Mako Surgical Class Action Lawsuit Filed Over Rio Robotic Surgery System

A class action lawsuit has been filed on behalf of investors who bought shares of MAKO Surgical Corporation stock, which have plummeted due to poor sales of its Rio orthopedic surgical robot. 

The MAKO investor class action lawsuit (PDF) was filed in the U.S. District Court for the Southern District of Florida on May 18. The complaint was brought on behalf investor Brian Parker and anyone else who invested in the company between January 9 and May 7, 2012.

According to the shareholder lawsuit, the company mislead investors about the potential of the Rio surgical robot and how well it would sell this year.

Last month, the value of MAKO stock fell 36%, from $26,45 per share to $14.95, after the company announced that sales of the Rio were far below expectations. MAKO had hoped to sell up to 62 of the orthopedic surgery robots in 2012, but sold only six in the first quarter. Overall, the stock has fallen more than 40% from its class period high.

The lawsuit alleges that MAKO knew sales for the robotic surgery machine would be poor, knew that utilization rates for the Rio robots already in service were declining, and that the company’s 2012 outlook lacked a reasonable basis when made. That information was not passed on to investors, resulting in an artificially inflated stock value, according to the complaint.

The Rio robot is an orthopedic surgery robotic arm used in knee, hip and other leg surgeries. The hip application was only recently released and has had underperforming sales.

There have been a total of 119 Rio robots sold worldwide, with the vast majority sold in the United States. However, doctors have not appeared eager to use the robot. According to the lawsuit, the first quarter only saw 2,219 robotic surgeries with the Rio, known as MAKOplasty, performed in the United States. Only 211 were hip procedures using the robots new Total Hip Arthroplasty program.

The sales are in sharp contrast to another controversial robotic surgery machine, the da Vinci Surgical System, sold by Intuitive Surgical. That surgery robot has been widely adopted by hospitals throughout the United States in a variety of surgical fields, including cardiothoracic, gynecology, urology and general surgery.

In recent months, concerns have surfaced about the risk of complications from da Vinci robotic surgery. Critics have suggested that the machines have been adopted too quickly, resulting in doctors performing the robotic surgery before they have been properly trained to operate the complex system.

In addition, a number of da Vinci robotic surgery lawsuits have been filed against Intuitive Surgical, alleging that the manufacturer failed to adequately warn about the risk of problems following surgery and that the device was defectively designed. Complaints indicate that the electrical current used by the da Vinci robot to cut, burn and cauterize tissue may pass outside of the operative field, causing damage to surrounding organs, vessels and tissue.