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Suppliers and the Biomaterials Act: A New Avenue for Protection?

Medical Device & Diagnostic Industry Magazine MDDI Article Index Originally Published November 2000 An existing federal statute is designed to shield biomaterials suppliers from potential lawsuits. A recent case suggests that implant manufacturers can also assert the statute to protect their suppliers. Ralph Campillo and Kevin Costello

Medical Device & Diagnostic Industry Magazine
MDDI Article Index

Originally Published November 2000

An existing federal statute is designed to shield biomaterials suppliers from potential lawsuits. A recent case suggests that implant manufacturers can also assert the statute to protect their suppliers.

Ralph Campillo and Kevin Costello

A relatively new preemptive federal statute exists that can be asserted to protect suppliers of biomaterials from lawsuits when the materials they supply are used in implanted medical devices manufactured and sold by others. This article reviews the purpose and extent of the now two-year-old statute, as well as its practical application in the defense of biomaterials suppliers involved in civil litigation.

THE BIOMATERIALS ACCESS ASSURANCE ACT OF 1998

In August of 1998, Congress passed the Biomaterials Access Assurance Act to insulate biomaterials suppliers from liability in civil actions when their raw materials or component parts are used in implanted medical devices.1

The act "applies to any civil action brought by a claimant, whether in Federal or State court, on the basis of any legal theory, for harm allegedly caused, directly or indirectly, by an implant," and "supersedes any State law regarding recovery for harm caused by an implant and any rule of procedure applicable to a civil action to recover damages for such harm...."

WHAT IS THE PUBLIC POLICY BEHIND THE ACT?

Congress clearly articulated the purpose of the act, noting that "each year millions of citizens of the United States depend on the availability of lifesaving or life-enhancing medical devices" and that the continued supply of raw materials and component parts for such devices is necessary for the "invention, development, improvement, and maintenance of the supply of the devices." Given this fact, and the relatively limited sources for raw materials and components in this regard, Congress found there to be grounds to erect statutory protections for the continued production of these materials by suppliers.

The need for this requisite protection is plain. Despite the fact that suppliers of materials and components are generally found to be free of liability with regard to claims as to the ultimate or end-use product, such suppliers have nonetheless been sued and made to incur increasing litigation costs in order to defend their interests.

Because of these costs of litigation, some biomaterials suppliers have ceased supplying such raw materials and component parts for use in medical devices. For these and other reasons, Congress found it necessary "to clarify the permissible bases of liability" and "to provide expeditious procedures to dispose of unwarranted suits against the suppliers in such manner as to minimize litigation costs."

WHAT IS A BIOMATERIALS SUPPLIER?

As defined in the act a biomaterials supplier is any entity that directly or indirectly supplies a component part or raw material for use in the manufacture of an implant, a component part is a manufactured piece of an implant that has nonimplant applications, and a raw material refers to a product with generic applications that may be used in a nonimplant application. A medical device is a device as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act, codified in 21 U.S.C. 321(h), and includes any device component of any combination product as the latter term is used in 21 U.S.C. 353(g). The biomaterials act also broadly defines an implant as a medical device that is intended to be "placed into a surgically or naturally formed or existing cavity of the body for a period of at least 30 days," or that will "remain in contact with bodily fluids or internal human tissue through a surgically produced opening for a period of less than 30 days," or that is a suture material used in implant procedures. Thus, the act would appear to apply to multiple types of medical devices, from pacemakers and prosthetics to the sutures used in their implantation.

The protection provided, however, does not automatically apply under all circumstances to all suppliers of raw materials or components. The act specifically articulates those circumstances in which suppliers may still be held liable. It provides that if the biomaterials supplier (1) manufactured the implant, (2) sold the implant, or (3) furnished raw materials or component parts for the implant that failed to meet applicable contractual requirements or specifications, as defined within the act, the protections of the act are not available.

WHAT TYPE OF HARM IS ADDRESSED BY THE ACT?

Harm is defined as (1) any injury to or damage suffered by an individual; (2) any illness, disease, or death resulting from that injury or damage; and (3) any loss to that individual, or any other individual, resulting from that injury or damage. This definition of harm would appear to cover all damages and types of injury that could conceivably be alleged under any tort theory, including strict product liability.

In short, the act insulates biomaterials suppliers for any type of injury to an individual in any court on the basis of any legal theory with regard to the suppliers' products used in implanted medical devices. The statute includes one exception, however, for commercial and contractual actions brought by the raw material purchaser for loss or damage to the implant. In other words, the immunity provided for any "harm allegedly caused, directly or indirectly, by an implant" will not apply to insulate a supplier from commercial or contractual disputes regarding the use of its materials in implanted devices.

HOW CAN THE NEW STATUTE BE USED PROCEDURALLY?

In keeping with the purposes stated, the act provides a variety of ways in which biomaterials suppliers may summarily dispose of claims via summary judgment, dismissal, nonsuit, or other dispositive motions during or after discovery. In ruling on such motions, the court may dismiss the party outright or allow discovery limited to the issue of whether the supplier has met the terms for protection under the act—that is, whether the component part at issue met the contractual requirements or had a purpose separate from its use in the medical device.

In support of or in opposition to any motion, affidavits may be submitted by the biomaterials manufacturer. In granting a motion to dismiss or a motion for summary judgment, the order of the court is to be entered "with prejudice." In other words, the plaintiff will be forever barred from bringing an action against that biomaterials manufacturer for the injuries alleged in his lawsuit.

There is one caveat, however. After a final judgment in the case against a defendant (i.e., a verdict), the court may allow that defendant to seek money from the dismissed biomaterials manufacturer in the form of contribution or indemnification. This will only be permitted after the court determines—following an independent review of the evidence—that the biomaterials manufacturer's negligence or intentional tortious conduct caused or contributed to the plaintiff's injuries.

CAN SOMEONE OTHER THAN A SUPPLIER ASSERT THE ACT?

It is clear that a biomaterials supplier may assert the act to extricate itself from litigation in a variety of ways and at various stages in a legal proceeding. What the act doesn't spell out, however— and what is perhaps a more interesting question—is whether entities other than the supplier can assert it. In other words, does a named defendant that is not a supplier of raw materials or components have standing to assert the act when a situation presents allegations against a supplier that indirectly affect the nonsupplier's rights?

As the following case study illustrates, a court may determine that, under certain circumstances, an implant manufacturer may also assert this statute.

CASE STUDY: A MANUFACTURER'S ACTION

In a recent case, in which a manufacturer of hip prostheses was sued for injuries related to the alleged early loosening of an implant, the plaintiff sought to add several suppliers of raw materials and components for the implant that had been identified in discovery. After failing to obtain a stipulation from the defendant manufacturer, the plaintiff moved in the United States District Court for the Southern District of California for leave to amend his complaint to add these parties.

The manufacturer opposed the motion, basing its argument on the Biomaterials Access Assurance Act of 1998 and California state substantive law, and arguing that the proposed amendment was "futile."2 (Futility is a proper basis on which a party may successfully oppose a motion for leave to amend.3) The manufacturer, assuming the argument on behalf of its suppliers, asserted that the addition of the suppliers would be futile, since there would exist mandatory ground for dismissal from the action under the Biomaterials Access Assurance Act.

In order to satisfy the stated requirements of the act, the defendant opposing the amendment established that the proposed defendants were suppliers of raw materials and component parts through affidavits from qualified officers of the relevant corporations. These affidavits also included statements that the materials supplied met the applicable contractual requirements.

Adopting the defendant's arguments, the district court denied the motion to amend, stating that "although the immunity statute is being raised in the context of a motion to amend the complaint, the court discerns no reason to allow an amended pleading that would be subject to a motion to dismiss." In support, the court cited Gabrielson v. Montgomery Ward & Co. 785 F.2d, 762, 766, for the proposition that there is no reason to allow an amended pleading that would be subject to a motion to dismiss or a motion for summary judgment.3

On the question of whether the defendant had the requisite standing to assert the terms of the statute on behalf of unnamed parties, the court's written decision provided that "the statute, though new, is quite clear that the suppliers can provide affidavits to demonstrate that they are not subject to litigation for their minimal contribution to a medical device ultimately designed, made, and sold by the manufacturer." The district court further held that:

[The manufacturer] has a strong incentive to pass any blame for the alleged defects in its medical device on to any supplier who failed to comply with the contract or whose product may have contributed to [plaintiff's] injury. In addition to having the incentive to pass blame on to its suppliers, the manufacturer would also have access to the information necessary to prove that the raw materials or components were defective. The court is confident that if facts arise during the case to indicate that some of these suppliers are to blame for the alleged tort, that [the manufacturer] will ardently endorse the addition of those parties to this action.4

Even though it may be true that a manufacturer might have incentive to pass blame on to its suppliers, there are also reasons why a manufacturer would not want its suppliers named as codefendants in a lawsuit. For instance, the addition of its suppliers to the action could make the various issues more complex, thereby affecting the trial date and prolonging the time ultimately spent in litigation. If the action is in federal court, the addition of biomaterials suppliers could defeat diversity jurisdiction. Further, the addition of a biomaterials supplier—though perhaps beneficial to the device manufacturer in the short term with regard to the apportionment of fault—could also strain long-term business relations between the two companies. Finally, the presence of indemnity contracts between the implant manufacturer and the biomaterials supplier may require the implant manufacturer to nevertheless defend the biomaterials supplier or otherwise hold it harmless.

CONCLUSION

The Biomaterials Access Assurance Act of 1998 effectively insulates biomaterials suppliers from liability when their raw materials or component parts are used in implanted medical devices. As set forth within the terms of the act, its protection may be invoked within the course of litigation by various means. However, sound and creative logic accepted by at least one court provides that, under certain circumstances, the act may also be asserted by a manufacturer of devices. The availability and use of this act, as discussed here, can provide a strategic edge, preserve resources, and may also serve to strengthen and improve business relationships between suppliers of raw materials and component parts and the manufacturers they seek to service.

REFERENCES

1. Public Law 105-230, sect. 1, 112 Stat. 1519 codified in 21 U.S.C. 1601 et seq. (1999)

2. See e.g., Ferrari v. Grand Canyon Dories, 32 Cal.App.4th, 248, 258–259 (1995); Walker v. Stauffer Chemical Corp., 19 Cal.App.3d, 669, 674 (1971); accord Keoloha v. E.I. DuPont De Nemours and Co. Inc., 82 F.3d, 894, 899 (9th Cir. 1996).

3. Gabrielson v. Montgomery Ward & Co., 785 F.2d, 762, 766 (9th Cir. 1986).

4. Marshall v. Zimmer Inc., et al., S.D. Cal., 5, 99–0973, Memorandum Decision and Order, (1999).

Ralph Campillo is a partner and Kevin Costello is an associate with the law firm of Sedgwick, Detert, Moran, & Arnold in Los Angeles. Both specialize in pharmaceutical and medical device litigation.


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