Sonova Holding AG reports that its US subsidiary Advanced Bionics LLC (AB) has decided to appeal the verdict of the Kentucky Western District Court announced last week (see April 17 HR Online News). A jury awarded the plaintiff unexpectedly high damages in a case related to a HiRes 90K cochlear implant placed in January 2006—more than 3 years prior to the acquisition of AB by Sonova in 2009.
Last week, Sonova provided information about the verdict in the case of Sadler v Advanced Bionics heard in the Kentucky Western District Court. A patient, whose cochlear implant had to be replaced, filed a claim and was awarded by a jury damages totaling $7.25 million. In January 2006, the patient had received a HiRes 90K implant manufactured by AB. Four years later, the implant malfunctioned due to moisture ingress.
According to Sonova, the implant in question was part of a voluntary recall issued by AB in March 2006. The issue with the device recalled was related to the feedthrough assembly, a component provided by one of two approved vendors (AstroSeal commonly referred to as “Vendor B”), affecting some, but not all, HiRes 90K devices manufactured prior to March 2006. AB promptly initiated a voluntary recall of all unimplanted devices that contained the Vendor B component and immediately ceased the use of components from Vendor B.
The recall was resolved prior to the acquisition of AB by Sonova in 2009.
Worldwide, a total of just over 4,000 devices affected by the recall were implanted between 2003 and 2006, says Sonova. To date, roughly one-third of these implants have been explanted due to recall-related failures. Since the 2006 recall, the rate of observed device failures has been decreasing and Sonova expects a further deceleration going forward. The company estimates that ultimately up to a total of approximately 50% of the devices originally implanted may fail. To date, the vast majority of explanted Vendor B devices were dealt with under the terms of the 10-year warranty, and a substantial number of cases were settled out-of-court.
According to Sonova, AB has continuously monitored these cases and assessed the costs to ensure sufficient coverage through insurance, warranty, and provisions. The Sadler case was decided by a court trial after substantial settlement efforts were unsuccessful. This is the first case related to the recall in 2006, which was decided by a court verdict and where damages were awarded to the plaintiff. They consist of compensatory damages including medical expenses as well as punitive damages. In the United States, both the verdict and the amount of the damages are decided by a jury.
“AB always puts patient safety first,” explains Sonova CEO Lukas Braunschweiler. “We did not expect punitive damages and disagree with the jury’s decision. AB will appeal the verdict and is also prepared to vigorously challenge any future cases. We will further strengthen our litigation management team.”
Sonova reports that, in view of the new circumstances, AB has thoroughly reassessed its provisions for claims of this category, increasing them from previously $55 million (CHF 52 million) to a total of $267 million (CHF 250 million). AB expects that the resolution of pending cases could take several years.
Looking ahead, Sonova maintains that the cochlear implant segment continues to play a pivotal role in the group’s strategy. With AB, Sonova can offer customers a comprehensive portfolio of solutions for every type of hearing loss. AB reports that it has continuously improved its design, manufacturing, and quality assurance processes and teams, and just recently passed an extensive FDA audit that led to the approval of a brand new, state of the art manufacturing facility in Valencia, Calif. Today, the HiRes 90K implant leads the industry with its reliability rate, according to the company.
“AB improves the quality of life of thousands of people,” says Braunschweiler. “With a great number of HiRes 90K devices successfully implanted since the recall in 2006, the company continues to allow recipients the opportunity to hear their best. AB’s clear focus is customer driven innovation, and it is dedicated to ensure the quality and reliability of its solutions.”