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Da Vinci Manufacturer May Have Insurance Policy Rescinded

Approximately 50 da Vinci robot lawsuits have been filed against Intuitive Surgical, claiming that the company’s robotic device is responsible for significant complications. When plaintiffs sue a medical device company, part of that company’s losses due to settlements and/or jury awards is typically offset by insurance coverage. However, Intuitive Surgical recently learned that their insurance company is seeking to rescind the policy, potentially leaving Intuitive Surgical liable for all costs.

Illinois Union Insurance Company filed the complaint in the U.S. District Court for the Northern District of California in San Jose. The complaint, filed on October 21, 2013, seeks declaratory relief in addition to rescission of the policy.

Dispute involves tolling agreements

Illinois Union Insurance Company was prompted to file the complaint because of a discrepancy involving tolling agreements. The insurance company claims that at the time it entered into a coverage agreement with Intuitive Surgical for the da Vinci robot lawsuits, the medical device representatives failed to disclose the tolling agreements.

The tolling agreements involve a small number of individuals who have notified the makers of the da Vinci robot of their intention to file lawsuits. The purpose of a tolling agreement is to delay the expiration of any applicable statutes of limitations, which allows the prospective plaintiffs additional time to file a product liability lawsuit. The makers of da Vinci and these individuals agreed to these terms in November 2012 and disclosed the information to the U.S. Securities and Exchange Commission (SEC) in April of 2013. However, the company allegedly failed to inform Illinois Union Insurance Company of the situation when the coverage was purchased in January 2013.

According to the complaint filed by the insurance company, the application for the insurance policy never would have been processed had they known of these tolling agreements. Furthermore, the complaint states, “Even if Plaintiff had been willing to consider providing products liability insurance to Defendant, the insurance would not have had the same attachment point or premium.”
The contested insurance policy provided coverage of $15 million for each occurrence, or a maximum of $50 million.

The outcome of the insurance company’s complaint is not expected to affect the plaintiffs who have filed da Vinci robot lawsuits. These lawsuits will proceed and the da Vinci makers will be held liable should settlements or jury awards be reached.

Manufacturer attracts FDA attention

The lawsuits filed with regards to the da Vinci robotic surgery equipment have drawn the attention of the U.S. Food and Drug Administration (FDA). In January 2013, the FDA surveyed doctors regarding their experiences with the medical equipment and the complications they have encountered. The results of the survey revealed da Vinci robotic surgery problems ranging from burns inflicted on the patient to damage to internal organs. One feature of the device is an electrical current intended to cauterize tissue. However, doctors have pointed out the propensity of the electrical current to extend beyond its intended zone.

Other reported complications have included internal bleeding due to severed blood vessels, nerve damage, muscle damage, evisceration, and death. Over 2,332 problems regarding the system were reported to the FDA during the first eight months of 2013.