A Tennessee-based global orthopaedic medical device company sold its money-losing hip and knee replacement business to a Chinese company in January.

The deal earned Wright Medical Group, Inc. $287.1 million – almost the exact same amount as its net loss in 2013.

However, a national class-action lawsuit filed in Nova Scotia three years ago against Wright’s hip implant products might cause the company more trouble with its bottom line.

Story of a failed hip implant

Ken Taylor still remembers that evening in September 2009, when he was at home sitting on the floor, trying to hook up an amplifier to his TV, and by the time he turned to get on his knee to get himself up, he heard a crunch – his hip implant fractured.

This happened two years after the Dartmouth resident got an implant on his left hip at the Queen Elizabeth II Hospital in Halifax. Ideally, a hip implant should last around 10 to 15 years.

After Taylor was rushed to the Dartmouth General hospital that night, the doctor had to keep him hospitalized because the only thing that was holding his leg on him was the skin.

The next day he was transferred to the QE II hospital and got a revision surgery to correct the broken neck of the implant. His doctor who performed the surgery told him the broken device was a faulty product.

However, the story doesn’t end there. It turns out the second surgery didn’t go well either – the device was loose, and the stem and Taylor’s femur bone didn’t adjust well so less than half a year later he had to undergo a third operation.

Taylor says the nurse told him if he was to have a fourth implant, there’s no room left in his femur bone for the stem to go down.

The surgeries have weakened Taylor’s left hip – if he sits for a while and gets up, he limps. After the third surgery, Taylor had to retire from his job.

He says if he knew the implant was going to cause him this much pain before his had the first surgery, “it would have been stupid for me to do it.”

Taylor’s doctor told him the first implant device that was put into him was defective and suggested him to see a lawyer. At first, Taylor was only filing for his own case. But two months into the legal procedure, his lawyer convinced him to switch to a class-action because the lawyer said there were other people who have similar implant fractures.

In September 13, 2011, Taylor and another Dartmouth resident Judy Rowter filed the class-action lawsuit at the Supreme Court of Nova Scotia against Wright Medical Group, Inc. and two other sub companies, Including one based in Ontario, who’s in charge of selling Wright’s products in hospitals across Canada.

Taylor says before he decided to take the legal action, he got in touch with Wright. And they offered him $30,000 to settle the case. And even the company staff, who talked to him admitted that amount was low. So Taylor turned to resolve the case in court.

But his interaction with the company provided him with the knowledge that the company knew their products were problematic, but kept selling them.

In fact, studies have being done as early as 2006, suggesting the Profemur Hip Implant System that Taylor got had a relatively high failure rate during the first few years after surgery.

Pending class-action case

The court has already certified Taylor’s case as a class-action, but the company appealed, accusing the judge of making an error and Taylor’s case doesn’t classify as a common issue, and incidents like this should be settled individually.

However, Raymond Wagner from Wagners Law Firm in Halifax, who’s Taylor’s lawyer, says this will discourage other patients like Taylor from coming forward because a lot of people couldn’t afford the $30,000 to $150,000 litigation fee.

Wagner says there are 15 to 20 people in Nova Scotia alone whose Profemur implants have fractured. And 30 others have signed up to join the class-action case too.

He says lawsuits on hip implant failures have been on the rise in recent years following medical device companies started making the metal-on-metal model, Wright’s Profemur products is one example. The medal parts rub against each other and release toxic particles in the patients’ body and the parts themselves gets fragile and become easier to break. Studies by medical journal Lancet suggest a higher failure rate of metal-on-metal models compared to metal-on-ceramic or metal-on-plastic models.

There are class-action lawsuits against the metal-on-metal products in the U.S. prompting companies, such as DePuy Orthopaedics, to withdraw their metal-on-metal models. And earlier this year, the U.S. Food and Drug Administration had asked 21 manufacturers to conduct safety studies on their metal-on-metal hip implants.

Still liable despite selling troubled business

From 2007 to 2013, Wright’s hip products have experienced growth and then decline (starting 2011). And the company’s net income had a same trend with the products success and failure because of an increase on the number of fracture complaints from its customers.

 

In January of 2014, Wright sold it’s hip and knee business to a Shanghai-based medical device company, called MicroPort Scientific Corporation. 

MicroPort is hoping the deal could help it expand its portfolio and get a presence in North America. And the company can take advantage of the growing hip implant market in Asian to sell Wright’s hip and knee products. The location of the business remains in Tennessee, U.S., only the name changed from OrthoRecon under Wright to the now MicroPort Orthopedics, Inc.

However, lawyer Wagner says the deal doesn’t free Wright from any potential liabilities from the lawsuit.

He says the court will make a decision by March on Wright’s appeal. “If Wright loses the appeal, it may encourage the company to resolve the case, which may take a couple of years,” says Wagner. Individual cases may vary, but Wagner estimates Wright will have to compensate each plaintiff who signed up to the class-action with $100,000 to $300,000.

If the court rules Wright winning the appeal, Wagner is planning to take the case to the Supreme Court of Canada, which may take over five years to resolve.

But he hopes the case can bring attention to relevant government organizations, such as Health Canada to ban the defective products from the market.

However, Wagner says Health Canada is an under-funded organization, who relies on manufacturers and physicians to provide all the information. “And with the budget they had it’s hard for them to do the policing,” says Wagner.

Eric Morrissette, Senior Media Relations Advisor with Health Canada says, “Profemur Hip System with the Long, Titanium Profemur Modular Neck component are no longer licensed for sale in Canada.”

He says in 2009, Health Canada investigated reported failures of the Profemur stems at the request of a surgeon. And the investigation concludes that “patients’ weight and activity level” are potential causes of neck fracture for the Long, Titanium Profemur Necks. “Health Canada’s findings were consistent with those of the manufacturer,” says Morrissette.

According to Ken Taylor’s class-action lawsuit, Profemur Hip Implant System first received licensing approval from Health Canada in 2011.

And so far this year, Health Canada has issued 373 new licenses to Profemur series products, the highest number since 2001. And a few of those products were the ones causing trouble to Ken Taylor and other plaintiffs.