Medtronic Board Escapes Investor Suit Over Infuse Product

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By Michael Greene

A Medtronic Inc. investor lost a bid to revive her lawsuit alleging that directors and officers caused the medical device company to market its bone tissue development product for an off-label use ( Kokocinski v. Collins , 2017 BL 62727, 8th Cir., No. 15-3519, 3/1/17 ).

The U.S. Court of Appeals for the Eighth Circuit upheld a lower court’s dismissal of the action on the grounds that a special litigation committee found no support for the shareholder’s allegations.

The company in 2012 formed an independent committee to investigate several similar shareholder claims that directors and officers breached their legal duties and made misleading statements in connection with the company’s Infuse product.

Infuse, a key component of Medtronic’s multi-billion dollar spinal segment, is a device that stimulates bone growth. In 2002, the Food and Drug Administration approved Infuse for use in spinal surgeries. The court recounted that the company from 2006 to 2008 was subject to controversy over the alleged promotion of the product for uses that hadn’t been approved by the FDA.

In the underlying lawsuit, shareholder Charlotte Kokocinski appealed a U.S. District Court for the District of Minnesota decision deferring to the committee’s report.

Applying Minnesota law, the appeals court found that the committee’s investigation was “extensive in both its length and scope.”

“The SLC reviewed over 2.6 million documents and interviewed 60 individuals over an 18-month period. It relied on the advice of independent experts and counsel,” Judge Clarence Arlen Beam wrote. “Kokocinski presents no evidence that Medtronic or the individual defendants were involved in the investigation, and she has not raised any complaint about the quality of the information received.”

To contact the reporter on this story: Michael Greene in Washington at mGreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

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