A Medical Device Daily Staff Report

The principal U.S. investigator for the Maverick artificial disc, who now serves as VP of the device's manufacturer, Medtronic (Minneapolis), has been found liable for malpractice in his use of the device by a state court judge in Richmond, Virginia. Judge T.J. Markow awarded damages of $650,000 against Hallet Mathews, MD, and Midatlantic Spine Specialists (Richmond).

The damages were awarded to Eric Garver, MD, who is himself a spine surgeon in Bridgeport, Connecticut. Garver traveled to Richmond in April 2005 to undergo surgery by Mathews, who installed a Maverick at the L5-S1 level of Garver's spine.

The device consists of two metal plates that fit into the patient's disc space with a ball and socket between them, intended to maintain the natural mobility of the disc as an alternative to traditional spinal fusion.

A fragment of bone and disc the size of an olive was retrieved from Garver's spine two weeks after the Mathews surgery by Patrick Mastroianni, a neurosurgeon in Bridgeport. Mastroianni said that he found the fragment pressing against the nerve root.

Removal caused some relief of Garver's symptoms, but he ended up with a chronic pain syndrome that is poorly controlled even taking multiple drugs every day. His previous condition, with back pain and pain going into his left leg, was cured by the Mathews surgery.

At the time of the surgery, Mathews was a surgeon in private practice who ran one of 32 sites in the U.S. at which the Maverick device was inserted into selected patients, and who also was the principal U.S. investigator for the manufacturer's application to the FDA. The device is still considered experimental while the Medtronic application to the FDA is pending.

According to testimony at trial, Mathews received consulting fees from Medtronic of around $700,000 in 2004 and 2005, though he was not paid anything for the clinical trial itself. He testified that he gave up his surgical practice at the end of 2006 to work full-time for Medtronic. His current position is VP medical affairs for the Medtronic Spine and Biologics division (Memphis, Tennessee).

In other legalities:

• The Securities and Exchange Commission has filed an insider trading action in the U.S. District Court for the Northern District of Illinois against Edward Boshell and Donald Pochopien.

The SEC's complaint describes Boshell as an "outside disinterested" director of a Dallas-based business development company, and Pochopien as a shareholder of a Chicago-based law firm. It alleges that Boshell and Pochopien engaged in unlawful insider trading in the securities of Laserscope (San Jose, California) in advance of the June 2006 report that Laserscope would be acquired by American Medical Systems Holding (AMS; Minnetonka, Minnesota).

AMS bought Laserscope for $715 million (Medical Device Daily, July 21, 2006).

The complaint alleges that in May of 2006, Boshell and Pochopien purchased Laserscope securities based on non-public information regarding the deal. Boshell, the SEC said, was made aware of the acquisition during a board meeting of the Dallas firm about a month before the public announcement, and Pochopien knew of the deal about a month before the announcement when his law firm was hired by AMS to do a due diligence review of the acquisition.

When the deal was disclosed, Laserscope's stock closing price of $30.65 was 43% higher than the proceeding day of $21.41, and that by selling their Laserscope stock, Boshell gained $85,750, Pochopien, $134,970.

Without admitting or denying the allegations, the two men consented to disgorge $85,750 and $134,970, respectively; to pay $11,381 and $17,914, respectively, in prejudgment interest; and civil penalties of $85,750 and $134,970, respectively.

• Quest Diagnostics (Madison, New Jersey) has agreed to pay 238 employees across the U.S. a total of $688,772 in overtime back wages following an investigation by the U.S. Department of Labor in New Jersey.

The investigation by the New Jersey department's Wage and Hour Division involving the company's Cambridge, Massachusetts, location found that employees in the positions of client systems analyst and senior client systems analyst were misclassified as exempt from the overtime requirements of the state's Fair Labor Standards Act (FLSA). The investigation revealed that this same misclassification existed at all of the company's facilities nationwide.

After being informed of the investigations findings, company management agreed to pay the affected employees back wages.

The FLSA requires that employees be paid at least the federal minimum wage, and time and one-half their regular rates of pay for hours worked beyond 40 hours per week. The law also requires that employers maintain accurate records of employees' wages, hours and conditions of employment. The FLSA provides an exemption from both minimum wage and overtime pay for bona fide executive, administrative, professional and outside sales employees.

George Rioux, director of the Wage and Hour Divisions district office in Boston, said that the Labor Department "is always pleased when we present our findings to an employer and are met with cooperation rather than resistance."