Carmel Spine Surgeon Files Suit For Access To Medtronic Sales Ledger
Carmel Spine Surgeon Files Suit For Access To Medtronic Sales Ledger
Posted
David Slone-dslone@timesuniononline.com
Carmel Spine Surgeon Files Suit For Access To Medtronic Sales LedgerA spine surgeon and inventor of spinal medical devices has filed a lawsuit to force Medtronic to open its sales ledger so the doctor may determine royalties owed him.
Dr. Rick S. Sasso filed the complaint Wednesday against Warsaw Orthopedic Inc., Medtronic PLC and Medtronic Sofamaor Danek Inc. in Kosciusko County Superior Court I. Collectively known as Medtronic in the lawsuit, the manufacturing company for spine implants has offices in Warsaw and Memphis, Tenn.
Sasso is a board-certified orthopedic surgeon who lives and works in Carmel. He is the president of Indiana Spine Group P.C. in Carmel and specializes in treatment of the spine.
Sasso grew up in Warsaw and attended Wabash College and the Indiana University School of Medicine. He began working with Sofamor Danek, which was merged into Medtronic.
The complaint concerns Medtronic’s failure to comply with the audit provisions contained in two agreements it entered into with Sasso – the 2001 Vertex agreement and the 1999 Screw Delivery System agreement. The Vertex agreement was entered into on July 26, 2001; while the Screw Delivery System agreement was entered on Nov. 18, 1999, to be effective Dec. 1, 1999.
The complaint states parts of both agreements provide that complete and accurate records relating to the agreements will be maintained and that Sasso “shall at his own expense have the right once per calendar year and upon reasonable notice and during normal business hours to inspect, examine, audit and copy such records on a confidential basis to verify” compliance with the terms of the agreement.
In August 2013, Sasso filed suit against Medtronic in Kosciusko County for unpaid royalties under both agreements. The case was transferred for trial to Marshall County on June 6, 2018. On Nov. 28, 2018, after a four-week trial, the Marshall County jury entered verdicts against Medtronic and in favor of Sasso on Sasso’s claims for unpaid royalties under both agreements.
The jury awarded Sasso $32,657,548 under the Vertex agreement and $79,794,721 under the Screw Delivery System agreement. The amounts are what Sasso requested under each contract, the complaint filed Wednesday states.
The judge entered judgment in favor of Sasso and against Medtronic consistent with the jury verdict.
The amount Sasso sought and was awarded in the Marshall County lawsuit was limited to unpaid Vertex royalties and prejudgment interest due up until the first day of the trail, Nov. 1, 2018, and unpaid Screw Delivery System royalties and prejudgment interest due through Dec. 31, 2017.
The complaint this week states Sasso could not pursue additional royalties because the amounts owed by Medtronic cannot be determined until Medtronic completes sales of the relevant medical devices and discloses accounts for such sales.
Medtronic continues to sell Vertex and medical devices that use the Screw Delivery System.
The Vertex agreement requires Medtronic to continue paying royalties on sales of Vertex so long as “the medical device is covered by a valid claim of an issued patent arising out of the Intellectual Property Rights,” according to the lawsuit. It also states that several patents satisfy these criteria, as found by the jury, and those patents remain in force and provide the basis for continued Vertex royalties to Sasso.
The Screw Delivery System agreement requires Medtronic to continue paying royalties until the expiration of two patents – Nov. 23, 2019, at the earliest.
On Feb. 19, 2019, Sasso requested access to the Medtronic ledger pursuant to the rights provided to him in both agreements. He requested Medtronic respond to his request no later than Feb. 26 and finished the letter by writing, “If we do not have agreement on full and complete remote access with a specific agreed upon date by March 5, 2019, we will take all measure necessary to gain such access.
Then on Feb. 27, 2019, Medtronic responded that it was reviewing the request but provided no date to respond nor any indication that it actually would allow Sasso to proceed with the audit.
The lawsuit states, “Based on its prior conduct and history, Medtronic will not provide access to its SAP sales ledger as provided” in the agreements “without an order compelling access.”
It also states Medtronic “has been breaching its contracts with Dr. Sasso since 2010.” On March 21, 2015, relating to another agreement, “One Pin Agreement,” Medtronic was ordered through an arbitration award to pay $2.34 million in damages and to account for sales of hip pins, which it never did, the lawsuit states. Alternative dispute resolution of the One Pin dispute began in June 2010. Sasso requested mediation in 2011, which was held in Memphis. A second mediation was scheduled for April 2012 but canceled by Medtronic. In January 2013, the parties mediated a second time, again unsuccessfully. In November 2013, Medtronic filed arbitration against Sasso after he filed suit on the Vertex agreement in August.
In 2012, Medtronic “breached the SiLo agreement and the Bryan Disc agreement.” An arbitration award entered April 20, 2016, found Medtronic in breach of the two agreements.
Sasso helped to invent a surgical instrument called the “Rock-N-Roll Reducer” for use in the SiLo spinal implant system sold by Medtronic. By terms of the SiLo agreement, entered into effective September 2005, Sasso would receive royalties on sales of the SiLo system for seven years, which would continue if there were a patent or patents naming him as a co-inventor that issued and covered the product. Relevant patents were issued beginning in 2011. In October 2012, Medtronic “wrongfully stopped payment of royalties notwithstanding the issuance of patents,” the lawsuit states.
After speaking with Jay Pearson at Medtronic requesting resumption of royalties, Sasso hired legal counsel in 2013 to investigate.
On Sept. 4, 2013, Medtronic “admitted that it had never logged for royalty payments the actual instruments covered by the patents” and “offered to settle by making the past due payments on such instruments.”
Sasso also helped to invent a simpler surgical technique for implantation of the Brycan Cervical Disc, An agreement for that was entered into in February 2006 with Sasso to receive royalties on the Bryan Disc system through January 2016 or beyond. Despite FDA approval of the system, Sasso’s royalties did not increase. In late 2013, Sasso began demanding access to the Medtronic ledger pursuant to a provision in the agreement.
The lawsuit chronicles how a certified public accountant Sasso hired attempted to do an audit of what was owed Sasso but encountered difficulties in getting all the relevant information. On the Bryan Disc agreement, Medtronic made a payment to Sasso for $274,618.25 just prior to a final arbitration hearing.
In the last paragraphs of the complaint, it states how Medtronic “falsely” stated what royalties were due Sasso and how Medtronic’s information was “inaccurate.”
