Transvaginal Mesh Lawsuits Result in $180M Charge for Covidien

The medical device manufacturer Covidien recently announced that it is taking a $180 million charge in the third quarter, due to costs associated with transvaginal mesh lawsuits involving products supplied to other companies.

According to a report filed with the U.S. Securities and Exchange Commission on July 11, two subsidiaries of Covidien supplied pelvic mesh products to an unnamed manufacturer involved in the litigation, and Covidien is indemnifying that manufacturer on certain claims.

Covidien has previously indicated that the other manufacturer was C.R. Bard, which faces thousands of lawsuits over Bard Avaulta mesh that are pending in a federal multidistrict litigation (MDL) centralized in West Virginia, as well as various state courts nationwide.

The complaints involve allegations that use of the transvaginal mesh products for repair of pelvic organ prolapse (POP) or female stress urinary incontinence (SUI) caused women to suffer severe and debilitating injuries when the pelvic mesh eroded through the vagina, caused infections or other complications.

The litigation charge by Covidien could be a sign that a large settlement may be reached soon to resolve Bard mesh cases, as confidential settlements have been reported involving several individual lawsuits that were scheduled for trial, and a different manufacturer of similar products recently announced an agreement to resolve most of the cases involving their transvaginal mesh.

“During the quarter ended June 27, 2014, Covidien received additional information regarding the nature of products liability claims and potential exposure based on access to medical records, discussions with plaintiff attorneys and settlements by other manufacturers,” wrote the company in the SEC filing. “Accordingly, Covidien recorded a pre-tax legal charge of approximately $180 million in the third quarter of fiscal 2014.”

Transvaginal Mesh Litigation

C.R. Bard is one of several manufacturers involved in the transvaginal mesh litigation, which currently includes more than 60,000 lawsuits filed nationwide.

In the federal court system, seven different multidistrict litigations (MDLs) have been established for consolidated pretrial proceedings against the various manufacturers to reduce duplicative discovery, avoid conflicting pretrial rulings from different judges and to serve the convenience of the parties, witnesses and the courts. All of the transvaginal mesh MDLs are centralized before U.S. District Judge Joseph Goodwin in the Southern District of West Virginia.

According to the latest case list (PDF) released by the U.S. Judicial Panel on Multidistrict Litigation (JPML) on July 15, Judge Goodwin is currently presiding over 8,667 Bard Avaulta mesh lawsuits, 18,501 Ethicon mesh lawsuits, 17,901 American Medical Systems (AMS) mesh lawsuits, 12,199 Boston Scientific mesh lawsuits, 1,506 Coloplast mesh lawsuits, 213 Cook Medical mesh lawsuits and about 74 Neomedic mesh lawsuits.

As part of the coordinated proceedings, small groups of cases involving many of the manufacturers have been prepared for early trial dates, known as “bellwether” cases. While the outcomes of these trials are not binding in other cases, they help the parties gauge how juries may respond to certain evidence that could be offered throughout the litigation and are designed to facilitate transvaginal mesh settlement agreements to resolve the litigation.

Last year, a series of three Bard Avaulta cases were set for trial in the MDL, with the first case going before a federal jury in July 2013. That trial resulted in a $2 million damage award against Bard, including punitive damages designed to punish the company for the actions during the manufacture and sale of the product. The second and third trials were each settled shortly before they were set to begin, with terms of the deals withheld.

A second wave of Bard Avaulta cases are currently going through case-specific discovery this year, which may result in up to 200 lawsuits being trial-ready by early 2015. If Bard and Covidien fail to settle or otherwise resolve the lawsuits, they could face trials in courts throughout the country.

Earlier this year, a series of bellwether trials involving AMS transvaginal mesh products were cancelled by Judge Goodwin, after Endo Health Systems agreed to pay $830 million to settle the majority of all cases pending against it’s subsidiary.