Lawsuit Brought Against Intuitive Surgical

Intuitive Surgical Inc. is facing a lawsuit that alleges false marketing of its Da Vinci surgical system. The system consists of a console where the surgeon sits while operating, a patient-side cart where the patient lies during surgery, four interactive robotic arms, a high-definition 3-D vision system, and proprietary Endowrist instruments. The machine is intended to perform a range of complex surgeries under physician guidance.

The class-action lawsuit was filed by Ryan & Maniskas LLP on behalf of entities that purchased securities of Intuitive between Oct. 19, 2011, and April 18, 2013. The complaint alleges that throughout the class period, defendants issued a series of materially false and misleading statements highlighting the purported safety and effectiveness of the Da Vinci surgical system, while at the same time announcing quarter after quarter of record financial results. As a result of defendants’ efforts to conceal significant safety and efficacy problems with the surgical system and their alleged false statements concerning the company’s business metrics and financial prospects, the lawsuit alleges Intuitive stock traded at artificially inflated prices during the class period, reaching a class period high of nearly $595 per share in intraday trading by April 18, 2012.

On April 18, 2013, the CNBC network program “Investigations Inc.” broadcast a story about the Da Vinci surgical system consisting of interviews with patients who have filed lawsuits against Intuitive claiming they suffered injury while being operated on by surgeons using the da Vinci Surgical System. Following this news, the price of Intuitive stock fell $8.62 per share to close at $484.75 per share on April 19, down nearly 19 percent from its class period high of $595 per share.

In April, the U.S. Food and Drug Administration (FDA) launched an investigation into the surgical system due to a spike in adverse event reports (AERs) last year. The number of AERs for the Da Vinci Surgical System filed with the FDA’s Manufacturer and User Facility Experience (MAUDE) database increased 34 percent in one year, going from 211 in 2011 to 282 in 2012. During that period, the number of procedures performed with the Da Vinci system in the United States increased 26 percent, going from 292,000 to 367,000, according to a quarterly report that Intuitive Surgical filed in April with the U.S. Securities and Exchange Commission.

Through the first three months of 2013, MAUDE received 62 reports. In many cases, AERs are filed by the manufacturer. Other reports come from hospitals, clinicians and patients.

Some of the complaints recorded in the AERs were blurry vision through the surgeon side console, system errors and unresponsive surgical arms.

Intuitive Surgical is based in Sunnyvale, Calif., and makes surgical robotics.