees (or ex-employees) who might have knowledge of the original occurrence or key product knowledge. In today’s fast-paced business world, personnel turnover is common. Over time, many people with firsthand knowledge of an incident may change jobs, relocate or retire. Tracking such employees is tough, but vital. Being able to locate former employees is worth the added cost and can avert later aggravation.

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Picking their way through today’s tort and regulatory minefield, device companies must appreciate the risk of claims and lawsuits. While U.S. Food and Drug Administration compliance and good quality assurance can prevent some mishaps, these steps alone will not inoculate medical device firms from claims. State-of-the-art risk management programs provide opportunities, via early intervention, to minimize claim costs and preserve the financial health of the enterprise. Occasionally, though, even the best, earliest and most decisive intervention will not prevent lawsuits. In those cases, device company actions before a claim can save money, time and limit a manufacturer’s legal liability.

Kevin Quinley is Principal at Quinley Risk Associates LLC in the Washington, D.C., area. You can reach him at [email protected].