A Medical Device Daily

A U.S. District Court judge in Oregon this week granted an injunction in favor of Smith & Nephew's Endoscopy Division (S&N; Andover, Massachusetts). The injunction prohibits Arthrex (Naples, Florida) from making or selling devices that infringe a patent exclusively licensed to S&N by Dr. John Hayhurst of Portland, Oregon. The injunction takes effect Jan. 18.

Earlier this year a jury determined that Arthrex infringed this patent by marketing and selling Bio-SutureTak, PEEK SutureTak, Bio-PushLock and PEEK PushLock suture anchors used in various minimally invasive soft-tissue repair surgeries, and awarded Smith & Nephew Endoscopy $14.7 million for infringement through the end of 2005 (Medical Device Daily, June 13, 2008).

The injunction will not affect sales of current Arthrex PushLock anchors, the company said. During the case Arthrex stopped selling the infringing first generation PushLock anchors and replaced them with modified PushLock anchors. S&N and Hayhurst have filed a second lawsuit against Arthrex seeking an injunction against the newer versions of PushLock anchors as well as Arthrex's Bio-Composite SutureTak anchors.

In October the judge also granted S&N prejudgment interest in the amount of $1.5 million and ruled that the court will award additional damages for Arthrex's infringement after 2005.

"We spend a significant amount of time and effort with surgeons to develop innovative technologies that provide real benefits to patients around the world," said Michael Frazzette, president of Smith & Nephew Endoscopy. "We are fully committed to defending our intellectual property from being infringed by Arthrex or any other companies that violate our rights."

The disputed patent covers use of S&N's Bioraptor, Tag Wedge, and Tag Rod suture anchors, which are designed to help repair instability in the shoulder as well as other soft tissue tears. The Arthrex products that were found to infringe these patents are: Bio-SutureTak, PEEK SutureTak, and Bio-PushLock and PEEK PushLock suture anchors which are used in various soft tissue repair surgeries, including shoulder repair surgery.

In other legalities:

• Medtronic (Minneapolis) has been subpoenaed by the U.S. Department of Justice in an investigation of unapproved uses of its Infuse spinal graft, according to the Associated Press.

News of the subpoena came during an analysts' call Tuesday with Medtronic CEO Bill Hawkins. He said the company would comply with the DoJ subpoena and move forward.

The FDA approved Infuse for regenerating some facial bones last year (MDD, March 14, 2007). It was previously approved as a grafting agent for spinal procedures.

Medtronic's Spinal & Biologics unit is located in Memphis, Tennessee.

• A California appellate court has invalidated a Medicaid payment freeze on the grounds that, in adopting the freeze, the California Legislature failed to follow federal Medicaid notice and comment requirements.

Hooper, Lundy & Bookman (HLB) represents 100 California hospitals in the case.

"We believe this to be the first case in the nation invalidating a Medicaid rate provision under federal notice and comment requirements," said HLB Partner Byron Gross, who argued the case before the appellate court. "For these 100 hospitals alone, this case represents approximately $50 million in reimbursement. Further, this case is also important for other cases in which we are challenging Medi-Cal rate cuts on behalf of our clients."

At issue was a freeze adopted as part of the 2004 California budget. Over a three-day period, the legislature proposed and enacted a freeze on the rates the state would use to reimburse certain hospitals that provided services to Medicaid beneficiaries during the state's 2004-2005 fiscal year.

HLB says it represented the many hospitals that initially filed suit, claiming that the state's legislative action violated federal Medicaid notice and comment requirements, as well as other federal Medicaid mandates for revising rates and rate methodologies. The trial court disagreed with the hospitals, except to the extent the freeze affected services rendered prior to the freeze's enactment.

In today's ruling, the appellate court reversed the trial court's ruling. The court concluded that the federal statute requiring notice and comment procedures applied to action taken by the state legislature, and that the legislature's process did not satisfy the federal statute, HLB noted.

"A significant aspect of this ruling is that the court, in essence, is telling the state what it must do to comply with federal Medicaid laws," said HLB Attorney Lloyd Bookman, who represented the hospitals along with Gross.