Stryker faces revived Brazilian insurers’ bribery lawsuit

Stryker (NYSE:SYK) is facing a revived lawsuit from an association of Brazilian health insurers claiming that the company paid bribes and kickbacks to doctors to promote use of its products, according to court documents.

The suit was reinstated after the 6th US Circuit Court of Appeals in Cincinnati reversed a 2017 lower court ruled that the Associacao Basileira de Medicina de Grupo, also known as Abramge, should have filed their case in Brazil, according to the documents.

In their original complaint, the Brazilian nonprofit Abramge claimed that Stryker undertook an “illicit scheme, which was planned and run from Michigan, designed to increase its market share by making improper payments and paying bribes and kickbacks to Brazilian doctors to induce the use of Stryker products,” according to court documents.

The suit was originally filed in the Western District of Michigan with claims of fraud, civil conspiracy, tortious interference with contractual relationships and unjust enrichment, according to the documents.

The case was dismissed over concerns that the plaintiffs, Abramge, were foreign with “minimal connection to the United States,” according to court documents, but the Appeals Court determined that a Brazilian court may not be “able to exercise jurisdiction over the defendant and offer a satisfactory remedy.”

The Sixth Circuit Appeals Court argued that there was no “obvious jurisdictional hook” to bring Stryker to the Brazilian court, alongside several other complaints brought about by Abramge.

Stryker argued that it “carried its burden in the district court by showing that Brazil is an available and adequate alternative forum,” though the argument was based on a single line in its reply brief stating that “additionally, Stryker consents to jurisdiction in Brazil, so Brazil is an available forum,” according to court documents.

“This lone statement does not suffice to carry Stryker’s burden for two reasons. First, an attorney’s statement in a brief is not evidence,” Sixth Circuit Appeals Court Judge Jane Stranch wrote. “Second, Stryker has provided no evidence that its consent to jurisdiction in Brazil would be legally meaningful even if it were presented in a proper evidentiary form.”

Judge Stranch goes on to state that they were unable to determine any connection between Stryker and Brazil to permit litigation over the claims, and that “without guidance from Brazilian legal experts or even citations to Brazilian laws or treatises, we do not know whether Brazil’s personal and subject-matter jurisdiction requirements could be satisfied on the facts alleged here.”

“In sum, Stryker’s attorney-drafted statement lacks evidentiary weight, and no evidence in the record establishes that Brazilian courts would be able to exercise jurisdiction over these parties and this subject matter, or to provide a satisfactory remedy. Stryker failed to carry its burden, and it was an abuse of discretion to rely on Stryker’s purported consent and dismiss the case. Because identifying an available and adequate alternative forum is a necessary prerequisite for forum non conveniens dismissal, we need not address the final step of the forum non conveniens analysis, the balance of the public and private interest factors,” Judge Stranch concludes.

While the case was revived, the court offered Stryker an opportunity to refile its motion “with supporting documents on remand.”

Late last month, Stryker’s Homedica was ordered to pay approximately $13.3 million in attorney’s fees and $513,258 in costs to Zimmer Biomet (NYSE:ZBH) as a result of a patent dispute, according to unsealed court documents.

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