LivaNova to settle majority of U.S. 3T Heater-Cooler cases

LivaNova (NSDQ:LIVN) said that it inked a deal to settle approximately 75% of litigations it faces in the U.S. related to its 3T Heater-Cooler device, which has been implicated in a number of unexpected severe patient infections, expecting to pay up to $225 million to settle the claims.

In June 2016, the FDA warned patients and doctors about the risk of a type of bacterial infection posed by LivaNova’s 3T Heater-Cooler. Four months later, the U.S. Centers for Disease Control & Prevention warned of the risk of serious bacterial infection in open heart surgery patients using the 3T Heater-Cooler.

A year later, a report emerged suggesting that a dozen children who underwent cardiac procedures at Children’s Hospital New Orleans earlier were infected with myobacterium previously linked to LivaNova’s 3T Heater-Cooler.

Last October, the company updated customers on efforts to correct issues with its 3T Heater-Cooler related to patient infections, providing instructions to monitor hydrogen peroxide concentration and information on a design upgrade.

The London-based company said today that it established a settlement framework looking to resolve a pending multi-district litigation in U.S. Federal Court as well as a related, pending class action and other certain cases in state courts across the country.

“We believe entering into the settlement is in the best interest of the company, its shareholders and patients, because it will remove ongoing costs and uncertainty as we focus on executing our strategy to deliver quality care to patients around the world,” CEO Damien McDonald, Chief Executive Officer of LivaNova.

Through the settlement framework, the company said it expects to pay up to $225 million, with up to $135 million to be paid no earlier than July 2019 with the remainder paid in January 2020.

LivaNova said that it previously established a $294 million reserve during its fourth quarter of 2018 to handle 3T Heater-Cooler litigation.

“We are pleased with the manner in which LivaNova has responded to these claims. These were complicated cases and the patients involved with this litigation have difficult medical histories. Protracted litigation was in no one’s interest, as the plaintiffs could benefit from settlement proceeds today. We especially appreciate the guidance from U.S. District Judge John E. Jones III, who oversaw the federal litigation,” plaintiff’s exec committee lead counsel Sol Weiss said in a press release.

The company said that it made no admission of liability under the settlement agreement and added that it can void the agreement if certain conditions, including participation rates of 95% of the category of plaintiffs, are not met.

LivaNova said that it still stands buy its 3T Heater-Cooler and plans to “vigorously defend the product and company actions in remaining cases.”

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