Surgical Robots Risk Greater Legal Costs Than You May Think

Shook, Hardy & Bacon L.L.P.
Contact

Shook, Hardy & Bacon L.L.P.

It’s no secret that defending against product liability lawsuits can be costly. But surgical robot manufacturers sometimes ask me to give them hard numbers. To read the tea leaves and estimate how much they’ll have to spend to resolve such claims. Unfortunately, the answer is hard to swallow.

Though the specifics of any given circumstance will dictate the exact legal costs, you can draw some reasonable assumptions by looking at the experience of Intuitive Surgical—arguably the leading surgical robot manufacturer in the United States. According to the company’s regulatory filings, in 2014, Intuitive incurred pre-tax charges of $82.4 million reflecting “the estimated cost of settling a number of the product liability claims covered by … tolling agreements.” In 2015, 2016, 2017, 2018, and 2019 those charges were $13.8 million, $8.3 million, $16.3 million, $2.7 million, and $0.5 million, respectively. This amounts to a total sum of $124 million over six years, a mean of $20.7 million and a median of $11.1 million.

According to Intuitive’s regulatory submissions, in 2014 the company also recorded charges of $49.5 million “in other accrued liabilities . . . related to the tolled product liability claims.” In 2015, 2016, 2017, 2018, and 2019 those charges were $24.4 million, $20.5 million, $12.8 million, $10.5 million, and $4.2 million respectively. This amounts to a total sum of $121.9 million over six years, a mean of $20.3 million and a median of $16.7 million.

What these data tell us is that under a perfect storm scenario, the cost of product liability litigation may well exceed $200 million in only a few short years.

As Intuitive acknowledges in its regulatory filings, “significant risks of product liability claims, . . . are inherent to the medical device industry.” Although these risks cannot be entirely eliminated, they can be mitigated. Legal risk assessments by experienced counsel at key points during a surgical robot’s development and testing phases can go a long way towards limiting a company’s exposure.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Shook, Hardy & Bacon L.L.P. | Attorney Advertising

Written by:

Shook, Hardy & Bacon L.L.P.
Contact
more
less

Shook, Hardy & Bacon L.L.P. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.