The prior twelve articles in this series have focused on products liability in general and the various aspects of designing, making, and selling medical devices. These articles pointed out the regulatory and common law requirements and techniques for minimizing liability. In the last article, we want to focus on aspects of the litigation process that you should be aware of that could affect what you do and what you write as you develop and market medical devices in the future. Whether or not litigation will occur or is likely to occur, you need to be forewarned about the things that you are doing that could adversely impact the company’s position and also that could help the litigator more easily defend you in the event of litigation.
Litigation is big business in the United States. An FDA Warning Letter, a news story about consumers claiming injury from a drug or device, a new study discussing risks, or a recall – all can set off a chain reaction of plaintiffs' lawyers advertising for clients, followed by lawsuits filed in select plaintiff-friendly jurisdictions, followed by more publicity and more suits, and culminating, in the worst case scenario, in a new "mass tort."
Given the American system of tort law, and in particular the concept of products liability whereby plaintiffs are not required to prove that a company was negligent in order to recover for injuries caused by a "defective" product, it simply is not possible to prevent litigation with 100% certainty. In this article, we will discuss three aspects of modern tort litigation that anyone in the life sciences industry should bear in mind.
"Doesn't FDA Approval Protect Me?" – The Limits of Federal Preemption
Newcomers to litigation in the United States involving drugs and medical devices often believe that complying with stringent and often expensive regulatory approval and reporting processes will insulate them from products liability claims. That reasoning makes sense. By their nature, drugs and medical devices carry inherent risks that other products – say, ladders or coffee makers – do not. Life sciences products affect the functioning of the human body and the treatment of injury and illness is never an exact science. Thus, a good argument can be made that a centralized government agency staffed by knowledgeable medical professionals – and not individual juries faced with a sympathetic injured plaintiff – should make decisions about what is an acceptable risk-benefit profile for a drug or device.
That argument generally does not carry the day, however, in the American tort system. The legal framework in which this issue is addressed is called "federal preemption." Under the Supremacy Clause of the United States Constitution, federal law trumps state law. Thus, if state laws – including the state rules under which product manufacturers can be held liable to consumers – conflict with federal law, they are "preempted," and thereby unenforceable.
In practice, however, federal preemption often will not provide a complete defense to a state tort lawsuit claiming that a regulated product like a medical device is defective. Generally speaking, and with exceptions beyond the scope of this article, courts view state tort lawsuits as a "complementary" form of regulation to FDA requirements, and, thus, view those requirements as a "floor, not a ceiling."
That is not to say, however, that compliance with FDA rules is unimportant in litigation. Compliance may not provide you with a complete defense to a tort lawsuit, but noncompliance can certainly hurt you in such a suit. Juries may not hold you blameless simply because you complied with FDA requirements, but the converse is not true – evidence of regulatory violations, such as Warning Letters, can provide plaintiffs with powerful tools to establish product defects and even possibly entitlement to punitive damages (discussed below). Even in the absence of any negative finding or enforcement action by the FDA, it is common for plaintiffs to seek to establish regulatory violations – "off-label" promotion for an indication not approved or cleared by the FDA is a favorite theme – to bolster their state law tort claims. This type of evidence can critically undermine your case before a jury and may overwhelm even a strong defense on your product's safety profile or the lack of medical causation.
The ideally situated life sciences defendant will be able to establish not only that it met, but exceeded, applicable regulatory requirements. This requires not only action, but contemporaneous documentation of that action. Your employees should be trained to treat all communications with the FDA with the utmost care and precision. The same is true of internal communications about the FDA. An e-mail among company representatives that can be portrayed as celebrating having convinced the FDA not to require a particular warning or type of warning (a real-life example) may make the difference between winning the case and being faced with an adverse, high-dollar verdict (or paying more in settlement than the case is worth). This is also true for hastily or imprudently phrased e-mails that plaintiffs can argue demonstrate a company's "foot-dragging" in implementing FDA requirements or suggestions.
In short, you and each of your employees should treat every communication to and about the FDA as a potential litigation exhibit. These communications can make or break your case. See articles from November and December 2012 for more suggestions on how to create helpful documents and how to minimize creating harmful documents.
“Why Are They Entitled to That?” – The Discovery Process
Theoretically, discovery is the process by which the parties find out the facts relevant to their claims and defenses. In practice, plaintiffs suing corporate defendants virtually always try to turn the process into a fishing expedition in search of “hot documents” – internal memos or e-mails that they can argue demonstrate indifference to safety or worse.
A key point to remember when it comes to discovery is that just because a document is not admissible in evidence at the trial, does not mean it is not discoverable. The rules of evidence do not apply to what is discoverable; rather, the test is whether the information sought might “lead to the discovery of admissible evidence.” What this means is that, depending on how willing the particular court is to place reasonable limits on what the plaintiff may demand, discovery can be an intrusive and expensive process that interrupts your business, distracts your employees, and costs tens of thousands of dollars and more.
It also means that documents and e-mails that you assumed would stay private may be disseminated to the plaintiffs’ bar and beyond. Even if those documents ultimately are deemed inadmissible at trial, their production in discovery can lead to a host of bad consequences, from adverse publicity to influencing the attitude of the judge who will decide critical issues in your case.
The transition from a paper to a digital workplace has magnified the dangers that the discovery process poses to corporate defendants. In our personal lives, what we put on the internet is forever. The same could be said of electronic communications in the workplace. It is common in litigation, particularly “mass torts,” for plaintiffs to be granted access to the hard-drives of the computers of key employees to search for documents and e-mails that may have been erased from the company’s servers or “official” electronic files.
Several aspects of a company’s routine business practices (i.e., before litigation is on the horizon) can mitigate the impact of the discovery process. A comprehensive and enforced document retention policy should be part of every life science company’s routine business practices. Note that it is imperative that you consult counsel in formulating such a policy – in particular, if you have reason to suspect that litigation may be forthcoming, a “litigation hold” (i.e. requiring the retention of potentially discoverable documents) that is communicated to all employees who may have discoverable information is critical. Evidence that your company properly formulated and implemented a litigation hold can help prevent plaintiffs’ counsel from alleging improper document destruction as an excuse to expand the scope (and expense) of discovery and thereby increase the cost of litigation and the company’s willingness to settle to put an end to it.
A well-structured and well-implemented document management policy can also minimize the disruption and expense of discovery. Generally, a plaintiff cannot force the defendant to organize its response to discovery in accordance with his or her discovery requests. Rules in most jurisdictions instead only require the defendant to produce documents as they are kept “in the ordinary course of business.” Haphazardly organized files, or an unevenly implemented document retention policy, however, give ammunition to plaintiffs’ counsel to argue that a corporate defendant has not produced files as kept “in the ordinary course of business,” and thus they should be required to re-order their production to fit the plaintiff’s requests. This can dramatically increase the cost of a document production.
In sum, many a plaintiffs’ lawyer with a weak liability case has extracted a higher-than-deserved settlement by re-focusing the case on the defendant’s alleged “discovery abuse.” Good practices with respect to maintaining documents and training employees on proper e-mail “etiquette” can help you avoid this outcome.
“How Can I Avoid Civil Punishment?” The Perils of Punitive Damages
Punitive damages are monies awarded to civil litigants not for their own economic and non-economic damages (e.g., medical expenses, loss of earning capacity, pain and suffering), but to punish the defendant for its intentional or “malicious,” or “grossly reckless” conduct. Many have questioned the wisdom (and constitutionality) of permitting juries in civil cases to impose what amounts to criminal penalties. But almost all states permit punitive damages in products liability cases. Though many states have imposed limits on the amount of such damages, and/or increased the plaintiff’s burden of proof to recover them, and while the United States Supreme Court has imposed some due process limits on such damages, punitive damages are nevertheless a real threat to corporate defendants in modern tort litigation. And, unfortunately, some state laws prevent punitive damages from being insured.
Aside from the potential cost, many courts will treat a viable punitive damage claim as expanding the scope of what is discoverable and admissible, including documents and testimony about events that post-date the plaintiff’s injury. Of course, a company’s attention to prevention, safety, and regulatory compliance are key to defeating claims of maliciousness and recklessness. But two points are important to remember for companies trying to structure their business practices to minimize the risk of punitive damages.
First, ill-considered internal communications can weaken or undo a consistent pattern of attention to safety. It seems obvious, but regularly reminding employees of the importance of their e-mail communications – and the potential discoverability of such communications – is paramount. E-mail “wit” often does not translate well before a jury. For example, a “humorous” e-mail from a low-level employee making light of a medical condition allegedly caused by the company’s product (another real-life example) may well suggest to a jury that the company had a callous attitude that deserves punishment.
Likewise, e-mail provides a ready medium for employees who feel their opinions are not sufficiently considered or are otherwise disgruntled to catalogue their grievances in a way that could provide fodder for plaintiffs seeking to undermine a company’s concern for safety. It is critical that such e-mails not go unanswered. A company should document its response to such accusation or complaints, whether or not it believes them to be meritorious.
This brings us to the second point – the company’s reaction when a safety issue is raised. A plaintiff may be able to make a case for liability when a drug or device is implicated in causing an injury, but he or she will have a hard time making a case for punitive damages if the company’s reaction – as documented in internal communications, including e-mails – is reasonable. Even if the company believes the allegations to be unfounded, a considered (and documented) reaction to them undermines arguments by plaintiffs in later litigation that the company tried to “cover-up” a problem or ignored safety signals.
Plaintiffs' lawyers aggressively pursue companies that they believe are likely to have “smoking guns” in their files or bad employees who will make the plaintiff's case easy and increase the company's potential liability. You don’t ever want to be perceived as such a company. Acquiring such a reputation has catastrophic effects not only in the context of litigation but also for your relationships with your customers and the FDA.
Therefore, even if you have never had a claim filed against you, as part of the life sciences industry you would be wise to seriously consider these suggestions and those in the earlier articles. Once bad documents are out or, for example, a bad deposition has been taken of your design engineer, you become a target and that is a difficult—if not impossible—label to remove.
By contrast, a diligent company which tries to do the right thing—and which documents its efforts—will better be able to avoid becoming a litigation target and minimize its exposure.
Susan Burnett co-wrote this article. Susan Burnett is a partner at Bowman and Brooke LLP in its Austin, Texas office with over 24 years of experience primarily in the defense of drug and medical device product liability litigation, including multiple mass torts.
Kenneth Ross is Of Counsel to the Minneapolis office of Bowman and Brooke LLP where he practices in the areas of product safety and liability prevention and advises manufacturers, product sellers and insurers on ways to identify, evaluate and minimize the risk of products liability and contractual liability. These guides do not constitute legal advice and are very general. You should consult competent legal counsel or Medmarc Loss Control before acting on any of the information in these guides.
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