Stryker Spine faces two new lawsuits

Stryker Corp. (NYSE:SYK) is fielding legal challenges on two fronts, one from a former distributor and DePuy Spine and another from a Utah man claiming a Stryker pain pump destroyed his shoulder.

DePuy and BioInitiatives Inc., a former Stryker Spine distributor, asked a California judge for an injunction barring Stryker from enforcing a non-competition clause in the now-expired deal with Roseville, Calif.-based BioInitiatives. Under California law, the Johnson & Johnson (NYSE:JNJ) subsidiary and the sales agent argued, would violate California’s ban on non-compete agreements.

“Defendant Stryker Spine has recently engaged in activities to enforce comparable non-competition provisions towards other distributors. Although confident that the non-competition provisions are void in California, defendant Stryker Spine’s conduct has caused plaintiffs to seek an order from this court confirming their position and avoiding the expected long and drawn out legal fight,” according to a document filed with the U.S. District Court for Eastern California.

After extending their contract twice, it lapsed as of January 25 this year (although BioInitiatives continued to sell Stryker Spine’s wares under its terms while trying to negotiate a new deal). When those talks failed, BioInitiatives inked its deal with DePuy.


The lawsuit wants the court to declare Stryker’s deal with BioInitiatives “void and unenforceable as against California’s fundamental public policy” and to enjoin Stryker from “taking any action to enforce the non-competition provision” in the contract, plus costs and legal fees.

Interestingly, Stryker Spine lured BioInitiatives’ founders, Matthaus Dengler and Mark Sienkiewicz, away from Medtronic Inc. (NYSE:MDT) in 2004, according to the filing. Stryker Spine, Dengler and Sienkiewicz made the same argument regarding the non-enforceability of non-compete clauses in California in a complaint seeking to stop Medtronic from enforcing its non-competition agreements with the two men. That suit was dismissed with prejudice in 2005, after Medtronic and the plaintiffs reached a settlement to allow Dengler and Sienkiewicz to work for Stryker, according to legal documents. The decision freed the two to start BioInitiatives, which now employs more than 40 people.

In Utah, Jason Kaufusi filed the latest in literally hundreds of lawsuits accusing pain pump makers of improperly marketing the devices for treating post-operative joint pain. In Kaufusi’s case, an arthroscopic procedure allegedly went wrong in 2003 after his doctors used the Stryker device to pump Marcaine and Epinephrine directly into Kaufusi’s shoulder, allegedly causing the progressive destruction of the joint’s cartilage, a condition known as chondrolysis. The devices are not FDA-cleared for such use, according to the lawsuit.

Concerns about connections between pain pump use in joints and chondrolysis began surfacing in the late 1990s. Two years before Kaufusi’s surgery, his suit alleges, orthopedic surgeons told Stryker they were worried about the possible toxicity of pain meds when pumped around cartilage. Stryker “did nothing in response to these concerns, except to continue marketing the pain pump for joint space use,” according to the lawsuit. Around the time of his procedure, articles began appearing in medical journals “expressing concerns that the performance of post-operative pain pumps, which could infuse potentially toxic medications, had not been independently investigated,” according to the lawsuit. And in early 2005, Kaufusi’s former surgeon and paid Stryker consultant, Dr. Lonnie Paulos, told the company to “cover its butt” by changing the pumps’ labeling after noting chondrolysis cases tied to the pumps.

“[Stryker] did neither of these things, but instead continued to market the Pain Pump to orthopedic surgeons for use in the joint space,” according to the lawsuit, and “did nothing to investigate these cases identified by Dr. Paulos.”

In the ensuing years, a series of medical journal pieces detailing problems with the pumps and their propensity to cause chondrolysis appeared. By 2009, the FDA had had enough and warned health care providers that the pumps should not be used “for continuous intra-articular infusion of local anesthetics after orthopedic surgery,” according to the lawsuit, “the very use for which [Stryker] encouraged Dr. Vachtsevanos to use the pain pump in Mr. Kaufusi’s shoulder.”

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