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医疗仪器产品责任保险，中文相关资料，请查阅这里
Product liability insurance report
by Jerry Bao 2005.9
1. Relevant law or legislation
Defective products often cause injury which may give rise to potential claims. The Consumer Protection Act 1987 makes manufacturers or importers of products into the EU strictly liable for injuries caused as a consequence of any defect.
The DTI Commission is currently reviewing the Product Liability Directive and is expected to publish some information on this during 2005. DTI has produced a <Guide to Consumer Protection Act 1987> see appendix1 explaining the requirements in more detail.
Key Facts - Consumer Protection Act 1987 (Part 1)
• Part 1 of the Consumer Protection Act 1987 transposes the Product Liability Directive (85/374/EEC and 1999/34/EC*) into UK law. The legislation imposes strict liability on producers for harm caused by defective products. *The 1999 Directive - extending coverage to food sold in its raw state - was transposed in England & Wales by the Consumer Protection Act 1987 (Product Liability) (Modification) Order 2000.
• This means that people who are injured by defective products can sue for compensation without having to prove the producer negligent, provided that they can prove that the product was defective and the defect in the product caused the injury.
• The legislation applies to all consumer products and products used at a place of work.
Key Facts - Consumer Protection Act 1987 (Part 2)·
• The general safety requirement under section 10 of the Act has largely been replaced by the General Product Safety Regulations 1994
• Section 11 empowers the Secretary of State to make emergency regulations without consultation to secure the safety of products when public protection is deemed necessary. Regulations made under this procedure lapse after 12 months.
• However, under normal circumstances, the Act requires prior consultation with interested parties. Safety regulations made under the procedure remain in force indefinitely, unless specifically revoked.
• Section 12 makes it an offence to supply goods that do not meet safety regulations made under the Act.
Frequently Asked Questions
Q1. What products are covered by the Act?
All consumer goods and goods used in the workplace. All food is covered. Buildings are not covered but building materials such as bricks are covered.
Q2. When can an injured person sue?
A plaintiff must begin court action within 3 years of the date he or she was injured.
Q3. What sort of damage is covered?
A person can sue under the Act for compensation for death, personal injury and damage to private property (provided the amount of loss or damage to property is £275 or more).
Q4. Where can I get advice as a plaintiff?
Anyone considering making a claim should seek legal advice at an early stage.
Q5. What can I do as a manufacturer/importer to cover myself for product liability?
Consider seeking advice from insurers about product liability cover.
Q6. Does the Act include enforcement powers?
The Act sets out the powers available to the enforcement authorities to deal with unsafe products.
Q7. Who are the enforcement authorities?
Local authority trading standards departments have primary responsibility for day-to-day enforcement of safety legislation. The Secretary of State for Trade and Industry also has enforcement powers.
Q8. What penalties are available to enforcement authorities?
Failure to meet the requirements of safety regulations made under the Act can result in a fine of up to £5000 and/or a prison term of up to six months.
Q9. Where should complaints about unsafe products be sent?
Complaints about unsafe goods should be made to your local authority trading standards department.
2. Products liability law: an overview
Products liability refers to the liability of any or all parties along the chain of manufacture of any product for damage caused by that product. This includes the manufacturer of component parts (at the top of the chain), an assembling manufacturer, the wholesaler, and the retail store owner (at the bottom of the chain). Products containing inherent defects that cause harm to a consumer of the product, or someone to whom the product was loaned, given, etc., are the subjects of products liability suits. While products are generally thought of as tangible personal property, products liability has stretched that definition to include intangibles (gas), naturals (pets), real estate (house), and writings (navigational charts).
Products liability claims can be based on negligence, strict liability, or breach of warranty of fitness depending on the jurisdiction within which the claim is based. Many states have enacted comprehensive products liability statutes. These statutory provisions can be very diverse such that the the United States Department of Commerce has promulgated a Model Uniform Products Liability Act (MUPLA) for voluntary use by the states. There is no federal products liability law.
In any jurisdiction one must prove that the product is defective. There are three types of product defects that incur liability in manufacturers and suppliers: design defects, manufacturing defects, and defects in marketing. Design defects are inherent; they exist before the product is manufactured. While the item might serve its purpose well, it can be unreasonably dangerous to use due to a design flaw. On the other hand, manufacturing defects occur during the construction or production of the item. Only a few out of many products of the same type are flawed in this case. Defects in marketing deal with improper instructions and failures to warn consumers of latent dangers in the product.
Products Liability is generally considered a strict liability offense. Strict liability wrongs do not depend on the degree of carefulness by the defendant. Translated to products liability terms, a defendant is liable when it is shown that the product is defective. It is irrelevant whether the manufacturer or supplier exercised great care; if there is a defect in the product that causes harm, he or she will be liable for it.
3. Background
An estimated 454,383 people suffered injuries from medical devices in a 12-month period from 1999 to 2002, according to researchers from two federal regulatory agencies. FDA researchers and the Consumer Product Safety Commission says despite the high number of injured Americans, this number may actually be understated because the study counted just patients treated in emergency rooms.
Product liability is an area of law dealing with the liability of the manufacturer, wholesaler or retailer of a product for injuries resulting from dangerous and defective products. This can be inclusive of not just medical devices, but medical implants, drugs, appliances, food, cars, tobacco, as well as many other consumer products.
For years, some regulators and large corporations have tried to restrict the rights for American consumers to bring product liability claims. In late August 2004, the U.S. Chamber of Commerce announced it was going to spend $10 million on television ads in seven battleground states urging voters to support restrictions on lawsuits. Even before releasing its campaign ads, the Chamber of Commerce had already put $100 million into lobbying against lawsuits, claiming product liability suits add a “tort tax” of $809 per person every year to the cost of goods and services.
Despite a recent analysis of the Medicare population estimating medical errors kill 131,000 people a year, the fourth leading cause of death, medical malpractice suits are jut five percent of personal-injury filings, with product liability cases another five percent. The overly litigious state Americans are said to be in when looking closely at the numbers do not appear as “frivolous” as some special interest groups make it out.
Products liability cases are able to better regulate the overall safety of American consumers when dangerous products fall through regulation and emerge on the market. Today, Americans are the least likely to die a premature death, in part because government regulation and strict product liability laws have made protecting citizens a priority. No longer allowing citizens easy access to the judicial system by limiting product liability awards and making it harder to pursue a case can only work to infringe on consumer rights and safety.
4. Product Liability Insurance
Product liability insurance is available to the manufacturers, wholesalers, and retailers of various products. A defective product is defined as any physical item which is sold or given away, including medical, leisure, automotive, industrial, health and fitness products, blood, pets, drugs, foods, and even commercial jets, that is found to be unreasonably dangerous for its intended use. Any party involved in the production or distribution chain of a product can be held liable in a civil lawsuit when its users suffer injuries caused by a defective product.
Product liability insurance protects the parties involved in the production or distribution chain of a product. Some product liability insurance companies specialize in specific types of coverage, and some exclude specific types of product coverage. It is important for a company to purchase product liability insurance in order to protect their financial resources in the event that a personal injury product liability lawsuit is filed against them. Anytime a product user is injured while using a product for its intended use, a lawsuit can be filed against anyone who took part in making or distributing the defective product.
There are several factors that influence the type of product liability policy a company can purchase. A company will want to consider the price of the policy, the coverage that is offered, the company's specialization, the insurance company's reputation, and the deductible in a product liability insurance policy. The cheapest policy is not always the best. A product liability insurance policy will be affected by the type of product that is being insured. The more dangerous a product is considered the higher the product liability insurance premiums.
Virtually any individual that has been injured by a defective product has the legal right to file a legal claim against those parties that produced or distributed the dangerous product. Product liability insurance companies represent their clients in a legal case in order to negotiate a settlement to compensate the injured victim for the damages they incurred as a result of a defective product.
There are three types of lawsuits that can be brought against a defective product's producers or distributors. In a negligence case, the victim must prove that the defendant's negligence (in failing to prevent injury) caused damages. In a breech of warranty lawsuit, the victim must prove that their existed a “privity” of contract between the defendant and plaintiff that was violated and thereby resulted in injury. The newest type of lawsuit is called a strict liability lawsuit where a victim has only to prove that the product was unreasonably dangerous for its intended use.
Common product defects involve either design defects (such as those pertaining to asbestos, drugs and vaccines, medical or industrial devices, or any other product that is faulty by design) or manufacturing defects, where problems in the actual making of a product causes injury. Product liability insurance is vital to the protection of a business's financial interests. It is also the vehicle by which victims of product injuries receive compensation for their injuries.
5. Some relevant article
1) Risk Management and Product Liability
Implications of FDA MAUDE Reporting
By Kevin M. Quinley CPCU
Virtually all medical design and device firms are familiar with the Manufacturer and User Facility Device Experience Database, otherwise known as MAUDE. What may not be apparent to all firms are the risk management, product liability and insurance implications which can flow from MAUDE. MAUDE data represents reports of adverse events involving medical devices. The data consists of voluntary reports since June 1993, user facility reports since 1991, distributor reports since 1993, and manufacturer reports since August 1996.
The FDA has made available an on-line search which lets interested parties - including claimants, plaintiffs and personal injury attorneys -- search the CDRH's database information on medical devices which may have malfunctioned or caused a death or serious injury.
Here are some of the prime risk management and product liability implications from this MAUDE database:
Creates insurance-reporting obligations
A MEDWATCH or MAUDE report may qualify as an "occurrence" and obligate you to report it to your insurer. Failure to do so may cloud insurance coverage. All insurance policies have a CONDITIONS section. This sets forth the duties of the insured policyholder. Most product liability policies contain the following language:
You must see to it that we are notified promptly in writing of an "occurrence" which may result in a claim. Notice should include;
1. How, when and where the "occurrence" took place
2. The names and addresses of any injured persons and witnesses; and
3. The nature and location of any injury or damage arising out of the "occurrence"
Notice of an "occurrence" is not notice of claim.
Many medical device firms think that if there is no lawsuit, they have no obligation to report a matter to their insurance company. This is mistaken.
Some may think that unless there is a letter from a lawyer or at least a patient's demand for money, there is no reason to report. This is misguided.
Some think that if the matter is an incident, they need not report it to their insurance company. This is a misconception.
A MEDWATCH/MAUDE report may qualify as an "occurrence." If so, it must be reported in writing with some degree of detail to the insurance company.
Consider how insurers define "occurrence." Most product liability policies define it as:
"an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
Under this definition, an occurrence worth reporting to MAUDE may be one which a medical device firm is obliged to report to its product liability insurer.
Another insurance coverage ramification is . . .
Punitive Damage Coverage Problems
If you have many MEDWATCH and MAUDE reports about a product problem and then have a bodily injury claim, the plaintiff can seek punitive damages. These damages may or may not be insurable. Punitive damages are awarded to punish wrongdoing and deter others from engaging in the same conduct.
Example: a company that makes operating room equipment has a wiring and fuse problem in a device, a problem that causes O.R. fires. They file, say 11 MEDWATCH reports over an 18-month period. They do not do a field recall or retrofit. None of the reports involved bodily injury.
Or they figured it was cheaper to pay claims than incur the expense of a retrofit.
But, eventually one causes serious injury. In fact, it fatally burns a user who was undergoing surgery.
The plaintiff attorney is savvy. As part of his case preparation, he researches the MEDWATCH and MAUDE reports. He sees 11 reports. He sees the manufacturer did little other than file reports. He says this is irresponsible. He adds a count of punitive damages. He has a good case for punitive damages. The price tag on a bad case rises to a catastrophic case. The claim settles for over $20 million.
Moral: If the MEDWATCH and MAUDE reports are not accompanied by some field correction, recall or remedial action, these can provide bases for a plaintiff attorney to seek punitive damages. This can raise some insurance coverage issues.
Some insurance policies do not cover punitive damages. Others specifically exclude them. In other cases, even if a policy covers them, many states do not allow insurance coverage for punitive damages on public policy grounds. They reason that punitive damages are no deterrent to bad conduct if a company can transfer the cost to an insurance company. There is no "sting" in that!
California, New York and New Jersey are among states that - on public policy grounds - do not allow punitive damages to be covered by insurance. So, MAUDE and MEDWATCH reports could cause insurance coverage problems if they raise punitive damage allegations.
Intentional Acts Exclusions
On many product liability insurance policies, the first exclusion reads:
This insurance does not apply to bodily injury or property damage expected or intended from the standpoint of the insured.
If a device maker is on notice of a product problem, files Medwatch and MAUDE reports but does not do anything - or enough - to correct the underlying problem, at some point you cannot say a mishap is an unforeseen event. At some point, it becomes expected from the manufacturer's standpoint. The exclusion doesn't say that the act has to be intended, only expected OR intended.
"Or," not "and."
As a result, an insurer may "reserve coverage rights," saying that the Medwatch or MAUDE reports create a paper trail which - when combined with lack of remediation - shows that the losses were expected from the insured's standpoint.
This may be an uphill battle by the insurance company, but it can still cloud coverage and create uncertainty over the status of your financial protection. If enough money is at stake, some insurers will be willing to challenge the coverage. In a way, this is not so much a problem with MAUDE or Medwatch reporting per se, but rather with MAUDE/Medwatch reporting and a lack of remediation or follow-up.
Moral: Take pains to document that you took specific corrective measures to address the safety factors surfacing in MAUDE and MEDWATCH reports. Otherwise, you may be facing insurance coverage headaches related to punitives and/or "expected or intended" acts
Another issue is that these reports create a . . .
New Discovery Avenue in Product Liability Claims
MAUDE reports definitely give plaintiffs new avenues of attack and discovery. In a recent MEDMARC case, the plaintiff's main liability theory was that a different design should have been used in implantable catheter material. The basis for this was the number of MDR's reflecting incidents of catheter puncture, fracture, abrasion, etc.
Unfortunately, such complaint records are easily obtained and can lead to much "discovery," including requests for product complaint files. Plaintiffs can also use them to show "trends" -- like a spike in complaints, associational trends like lot numbers, and related items. Often, plaintiff attorneys have tried to use Medwatch reports in fact-finding investigations and as tools for deposing company witnesses.
The key factors are for medical device and design professionals in completing these reports are . . .
· Respond only to the questions asked on the form.
· Be very specific without volunteering additional information or speculating,
· Be consistent with reports to the insurance carrier (notice of claim and follow-up correspondence).
Device manufacturers must file MDRs when they get reports of death of serious injury related to product use. Most companies will have a Field Report as well as an MDR. Savvy plaintiff lawyers will seek these in discovery. Many know how to get this information themselves on the Internet. Device firms are not always successful in blocking plaintiffs' requests for Reports or MDRs. Often, judges feel this is "discoverable."
Thwarting Misuse of Reports
Can a MEDWATCH or MAUDE report be used against you in a product liability claim? Possibly, but a couple of arguments can be used successfully.
First, these reports are based on hearsay. Some courts have excluded them on that basis. However a good plaintiff may argue around that and say they are a business record or "back door" them with their expert.
Second, a defense attorney can argue the reports provide little information for plaintiff to cross the threshold of proving substantial similarity with the plaintiff's incident. This eliminates lots of reports because often the information is cursory.
However, this may not be the case if the company did a good job of investigating and followed up the report with a product inspection, etc. Nevertheless, expect to be confronted with at least some of the MAUDE/MEDWATCH reports at trial.
Most judges will find a way to let a portion of the MAUDE reports in on the basis of notice in a negligence claim or "defective and unreasonably dangerous" in a strict liability or warning claim.
Turning a Negative into a Positive
MAUDE/MEDWATCH reports can also be used constructively by device companies who find themselves defendants. In one MEDMARC case, the three MDRs admitted were ones we wanted to come in. Reason: they showed the company went to great lengths to investigate the complaint, inspect the product and determine the failure's cause. Also, the explanation of failure coincided with the plaintiff's failure, i.e. patient misuse.
In other words, show that you were a good, concerned corporate citizen. Often a company that's careful about MDR reporting and takes follow-up and report tracking seriously has a better all-round product and is easier to defend in a lawsuit.
Insurance Underwriting and Pricing Implications
One final risk management implication of the MAUDE database is that it is a new source of underwriting information for your current or prospective product liability insurer. Expect some insurance companies to ask about MEDWATCH and MAUDE reporting as part of their underwriting processes. It has always been standard for insurers to ask about an applicant's claim and loss history. This bears upon the attractiveness (or lack thereof) of a risk.
Nowadays, insurance underwriters can go on-line to see what kind of MEDWATCH reporting has been done by a company on its products. The savvier insurers and underwriters will do this.
In fact, if the underwriter draws a blank when you mention MEDWATCH or MAUDE reports, that may be a sign you are dealing with an insurer that doesn't know much about medical products. (If they think a "MAUDE report" relates to an old Norman Lear sitcom, you may be dealing with a neophyte who lacks the foggiest idea of how to underwrite medical product liability insurance.)
Tip: drop these terms with the underwriter or insurance person to see if they register as a litmus test of how well they understand the regulatory environment in which you as a medical device company operate.
Of course, underwriters might ask for your MEDWATCH/MAUDE history and then do their own independent search on the Internet. If this reveals sizeable discrepancies - say, a company reports minimal activity but the Web site shows otherwise - that can be a "red flag" to an insurer.
This is akin to ordering a copy of a driving record for car insurance. An insurance application asks about driving violations and accidents, but the insurance underwriter doesn't just take our word for it.
As Golda Meier once said of Henry Kissinger,
"Trust . .. but verify."
This is the philosophy which more and more insurers may embrace. So, more than just plaintiff attorneys can access MAUDE/MEDWATCH reports. Increasingly, insurance underwriters may access them to get a feel for a prospective risk.
A maxim in insurance underwriting is that "Frequency precedes severity." An insurer may view MEDWATCH/MAUDE reports as weather-vanes or precursors of future claim experience. It may feel that MEDWATCH reports are a "distant early warning system" portending future claim activity. Some may be off-put by seeing brisk MEDWATCH report activity.
They may get nervous and be reluctant to offer insurance or be inclined to price it higher than would otherwise be the case. As a result, one insurance implication is that these reports may affect the price of your insurance or even your ability to procure such coverage.
This is no reason to withhold reporting, but simply to prepare you. Moral: be ready to "educate" your insurance agent, broker or underwriter about what MEDWATCH reports do and don't signify. Invest time to give the insurer a comfort level about these reports so they don't overact. Let them appreciate the "context" of these reports so that they don't conclude that "lots of reports equals a bad risk."
Do not view MAUDE as a reason not to report potential claims to your product liability insurer. Early reporting has the benefit of letting your insurance company have a chance to investigate an occurrence early on, before it becomes a claim. It is always better to gather facts before the trail grows cold. Sometimes an insurer's early involvement can prevent an incident from developing into a claim, nipping a problem "in the bud."
Closing thoughts . . .
All medical device companies can expect MAUDE/MEDWATCH reports to be used against them in product liability cases. It is farfetched to think that a medical device company would jeopardize its liability insurance coverage by complying with the FDA's requirements.
An insured must obey the law and regulations implementing the law. Most attorneys seem to agree that any provision in an insurance company's policy which negated coverage if an insured complied with FDA reporting requirements would be null and void. Any attempt to enforce it would likely invite a bad faith claim against the insurance company by the medical device manufacturer. Judges and courts might also negate any such provision on grounds that it is against public policy.
Still, there is a need to balance FDA compliance in occurrence reporting and insurance policy compliance. The device company must report to FDA. It should probably report to its insurance carrier that it has complied with FDA reporting requirements. Give the insurer the same information it gives to FDA, maybe more.
MEDWATCH reports and the MAUDE database create new regulatory challenges for medical device and design professionals. They also have risk management and insurance implications. Being aware of these is the first step toward harmonizing regulatory compliance with sound risk management
Kevin M. Quinley CPCU is Senior Vice President, Risk Services, MEDMARC Insurance Company, Fairfax, VA. He can be reached at kquinley@medmarc.com He is the author of over 400 articles related to claims, product liability and risk management. He has also written seven book on claims and risk management, including Managing Product Liability and Avoiding Litigation. He is a former Editorial Advisory Board Member for Medical Device & Diagnostic Industry Magazine.
2) Improve Your Risk 'Profile' May Result in Insurance Savings
By Jill Wadlund & Frank Goudsmit
After years of relatively low insurance prices, the insurance industry today is experiencing a hard market. For insurance buyers, that means policies may cost more and have more restrictive terms than they did a few years ago. But underwriters who specialize in providing insurance to the medical technology industry don't view all medical device firms through a single lens. Medical device companies that demonstrate the highest level of performance get the best terms and pricing in any market. Those with an average to poor "risk profile" may have more difficulty finding affordable insurance that meets their unique needs in a hard market. To determine its level of performance and assess the risk that a medical device firm represents, a knowledgeable medical technology underwriter will take a good, hard look at all aspects of the business, from sprinklers to sales training.
The insurance underwriter's job is to evaluate risk and determine how much of a particular risk he or she is willing to assume on behalf of the insurance company and at what price. The underwriter also works closely with experts in loss control to try to improve the loss exposure. How a company manages its business and its exposures to loss can distinguish it as a "better risk" or a "worse risk." Better risks qualify for lower rates and more generous terms from top-flight insurance companies. An insurer with an intimate knowledge of the medical device industry will want to find out what you do and how you do it. Then the underwriters will assess how you conduct your business relative to other firms in the industry.
Here are some of the qualities-both philosophical and technical-that an experienced medical technology underwriter will look for in evaluating a medical device firm. By striving to incorporate these qualities into your business, you can make your medical device company a better risk-which can translate into savings on your insurance program.
A long-term view of the business. Medical technology underwriters try to discern if a company takes a long-term or short-term view of its business. It's an easy bet that short-term thinkers will create more problems for an insurer than long-term thinkers will. Management that makes decisions to achieve short-term benefits may, for example, rush a product to market and end up recalling it later. Long-term thinkers invest in risk management and avoid shortcuts that may improve the bottom line in the next quarter but could threaten the business's long-term survival.
Best practices. Underwriters are looking for medical device companies that strive to achieve the best practices in their standard operating procedures rather than abiding by the letter of the law. Companies that do only the minimum that regulations require are more likely to experience more and greater losses, whether as the result of a tainted product that can't be sold or, in the worst case, a defect that contributes to the injury or death of a patient. Underwriters will investigate how many regulatory violations a company has been cited for, the nature of those violations and how the company has responded to them. Evidence that a medical device firm provides quick and candid responses to the regulators' inquiries tells the underwriter something about the company and its attitude toward regulatory compliance; a history of unanswered letters that result in warning letters from the regulators sends an entirely different message.
A commitment to patient safety. Talking about patient safety is one thing; evidence of a true commitment to doing something about it is another. Does the company provide honest and full disclosure about the risks and benefits of its products to the healthcare community? Has it committed resources and authority to safety surveillance groups that monitor adverse events and provide unfettered support from senior management? Underwriters look closely at these kinds of quality control monitoring techniques.
Proactive design. Underwriters look carefully at the design process. Do the company's design engineers engage in systematic and thorough analyses to try to anticipate how the product will be used and how it might be misused and then build controls designed to prevent inappropriate use? Companies dedicated to human design engineering are less likely to face product liability problems.
Employee training. A company's policies and procedures are only as good as the people who institute them. Underwriters want to know what kind of messages employees are receiving from senior management. Training should include an emphasis on safety in the workplace, such as ergonomic workstations, guarded machinery and proper fire prevention. Field training is also critical; for example, is the training program for salespeople so focused on production and incentives that they feel encouraged to promise something the product can't deliver or to downplay its risks? An effective sales training program should emphasize the importance of candid and objective dissemination of information.
Well-run clinical trials. When a medical device firm is engaged in clinical trials, an underwriter will want to see a well-documented informed consent process and a form that is written clearly and simply, while also accurately outlining any potentially harmful effects.
A facility-protection philosophy. An underwriter will want to see that a medical device firm has a prudent facility protection philosophy that drives all of its engineering efforts and its analysis of facilities it intends to build or acquire. Underwriters will look, for example, at a company's security system; the controls it has to protect clean rooms from potential breaches; and how flammable chemicals are stored and dispensed. Are the sprinkler systems in the warehouse appropriate for the type of commodities stored there? The underwriter will also look for evidence that the company engages in ongoing testing and maintenance of its protection systems.
Supply chain redundancy. Medical device companies risk losing millions of dollars in business income if a key supplier experiences a fire or other disaster. However, many are unaware that they can insure against the business income they lose when the supplier can't provide critical materials. Underwriters that provide this coverage want to know that their policyholders have thoroughly analyzed their supply chain dependencies and have identified alternative suppliers where possible.
Business continuity plan. A business continuity plan is a risk management road map. By developing a business continuity plan and then regularly testing and updating it, a medical device firm demonstrates a strong commitment to the long-term survival of its business. During the process of developing a plan, a company assesses its vulnerabilities to a disaster, takes steps to control them and then prepares for the possibility that one will occur anyway. This includes everything from instructions for responding to an emergency to backup plans that will get operations running again and restore the business to normal in as little time as possible. Medical device firms that have thought through their exposures and how they would get back in business are much more likely to minimize losses in a disaster, improving their risk profile from an underwriter's point of view.
Small Companies, Strong Controls
More than 80 percent of medical technology companies have fewer than 50 employees and little or no sales revenue, according to AdvaMed. These small businesses, which often have limited personnel and budget resources, may find it more challenging to operate at the peak of best practices. Nonetheless, small medical device firms can do a lot to improve their risk profile.
Exceeding regulatory requirements does not have to be onerous or prohibitively expensive. When underwriters evaluate small companies, they look for the right attitude. Has the company demonstrated a commitment to do the best it can with the resources available to it? What kinds of messages are employees getting from management when it comes to patient safety? A sophisticated safety surveillance system may be beyond the means of a small company, but underwriters will know if a CEO is dead serious about getting feedback from doctors and patients for incorporating safety improvements into the design.
Insurer as Business Partner
In the end, an experienced medical technology underwriter is looking for medical device companies, whether large or small, that view their insurance carrier as a business partner. Insurance companies that know a lot about the medical technology industry can help medical device companies implement effective loss prevention strategies and improve their defense posture in product liability cases. Insurers can help medical device companies incorporate safety into the design of new facilities and evaluate exposures to property, liability and business income losses. Good medical technology insurance companies put enormous effort into understanding the businesses they insure and emerging trends that will affect them. Their experience with claims and litigation makes them a clearinghouse of information that comes back to clients in the form of their risk assessment, as well as loss control recommendations and services.
How does an underwriter know if a company views its insurer as a business partner? That's easy. Companies that shop for a better price each year raise a red flag. An underwriter also learns a lot about a medical device firm from its willingness or unwillingness to cooperate during the risk assessment by providing access to decision makers and detailed answers to their questions. Medical device firms that view their insurer as a business partner will provide early and regular communications about potential problems. The companies that represent the best risk are those that want to take advantage of the insurer's expertise in risk management and loss control. They want more information from their insurer, though they need it less.
Choosing an Insurer
Medical device firms should be as choosy about their insurer as their insurers are about them. Your agent or broker should be able to help you find an insurer that receives top ratings for financial strength and claims-paying ability, that has an excellent reputation for handling claims and that understands the unique needs of a medical technology company. For example, most insurance policies pay a business income loss until the property that has been damaged is physically restored; but, medical device companies may want to look for a medical technology insurer that pays business income losses until there is an operational restoration of the business to cover the time it takes for the FDA to recertify the facility to begin manufacturing again.
The relationship between a medical device company and its insurer should not be an adversarial one or a distant one. Medical device companies should look for top-quality insurers that specialize in providing coverage to medical technology companies and demonstrate an interest in creating a business partnership. An insurer that specializes in the medical technology industry has the ability to develop policies that respond to the specific needs of medical device firms, provide services that help them reduce losses, lower insurance cost in both soft and hard insurance markets and ultimately help the company succeed in the marketplace.
Jill Wadlund, vice president, Chubb & Son, and casualty manager, life sciences, can be reached at Jwadlund@chubb.com or 908-572-4697. Frank Goudsmit, assistant vice president, Chubb & Son, and property & international manager, life sciences, can be reached at fgoudsmit@chubb.com
3) Risk Management
Three Ways to Boost Your Product Liability Investigation
By Kevin M. Quinley CPCU
Medical device companies often make headlines in ways they would rather not. Lawsuits against catheters, ear implants, hip screws and other products foreshadow huge needs to gather facts to assess the existence of defects or adverse outcomes due to other factors. Want to win medical product liability claims? The foundation of winning lies in a good investigation. Let's look at some practical tips in launching product liability investigations. Follow three steps to turbo-charge your fact-finding process:
Step #1. Get the product. Typically, a medical device manufacturer first learns of a claim through a hospital or physician complaint, either by phone or mail. The first step is to obtain the product involved in the accident or injury. This way, the investigator -- the manufacturer, insurer, claim adjuster or outside counsel -- can examine it early and assess whether an adverse outcome was due to genuine device failure or to some other factor, such as failure to read or heed the instructions, sloppy physician technique or poor patient selection.
Since the consumer owns the product, unless he or she relinquishes it, astute manufacturers will make it easy and attractive for customers to return products which have been involved in an adverse outcome. The techniques include:
· Requesting return of the product, so that you can examine it and make sure no further accidents occur;
· Offering to exchange the old product for a new one;
· Offering to refund the purchase price in exchange for returning the product;
· Making return of a product easy by offering to pick it up, to pay for shipping and handling charges;
· Offering a premium, such as another product, or discount off the purchase of another product.
These approaches are not only useful for regaining possession of the device in question. They also build customer goodwill and lower the odds of facing a formal claim for damages. In the final analysis, though, it is up to product buyers whether or not to return the product and if they refuse these inducements, the device company has a tougher job in getting early access to the product for examination and testing. Persistence and creativity may pay off here, however.
Step #2. Observe common-sense do's and don'ts after obtaining the product. Once you get the product, tag it and keep records of when and where you store it for chain of custody purposes.
Do not test the product without first clearing it with your insurer or your attorney. They may want safeguards in place to make sure that test results are privileged, especially if the test results turn out to be unfavorable. "Privileged" communications means that they are confidential and do not have to be divulged or disclosed.
In a claim involving a motorized three-wheeled scooter, the lawsuit claimed that it flipped and tipped going up an incline. The claimant's head injuries were very severe, and ultimately fatal to the elderly woman riding the scooter. Well into the litigation, the product liability insurer learned to its horror that the manufacturer had -- post accident - conducted a homemade experiment to try to re-enact the accident. Neither the product liability insurer nor the defense attorney were aware of this "testing." Unfortunately, the tests did replicate the flip-over. At this point, the insurer was fearful that the tests -- which were not protected by attorney-client privilege -- would have to be disclosed and would cripple its liability defenses. The insurer thereafter settled as quickly and as cheaply as it could, but still paid a premium due to the damaging facts lurking in the background.
Moral: Do not test on your own without first discussing it and clearing it with your insurer or attorney.
Step #3. Identify the device. If you cannot obtain the product in question, the next best option is to gain access to it to inspect it. A product inspection should aim to:
· record the model, lot and serial numbers
· confirm or rule out the identity of the actual product manufacturer
· get good color photographs
· check for signs of product abuse, misuse or shoddy maintenance. For example, a worn, scuffed or jerry-rigged product condition may imply certain defenses which the manufacturer can employ.
Often, despite best efforts, a device manufacturer may not be able to obtain possession of the product. Perhaps the end users do not trust you enough to relinquish it. Or, they realize that it could be a crucial piece of evidence. If the claim is not yet a lawsuit phase, an attorney may be reluctant to relinquish the product, lest someone else lose or alter it. Sometimes no one has the device because it has been lost, destroyed, discarded or consumed.
Usually, the medical device inspection occurs at the office of a lawyer. In other cases, the product inspection may be in the home of the claimant/consumer-user. Or the device inspection may be at a hospital or a physician's office. After the device manufacturer gets permission, it helps having the inspection performed with a technical or product representative from the manufacturer. Typically, these persons have much greater expertise than even the best attorney or claims adjuster. They will know what to look for in assessing whether or not a product incident involves a device defect or malfunction, or is due to other causes.
These three steps will lay a strong foundation for product liability defense and may provide sufficient ammunition to keep you out of court.
Kevin M. Quinley CPCU is Senior Vice President, Risk Services, MEDMARC Insurance Company, Chantilly, VA. He can be reached at kquinley@medmarc.com
4) Risk Management
Four Hot Areas of Medical Device Liability
By Kevin M. Quinley
Once considered the realm of Rube Goldberg contraptions, medical technology is now a key feature of patient care. Longer life expectancy corresponds with the growth in entrepreneurial device companies making everything from tongue depressors to Jarvik-7 artificial hearts. Patients often expect perfect device performance along with flawless medical outcomes. Medical devices are now a multi-billion dollar industry, with vigorous growth forecast into the 21st century.
Accompanying such growth, however, are significant product liability risks. "Medical devices" is a phrase often evoking memories of the Dalkon Shield, breast implants or defective heart valves. While product liability claims are facts of life for most manufacturers, medical device companies enjoy smaller margins of error. A pacemaker hums perfectly, or else a serious medical crisis may result. If a life-support ventilator does not function flawlessly, a patient dies or is brain-damaged.
Medical device manufacturers increasingly find themselves targeted by ingenious personal injury attorneys pursing injury claims for aggrieved patients. Let's dust off the crystal ball and peer into the future, venturing a handful of predictions about product liability litigation against medical device companies. Here are four:
1. More discovery targeting e-mail records in product liability lawsuits.
Medical device companies which exclude e-mail in their document retention/purging policies are courting trouble. Increasingly, discovery in litigation includes requests to review e-mail records. In some cases, e-mail contains the proverbial "smoking gun" document helping a plaintiff make his or her case. These can include e-mail where a design engineer writes, "We need to re-work the design before a patient gets killed," or "A recall is much more costly than simply paying the claims." Personal injury lawyers dream about finding such documents, because they can astronomically inflate the value of a claim.
Even without any such incriminating e-mail in storage tapes or hard drives, problems abound. One reason: the cost of retrieving and reviewing e-mail archives can be so onerous that companies are compelled to settle cases rather than endure the cost and time of e-mail discovery production. Moral: include e-mail in your corporate document management and destruction policy.
2. Intense merger and acquisition activity in the medical device sector will come back to haunt many firms and make defense of claims from "acquired" companies very problematic. The medical device sector is a hothouse of brisk merger and acquisition activity and pronounced consolidation. Often, an acquired company - its products, employees and documents - becomes an "orphan" in a new corporate context.
When a lawsuit is filed involving a product made by an acquired company, lawyers often find it very difficult to defend the case. Due to the acquisition, the product's original designers have left, key employees may be gone and crucial documents may be lost. Tip: keep meticulous records on products and employees involved in acquired entities. They may help immensely in a subsequent product liability claim.
3. A shakeout in the plaintiff's bar has produced more sophisticated attorneys bringing medical product liability cases and a decline in marginal cases and lawyers. Fewer medical device cases may be brought, but those emerging may be stronger and handled by a higher caliber plaintiff attorney. The watchwords seem to be, "Less quantity - higher quality."
4. Direct-to-consumer advertising will increase and may erode the learned intermediary defense to product liability claims. Historically, drug and device companies have successfully asserted a "learned intermediary defense" against "failure to warn" claims in product liability suits. This legal doctrine holds that drug and device companies only have a duty to warn the doctor -- not the patient/consumer -- of contraindications and potential complications of using a medical device. This was because typically doctors - not the patients themselves - make the buying decisions regarding medicines and medical equipment. With the increase in direct to consumer ads for medications such as Claritin, Flonase and Viagra, plaintiff attorneys may argue that this defense no longer applies, that companies have waived the defense by advertising directly to consumers. Suggestion: have legal counsel review any direct-to-consumer ads in light of promises, warranties and its possible effect on legal defenses to liability claims.
As part of prudent risk management, medical device firms should try to peek over the horizon to assess developing trends in the law, litigation and in claim patterns. Being forewarned is being forearmed. Knowing where there are potential areas of claims may help medical device firms navigate the rocks and shoals of today's shifting tort system.
Kevin M. Quinley is Senior Vice President, Risk Services, MEDMARC Insurance Group, Chantilly, VA. He can be reached at kquinley@medmarc.com and by telephone at (703) 652-1320.
5) The Lessons Of Arthur Andersen:
Minimizing Your Liability Through
Effective Management Of Your Documents
By Thomas M. Freeman
Recent news articles and congressional testimony concerning Arthur Andersen's audit and consulting activities for Enron have sent reverberations through companies across the country. Hopefully, companies will appreciate and learn from the catastrophic consequences resulting from Andersen's failure to follow its own document retention policies and document destruction schedule, particularly its decision to initiate the shredding of documents on the eve of a government investigation. While a document retention program is not a guarantee for avoiding liability, Andersen's rapid demise should provide a powerful incentive for companies to reexamine their own document retention and destruction programs and, more importantly, their enforcement practices.
The important lessons which companies can learn from the recent Andersen/Enron fiasco are the need to pay attention to which documents are being retained and when documents should be destroyed, and the importance of consistently enforcing their document retention policies. By focusing on more effective management of their document retention programs, companies can improve their operations, reduce costs and reduce their potential liability. In light of Andersen's recent experience, companies should review how their own programs are operating and would hold up under court scrutiny.
Unfortunately, despite the publicity surrounding of Andersen's document destruction practices, many companies, particularly new or smaller enterprises, have not established a formal document retention program. More disturbing perhaps is that companies may have a document retention policy, but the policies are outdated or inadequate for the retention and destruction of electronic data (or the electronic discovery requests increasingly used in litigation), or the policies are poorly enforced or not enforced at all. Whichever the case, these companies are probably wasting money and increasing their liability risk.
FREQUENTLY ASKED QUESTIONS ABOUT
DOCUMENT RETENTION PROGRAMS (DRP)
Q: We are a small company. Why do we need a formal DRP?
Companies with no formal document retention program typically offer a variety of excuses. Some of the more common excuses include, "we're just a small company. . . we don't have many employees or documents"; or, "it sounds too expensive and will cost us too much. . . ."; or, "our company already keeps what it needs so we don't need a formal 'document retention program' . . . ."; or, finally, "we're not embroiled in litigation. . . ." Regardless of the size or business of the company, those excuses do not stand up to scrutiny. All companies, even small companies with few employees and few documents, should have document retention and control policies in place to more effectively manage their business; minimize their risks and legal exposure; reduce ongoing costs; and proactively manage future expenses.
Q: We can't afford to develop a DRP.
Ironically, expense is one of the most frequent justifications for not having a document policy. It inevitably will cost a company far more to ignore document retention issues, however, than to address the issue head-on. Absent an effectively-enforced document retention and destruction program, documents are more likely to be lost resulting in costs incurred recreating documents or searching for documents. There may be excessive costs for unnecessary storage space. Most importantly, the company risks losing a history of its operations, transactions and business. A company employing a haphazard approach is likely to keep too many documents, or too few, or both. Without a well-conceived program with established criteria for which documents are retained and how they are organized, a company risks losing or destroying records important to its operations, or even required by law. It is easy to imagine dire and expensive consequences resulting from the destruction of, or inability to find, important records. At the same time, retention of documents alone is not a solution. Effective management of corporate documents requires established retention schedules and procedures, including a regular, well-enforced destruction schedule. The most thoughtful and detailed retention schedule is of little value when it is not consistently and uniformly enforced.
The cost of developing and operating a document retention program will seem trivial when litigation besets a company. Any lawsuit will require a company to retrieve and review its own records, both to prepare its own, and to respond to the opposing party's, discovery requests. The retrieval, review and production of emails alone can be exorbitantly expensive and time-consuming. Consider, for example, the experience of parties in a recent case, Rowe Entertainment, Inc. v. The William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y 2002), where the physical recording, cataloging and processing of a sampling of eight back-up tapes of email, generated or received by 56 employees in two offices over two years, was estimated to cost almost $400,000, not including legal expenses. The total cost was estimated to mushroom to almost $9,750,000 if the emails on all of the back-up tapes retained by the company over two years were produced, instead of a sample of eight sessions. An important lesson from the case is that even after cost-sharing and cost-shifting of these expenses between the parties, the price of seeking justice through litigation may result in either the abandonment of meritorious claims or unjustified settlements. Thus, controlling what documents - hard copy as well as electronic - a company decides to retain, and for how long provides a meaningful, proactive means of controlling both expenses and possibly outcome when litigation occurs.
Q: How would a DRP help our company?
Habit or inattention aside, companies generally keep documents for two reasons: business efficiency and compliance with legal requirements.
Business efficiency requires a document retention program. Companies need an efficient and well-run document retention program to effectively identify and organize the documents it retains and facilitate easy and economical access to records when needed for business operations. The process of establishing and operating an effective document retention program requires a company to identify records necessary for ongoing operations, or emergency needs, and aggressively discard and destroy volumes of unnecessary and duplicative records which otherwise would clutter its offices or require off-site storage at significant cost and inconvenience1 . An effective document retention program which reduces the number of documents for storage can thus provide cost-saving advantages.
Companies also maintain records to allow them to comply with legal requirements. Often, state and federal laws subject a business to an affirmative legal duty to keep certain records for specific time periods. To comply with these requirements, applicable statutes and regulations necessarily encourage the implementation of minimum document retention periods.
A third reason, however, that should inspire companies to develop - and enforce - a well-planned document retention program is to save costs should they face litigation. Unfortunately, litigation is a fact of life in today's business environment. An effective and efficient document retention program can save significant resources (time, effort and money) locating and reviewing documents either to pursue legal claims or to respond to subpoenas and document requests. It also will help minimize the likelihood of unexpected surprises with adverse consequences in litigation, government investigations and audits. "Every litigator and corporate counsel knows that the Achilles' heel in almost every case involving a complex dispute is the paper found in the company's own files." Phillip Allen, What Corporate Counsel Should Do About Bad Documents, at 1, in American Corporate Counsel Association, Records Retention Manual (1995) (noting that "[n]othing is quiet as dismaying - or as inevitable - as finding a memorandum written by some employee that seems to prefigure the opposing party's theory of the case.")
Inattention to a reasonable document destruction policy will also result in retention of more documents for longer than necessary, and unnecessarily increase the risk of adverse evidence. On the other hand, selective or inconsistent retention or destruction of documents suggests improper document retention practices increasing the company's exposure and vulnerability to accusations of a cover-up.
Q: Now that we work in a paperless society, what is a "document"?
In developing or effectively enforcing a document retention program, an understanding of the legal definition of the term "document" is essential. The law applies a very broad interpretation to the term "document" and any company document retention program should adopt a similar approach. State and federal law defines "document" to encompass virtually any means by which information is generated, stored or communicated. See, Cal. Evidence Code ? 250 and Federal Rule of Civil Procedure 34. These statutory definitions include not only hardcopy paper files, correspondence, manuals, etc., but computer email, floppy disks, CD-ROMs, hard drives, DAT files, photographs, videotapes, audio recordings, personal digital assistants, cell phone memory and voicemail, as well as an employee's "personal" files. Accordingly, in developing and enforcing its document retention program, a company must include all of these media in its categories of records for retention and destruction. The company also must educate its employees on the broad scope of the program.
Q: How do we go about creating and implementing a DRP?
The basic elements for creating and implementing an efficient and effective document retention program include: support of management; thoughtful, coordinated and systematic guidelines and procedures for the selection and categorization of documents with established time periods for retention and destruction; conscientious enforcement of the program to assure compliance with the guidelines and procedures for retention and destruction of records; and periodic review and revision of the program to effectively tailor it to the changing circumstances, needs and requirements of the company.
Whether a company is developing and implementing a document retention program or simply performing a periodic review, it should consider the following recommendations as a good starting place for avoiding or minimizing unnecessary risk:
1. Put someone with experience and authority in charge of the policy and hold employees accountable.
2. Document the goals of the program, as well as the guidelines and procedures for how these goals will be achieved.
3. Consult with legal counsel and all appropriate management levels within the company and obtain written approval for the organization of records and proposed schedule of document retention and destruction.
4. Involve the company's technology department in decisions regarding the program's methods for retention, destruction and enforcement.
5. Documents should be destroyed systematically, as specified by the policy, not in a selective or haphazard way; require "sign off" to vary from the policy or schedule.
6. Once established, the schedule of document retention and destruction should be published and all company employees should be educated about the policy and the necessity for compliance; require employees to confirm compliance.
7. Be prepared to suspend regular retention and destruction procedures when litigation is pending or imminent; have a plan in place for quickly notifying all necessary staff that this action must be taken.
8. Periodically conduct internal audits of the program.
9. Conduct regular reviews of the effectiveness and operation of the program and consider any necessary revisions based on the changing needs and direction of the company.
Q: Where can I find out more about how to develop and manage a DRP?
Several particularly useful and valuable resources worth consulting when establishing or reviewing the effectiveness of a document retention program include: American Corporate Counsel Association, Records Retention Manual, 2001; Business Laws, Inc., Guide to Records Retention, 4/99; Office of the Federal Register, Guide to Record Retention Requirements in the Code of Federal Regulations, published with annual supplements; and Shupsky, ed., Legal Requirements for Business Records: Federal and State, a four-volume loose-leaf publication; CCH Inc., Guide to Record Retention Requirements, (Rev. 7/01).
Q: What are some of the dangers of an inadequate or poorly enforced PRD?
Improper Intent May Invalidate Policy
Whether the program was instituted in bad faith - with fraudulent intent and a desire to suppress the truth - may be a factor in determining whether a company's document retention program withstands legal scrutiny. In Lewy v. Remington Arms Co., Inc., 836 F.2d 1104 (8th Cir. 1988), the court suggested a reasonableness test to review the defendant's document retention program; the issue arose after the trial court used a "general negative inference" instruction due to defendant's failure to produce relevant documents (including customer complaints) that had been destroyed pursuant to the company document retention policy. Testimony was presented that the company had established its document destruction schedule to eliminate customer complaints from specific files to avoid potential liability. Other courts have found that implementing a document retention program will not insulate a company from liability if the policy is unreasonable, mismanaged or improperly applied.
Selective or Haphazard Enforcement of Policy is Dangerous
Establishing a document retention program is of little value if it is not well conceived and consistently enforced. In Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472 (S.D. Fla. 1984.), the court entered a default judgment and imposed monetary sanctions after determining that the stated purpose of the document record policy was the elimination of documents that might be detrimental to the company in litigation. Records management practices which are selective or inconsistent may actually create additional risks and liabilities for a company. In Re Prudential Insurance Company Sales Practices Litigation, 169 F.R.D. 598 (D.N.J., 1997), the court imposed a $1 million fine and other litigation sanctions because Prudential's "haphazard and uncoordinated approach" to document retention, including repeated destruction of documents after entry of a document retention order, denied its opponents potential evidence. Prudential exposed itself to additional potential liability -including spoliation of evidence claims, issue or evidence sanctions at trial, adverse inference instructions, as well as white collar criminal charges - with its "haphazard approach" to document destruction, . See, 18 U.S.C. Ё 1503, 1505 and 1510, and similar state statutes.
The Prudential case demonstrates that an effective procedure for suspending document destruction policies and instead preserving evidence is just as important as establishing destruction practices in the first place. A company should have a procedure in place that can be implemented without delay in the event of a governmental investigation or claim against the company (or a claim by your company against someone else).
WAKE-UP CALL
The recent stories regarding Andersen's destruction of Enron documents should provide a wake-up call to companies to implement a document retention program or review the reasonableness and effectiveness of existing programs. Creating a document retention policy requires time and effort. Assuring that an existing records management program is functioning effectively and consistently also requires more than casual, sporadic attention.
While a document retention program does not guarantee that liability will be avoided, a well-conceived and consistent approach to the retention and destruction of documents should improve any company's business operations, reduce costs and minimize its liability risks. If you don't think these things matter, ask someone from Andersen.
Thomas M Freeman is a Partner in the Oakland, California office of Crosby, Heafey, Roach & May. Since joining the firm in 1984 after clerking for the Hon. Robert E. Coyle, U.S. District Court, Eastern District, California, his practice has focused on civil litigation with an emphasis in product liability and business litigation.
Crosby Heafey has decades of experience with product liability issues. We use this experience not only in the courtroom, but also to help our clients stay out of the courtroom by devising strategies to minimize their risk of product liability litigation and, if it occurs, to minimize their exposure to damages (including punitive damages). There is no aspect of counseling and pre-litigation advice that our attorneys and consultants have not handled, including document retention strategies, recall campaigns, warnings and product literature development, packaging design, and safety engineering. raymond@parenty.mb.ca, (204) 237-3737
6. Solution
Where can I find information on product liability risks and reasonable levels of coverage for pharmaceutical, clinical diagnostic products, or medical devices?
At this point, there is no single location to acquire the information you need. Most of this information is in the hands of insurers, brokers, and trade associations. Contacting the appropriate trade association for each of your areas of interest may be helpful. If you need a general schematic of what we look at, the following description should help:
Generally, an insurance underwriter feels a company faces product liability risks from:
· The Product and the Indication
· Phase and Duration of Trials
· Location of Trial Site
· Reputation of Hospital/Clinic
· US vs. non-US
· Demographics (Number and age of Patients)
· Hazard Group (Medical Condition)
· Sick adults who have either exhausted alternative therapies or for whom no existing therapies exist
· Patients who have an existing medical condition but who live relatively normal lives
· Healthy subjects/therapeutics
· Healthy subjects/vaccines
· Known Adverse Reactions
· Pre-Clinical and Previous Results
· Financial Strength of Company/Sources of Funding
· Collaborative Partners
· Medical/Scientific Experience of Company
· Degree of Liability Assumed by Company
· Degree of Liability Assumed by Others
· Study Center
· Contract Manufacturer
· Suppliers
Picking a limit of Liability is a tricky process. If your broker or insurer is experienced with life science companies, they should be able to give you benchmarking information. Here is a process for Clinical Trials that you can follow that should be helpful.
Step 1: Consider the requirements made by outside parties or which may be made by outside parties. These parties include:
· Investors
· Licensors
· Clinical Trial Sites
· Outside Consultants/Clinicians/CRO's
· Board of Directors/Scientific or Medical Advisory Boards
If any licensor, clinical trial site, or consultant requests limits in excess of $5MM these would be quite outside the "normal" range of requests.
Step 2: Subjectively analyze the risk. High risk factors include:
· Known significant side effect profile
· Subjects under age 18
· Subjects in good health
· No prior clinical experience with the compound
· High number (>250) of subjects
Step 3: Analyze any contractually assumed risk particularly from licensors and clinical trial sites. Consider the total liability of others you are assuming under an aggregate policy limit.
Step 4: Review the information your broker/insurer provides you. ABD can help in this area if you need assistance.
Step 5: Make your informed decision and review at least once a year.
7. Results
Company 1
The ACE Group of Companies is a global insurance and reinsurance leader in property, casualty and financial services.
Headquartered in Bermuda since its inception in 1985, ACE was created to provide hard-to-find excess liability coverage. Today, members of the ACE Group of Companies operate in more than 50 countries around the world with an exceptional underwriting team committed to hard work, integrity and discipline.
As a true innovator in the insurance industry, ACE prides itself on developing the appropriate response to every challenge. ACE uses its strong analytical skills, breadth of resources and deep industry experience to create solutions for complex insurance and financial challenges. Because each client’s needs are specific and unique, ACE continually explores new and creative ways to protect them, their property and businesses.
ACE’s global reach and knowledge enable us to deliver the kind of quality and service that builds lasting relationships. Around the world, ACE’s clients and brokers can expect the highest level of commitment to service
UK
ACE European Group, headquartered in London, is one of Europe’s leading providers of Property and Casualty, Accident and Health and Personal Lines insurance.
ACE European Group trades under three brands: ACE Europe, ACE Global Markets and ACE Tempest Re.
ACE Europe specialises in client-focused solutions for UK and Continental multinational and large commercial clients. ACE Europe’s property and casualty product range includes property, primary and excess casualty, financial lines (D&O and Crime) surety, marine cargo and construction related risks. ACE Europe also underwrites an accident and health and travel insurance portfolio, providing benefits and services to individuals, employee groups and affinity groups throughout Europe.
ACE Global Markets (provide link to agm.com) is the London Market arm of ACE European Group providing global access to ACE’s specialist underwriters in property, energy, financial lines, marine and accident and health as well as, through its Lloyd’s syndicate, global aviation and marine business.
ACE Tempest Re is the reinsurance arm of ACE European Group underwriting a significant treaty reinsurance portfolio for all property and casualty lines of business that are focused principally on the UK, continental Europe, Japan and the Far East.
ACE European Group combines professional expertise and experience of underwriting with financial stability and strength: ACE European Group Limited is rated A+ (Strong) by Standard & Poor’s and A (Excellent) by A.M. Best; ACE’s Lloyd’s Syndicate 2488 is rated Aa3 by Moodys. Both companies are authorised and regulated by the Financial Services Authority.
The company created the ACE Trading Floor, which is unique in the underwriting world. The facility is based in the ACE European Group’s London headquarters and enables brokers to conduct business with ACE underwriters within ACE’s own state-of-the-art environment.
ACE European Group’s underwriting teams are respected leaders in the insurance industry, highly regarded for their knowledge and business acumen. As one of the fastest-evolving and most freethinking players in the market, ACE European Group takes pride in developing its business to secure its clients’ futures, and attaches great value to being able to tailor each product to fit specific needs.
ACE Medical Risk
ACE Medical Risk offers a wide range of liability products for the healthcare industry.
Products liability: For non-invasive medical device manufacturers and distributors
For additional information, please visit www.acemedicalrisk.com.
See appendix 2 to 4 for application form and policy
China
ACE INA Insurance Company of North America, Beijing Representative Office
Huatai Insurance Company of China Limited ACE Strategic Partner in China
Corporate Square
35 Financial Street
Xicheng District
Beijing 100032
China
Phone: +86 (10) 6621 8833
Fax: +86 (10) 6621 3751
www.ehuatai.com
HongKong
ACE Insurance Limited
25th Floor
Shui On Centre
No.6-8 Harbour Road
Wanchai
Hong Kong
Hong Kong
Phone: +852 3191-6800
Fax: +852 2560-3565
contact.acehk@ace-ina.com
Corporate and Mailing Address:
ACE European Group
The ACE Building
100 Leadenhall Street
London EC3A 3BP
United Kingdom
Telephone: +44 207 173 7000
Media inquiries: 44 207 173 7578
Fax: +44 20 7173 7800
E-mail: info.uk@ace-ina.com
Website: http://www.aceeurope.com
Company 2
Miller is a specialist insurance and reinsurance broker, operating internationally and at Lloyd's.
Headquartered in London - heart of the global insurance industry - we provide specialist risk transfer and consulting services for clients around the world. This specialist focus means we can offer unrivalled expertise, sector knowledge and depth of relationships with the major markets - both in London and internationally.
Founded in 1902, today Miller is the only remaining truly independent insurance and reinsurance broker of its size, based in the UK.
In the hundred years Miller has been in business we've built up a worldwide reputation for delivering results. We deliver because we get to know our clients' businesses and risk issues inside out: at Miller, clients aren't just clients - they are valued partners.
Together with fellow group company Miller Insurance Services (UK) Limited, we work with some of the world's most innovative science and technology companies, in sectors ranging from IT and telecommunications to life sciences. We provide advice and place tailored, cost-effective insurance cover.
Miller's specialist expertise has been recognised by market leading companies and trade associations, and 35% of the UK's FTSE quoted pharmaceutical companies.
Who we work with
Miller works with a wide range of science and technology companies, from the computing, software and networking sectors to bio-technology and pharmaceuticals companies.
Where we operate
In the UK we deliver insurance solutions direct to clients. Internationally, we operate through local retail insurance brokers.
Pharmaceutical and medical product liability
http://www.miller-insurance.com/Specialist_areas/Science_and_technology/Pharmaceutical_and_medical_product_liability.asp
Proposal form (See appendix 5)
Miller Insurance Services Ltd
Dawson House
5 Jewry Street
London
EC3N 2PJ
Tel: +44 (0) 20 7488 2345
Fax: +44 (0) 20 7410 2757
info@miller-insurance.com(0)20 7488 2345
Miller Insurance Services (Hong Kong) Ltd.
Unit 2102
21st Floor
Chekiang First Bank Centre,
1 Duddell Street,
Central,
Hong Kong
Contact: Susanna Lam
Tel: +852 2525 6982
Fax: +852 2525 6981
E-mail: susanna.lam@miller-insurance.com
Company 3
Reed Smith LLP
We are a top global law firm that has worked in close partnership with its clients throughout a successful history to grow from being a leading national law firm to a transatlantic law firm committed to providing the highest level of service to national and international clients.
Founded in Pittsburgh in 1877, we now have nearly 1000 lawyers located throughout the U.S. and Europe, and we are counsel to 29 of the top 30 United States banks; 26 of the Fortune e-50 companies; 9 of the top 10 pharmaceutical companies; and 50 of the world's leading drug and device manufacturers.
Product Liability:
Drug & Medical Device
· Product Liability
Our Drug & Medical Device practice includes the representation of clients in litigation involving numerous drugs and medical devices encompassing diet drugs, contraceptives, vaccines, cardiac devices and implants, orthopedic implants, latex gloves, and more. As with our mass tort practice, our work in this area covers the full scope of management and organizational issues such as multi-district litigation, class action representation, individual actions in different jurisdictions, mediations and summary jury trials. We have extensive experience in class certifications dealing with medical monitoring claims in drug and medical device as well as mass tort litigation.
Our product liability attorneys have defended manufacturers in cases involving the following classes of products, among others:
· Drugs
· Diet drugs
· Contraceptives
· Steroids
· Synthetic estrogens
· Antidepressants
· Anti-anxiety medications
· Anti-tuberculosis medications
· Non-steroidal anti-inflammatory drugs
· Oncology drugs
· AIDS drugs
· Vaccines
· Blood products and biologics
· OTCs
· Devices
· Cardiac devices and implants
· Opthalmological devices
· Orthopedic implants
· Latex gloves
· Anti-smoking patches
· Diagnostics
· Biotechnology
Office:
London
Reed Smith LLP
Minerva House
5 Montague Close
London
SE1 9BB
---------------------------
T: 00 44 (0)20 7403 2900
F: 00 44 (0)20 7403 4221
Company 4
Insurance Claims Consultants is a Third Party CONSULTING FIRM That inspects AND CERTIFIES your product for proper labeling and defects. There is the simple choice when your company wants to reduce product liability exposure. Consider the technological approach with ICC. The experts in Administrative Claims
ICC has a self- insured plan, specifically for businesses, manufacturers and other professionals who want to keep their product liability rates under control. :
Manufacturer / Product Liability
ICC is not out to make a profit from professionals and manufacturers like insurance companies are. ICC, under the self-Insurance plan or retention plan is only paid for administrative fees. This drastically reduces your cost.
If you have an interest in creating a self insured plan, please fill out the response form and a representative will contact you directly to explain how to become self- insured. Or to set up a self retention plan.
A Self-Insurance plan is the alternative to paying high insurance rates. ICC will help you meet state liability requirements and will write your self insured policy for your practice as well as administrator claims for your company. .
http://www.insuranceclaimsconsult.com/product_liab.htm
8. NEWS:
<Law and Practice of Product Liability, Regulation and Insurance in Medical Devices, Healthcare Products and Pharmaceuticals> Monday 10th October - Café Royal, London http://www.ibclegal.com/NASApp/cs/ContentServer?pagename=marlin/home&MarlinViewType=MARKT_EFFORT&siteid=30000000742&marketingid=20001264734&proceed=true&MarEntityId=1124631627906&entHash=102ad6aa5d0 http://www.dac.co.uk/whatsnew/uploads/MMLY13180001.pdf
July 22nd, 2005
"Baxter halts shipments of Colleague brand infusion pumps"
Baxter International Inc. announced yesterday it has halted shipments of a popular infusion pump because of dangerous design problems. The company said about 250,000 of its Colleague brand pump used to administer intravenous medicines to patients might have a product flaw responsible for three deaths and six serious injuries.
Baxter said it plans on fixing the medical products, but the infusion pump recall forced the company to take a $65 million charge for the second quarter. A design flaw was first reported to customers in March that could disrupt infusions of intravenous therapies to patients. The decision to withhold further shipments was made after Baxter said it discovered a separate problem with certain models of the pump.
The FDA classified the Baxter Colleague recall as a “Class I,” or the most serious type of recall issued. Baxter must fix the estimated 250,000 devices already in use, but the company said only a small number of the devices have been affected by the safety flaws.
9. Appendix
Appendix 1
<Guide to Consumer Protection Act 1987> by DTI
http://www.dti.gov.uk/ccp/topics1/pdf1/act1987.pdf
Appendix 2
Life Sciences Liability Claims-Made Application
http://www.acemedicalrisk.com/policies/Life_Sciences/Application/LS_App.pdf
Appendix 3
Life Sciences Products-Completed Operations Liability Policy Claims-Made (Declarations)
http://www.acemedicalrisk.com/policies/Life_Sciences/Medical_Devices/Primary_Products.pdf
Appendix 4
Life Sciences Excess Liability Policy (Declarations)
http://www.acemedicalrisk.com/policies/Life_Sciences/Medical_Devices/Excess_Liability.pdf
Appendix 5
Proposal form for Pharmaceutical and medical product liability
http://www.miller-insurance.com/Downloads/PL%20PRODUCTS%20Q%2020051.doc
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