On 5 March 2015, the Court of Justice of the European Union ("CJEU") delivered its ruling on product liability in joined cases C-503/13 and C-504/13 Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt – Die Gesundheitskasse, Betriebskrankenkasse RWE ("Boston Scientific") following a reference from the Bundesgerichtshof (German Federal Court). The ruling affects the liability of manufacturers of high risk products (such as active implantable medical devices) under the Product Liability Directive ("PLD"), but may also have consequences for their insurers and Notified Bodies.
The German Federal Court made a further reference on 9 April 2015 that seeks clarification from the CJEU on whether the obligations of a Notified Body under the Medical Devices Directive (Directive 93/42/EEC ) have a protective effect for patients and the extent of a Notified Body's surveillance duties.
The outcome and interaction of these cases is discussed and what it may mean for the medtech industry.
The significance of the CJEU's ruling in Boston Scientific for the medtech industry is that a product can be found to be 'defective' within the meaning of the PLD if the product in question belongs to the same group or forms part of the same production series that have a potential defect. So, in a way, the CJEU has introduced a 'batch liability'.
The joined cases concerned pacemakers and implantable cardioverter defibrillators ("ICDs") manufactured and marketed in Europe by Guidant GmbH, now Boston Scientific Medizintechnik GmbH ("BMS").
Guidant became aware that a component of some of its pacemakers could experience gradual degradation leading to premature battery depletion. The company notified physicians of the issue and recommended that they consider (amongst other things) replacing the devices in affected patients. Guidant also undertook to provide replacement devices at no charge to the patients where their physicians advised replacement. A potentially life-threatening defect was also discovered in the ICDs. Again, Guidant notified physicians and recommended that a particular component in the ICDs be deactivated. The claimants in the national proceedings were healthcare insurers of patients who had devices replaced and now sought reimbursement of their costs.
The claims were successful at first instance and on appeal. BMS appealed to the German Federal Court, which in turn made a reference to the CJEU seeking clarification on the following (paraphrased) questions:
- Should a product in the form of a medical device implanted in the human body automatically be regarded as defective within the meaning of the PLD if products in the same product group have a significantly increased risk of failure but a defect has not been detected in the device which has been implanted in the specific case in point?
- If the answer to the first question is in the affirmative:
Do the costs of the surgery to remove the product and to implant another product constitute damage caused by personal injury?
The CJEU has answered both questions in the affirmative. Having regard to the nature of the devices concerned and the abnormal risk of damage the products in question might cause the patient, the CJEU held "where it is found that products belonging to the same group or forming part of the same production series...have a potential defect, such a product may be classified as defective without there being any need to establish that that product has such a defect." (Emphasis added).
At first sight, the ruling suggests that medical device manufacturers and their insurers could face increased costs and litigation as they would be obliged to replace products belonging to a group or series of products that have a potential defect regardless of whether the products at hand are in fact defective. However, this type of liability seems only to apply to products with an "abnormal potential for damage". Such products would include high risk medical devices, medicinal products and other products that meet that requirement.
The CJEU's decision lowers the threshold needed to establish liability by removing the need for a claimant to prove that the product in use was in fact defective. However, the decision does not give a carte blanche right to damages. The claimant would still be required to prove damage and a causal relationship between the defect and the damage. Establishing causation is a matter for national courts and would generally involve an unbroken chain of causation between the defect and the damage claimed to have been suffered. Manufacturers (and their insurers) may be exposed to significant costs if these criteria are established and the manufacturer has no available defence.
In summary, the decision is important for manufacturers of high risk products or components of them, but it is not ground breaking. It does reduce the threshold for a claimant to prove individual defectiveness of the product in question, but the general landscape of liability under the PLD remains largely unchanged. Specifically within medical device litigation, the impact of this decision is likely to turn on whether or not the product in question is considered to be life-saving or not.
German Federal Court Reference
On 9 April 2015, the German Federal Court made a reference to the CJEU on whether the obligations of a Notified Body under the Medical Devices Directive have a protective effect and the extent of a Notified Body's surveillance duties. The outcome is likely have a significant impact on Notified Bodies within the EU.
The reference arises in the context of the notorious Poly Implant Prothèse ("PIP") scandal, where the French regulatory authorities found that PIP had used industrial grade silicone (instead of medical grade silicone) to manufacture breast implants contrary to the approval granted by a Notified Body, harming thousands of women around the world. As PIP went into liquidation in 2011, affected parties in some countries commenced proceedings against TÜV Rheinland ("TÜV"), the Notified Body commissioned by PIP.
The claimant in the German reference had received the PIP implants in 2008 but they were removed in 2012 following medical advice. She commenced proceedings against TÜV for damages for pain and suffering and sought a declaration that the company would be liable to pay for future material damage.
The claimant argued that TÜV had failed to comply with its obligations as a Notified Body responsible for a class III device under the Medical Devices Directive (as implemented in Germany). The conformity assessment conducted by TÜV was pursuant to Annex II of the Medical Devices Directive, which involved an audit of PIP's quality assurance system, examination of the design dossier and ongoing monitoring. The claimant also submitted that had TÜV reviewed PIP's business records and conducted product testing, it would have identified the use of industrial grade silicone.
The claim was dismissed by the District Court and by the Regional Court on appeal. The Courts found that TÜV had not breached its obligations in carrying out its obligations under the Medical Devices Directive in conducting the conformity assessment. Further, TÜV's product surveillance was held sufficient. The claimant appealed to the German Federal Court, which has now sought clarification from the CJEU on three issues on the interpretation of the Medical Devices Directive (translated from German):
- Is it the purpose and intention of the Medical Devices Directive that the Notified Body responsible for the audit of the quality assurance system, product design and monitoring of class III medical devices shall act to protect all potential patients so that it may be held directly and fully liable for a negligent breach of its obligations?
- Does Annex II of the Medical Devices Directive impose a general or case-specific duty on the Notified Body responsible for the audit of the quality assurance system, product design and monitoring of class III medical device to test the devices?
- Does Annex II of the Medical Devices Directive impose on a Notified Body responsible for the audit of the quality assurance system, product design and monitoring of class III a general or at least cause-related obligation to view business documents of the manufacture and/or to carry out unannounced inspections?
It is important to note that the European Commission has already taken interim measures to tighten up the regulation of Notified Bodies, through Implementing Regulation (EU) 920/2013 of 24 September 2013, which sets out the criteria for designation and surveillance of Notified Bodies and provides for joint audits, transparency and cooperation between Member States in the regulation of Notified Bodies. Further, European legislators are set to replace the current regulatory framework governing medical devices with two new EU Regulations. These new Regulations (which are yet to be agreed by the legislators) will introduce more stringent regulation of manufacturers of medical devices and Notified Bodies. Although the German reference applies to matters that occurred before these legislative changes, the Court will no doubt be aware of them and of an increased concern for patient safety.
The decision is likely to affect the balance of liability between manufacturers and Notified Bodies. Manufacturers are already under a duty to ensure that their devices do not harm patients, but depending on the outcome of the decision, the CJEU's may interpret the Medical Devices Directive to impose a similar duty on Notified Bodies in respect of high risk devices. If the CJEU considers the obligations of a Notified Body under the Medical Device Directive have a protective effect, the ruling would make it easier for patients to pursue claims against Notified Bodies.
The pending decision might also reduce the risk of divergent decisions of courts in different Member States of the EU and give greater certainty to Notified Bodies. Taking the present case as an example, TÜV was also sued by patients and distributors in France, but a different outcome was reached on essentially the same issues as those before the German Courts. The Commercial Court of Toulon decided in favour of the claimants and ordered TÜV to make interim payments pending expert assessment of each individual case. Despite the fact that from a criminal law perspective, TÜV was considered a victim of PIP's fraud, the Court considered that TÜV had committed gross negligence in the course of its duties as a Notified Body. The Commercial Court's decision was upheld by the Court of Appeal of Aix-en-Provence in January 2014. The decision, however, remains an interim measure and the French courts still need to make a decision on the substance of the case.
Although the German Federal Court's reference is framed in respect of class III medical devices, it would be interesting to see whether the CJEU ruling will be limited to these high risk devices or extend to medium (class IIa and IIb) and low risk (class I) devices.
Notwithstanding the points discussed above, manufacturers of medical devices have a duty to monitor the safety of their devices throughout their lifetime. Manufacturers must therefore ensure that they have adequate monitoring and reporting systems in place.
As the cases and legislative changes illustrate, there is increased concern about product safety and tighter regulation of manufacturers of medical devices and Notified Bodies. If the outcome of the German Federal Court's reference means that Notified Bodies do have a duty to protect all potential patients using class III medical devices, the synergy between this and Boston Scientific could act as a 'squeeze' on Notified Bodies. The greater product liability risk to a manufacturer in light of Boston Scientific would probably require greater scrutiny from Notified Bodies, which in turn may be heightened further by the outcome of the German reference. Accordingly, the CJEU should provide clear guidance as to the responsibilities of Notified Bodies to avoid a sliding scale of liability between them and manufacturers.
For a detailed consideration of CJEU's ruling in Boston Scientific, please see the review by our colleagues, Hanneke Later-Nijland and Evelyn Tjon-En-Fa, on our Dutch legal knowledge portal, Birdbuzz.nl.
 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products
 Council Directive 93/42/EEC of 14 June 1993 concerning medical devices
 Legislative tracker for the draft Regulation on Medical Devices, 2012/0266(COD)
Legislative tracker for the draft Regulation on In Vitro Diagnostic Medical Devices, 2012/0267(COD)