Scope repair lawsuit is cause for concern
A lawsuit filed against "third-party" endoscope repair companies should get the attention of risk managers, even though health care institutions are not the subject of the lawsuit, says a risk manager whose facilities use the repair companies.
Karl Storz Endoscopy America is suing two laparoscope repair companies, alleging that their work on Storz endoscopes and laparoscopes misleads the medical community into thinking that Storz did the repair work. A great many hospitals use third-party companies to repair scopes, mostly because they offer cost savings of about 50% over what the original scope manufacturer would charge for repairs.
The two defendants in the lawsuits are Fiber Tech Medical Inc., whose endoscope business recently was sold to and is now being conducted by General Electric Company, and Surgi-Tech, whose endoscope business recently was sold to and is now being conducted by Cardinal Health Inc. Neither company returned calls seeking comment on the lawsuits.
Though the lawsuits are based on trademark infringement, Storz’s real concerns relate to the quality of the repairs, says Rick Kilgus, manager of Karl Storz repair services in Stanford, CT.
"What many people don’t know — including doctors, OR nurses, hospital administrators, and patients — is that our highly complex endoscopic devices are too often being repaired by companies using unauthorized parts and altering the original specifications, which could result in missed diagnoses or even injury to a patient," Kilgus says.
In particular, the Storz company is upset with the practice of "reshafting and refibering" scopes, he says.
"The practice of reshafting and changing nearly all of the critical optical components of our endoscopes confuses and misleads medical professionals, who still see our Karl Storz logos on these endoscopes," he explains. "They assume these devices contain genuine Karl Storz parts and workmanship and meet our stringent quality control requirements. We want to inform the users of the risks and the fact that these are no longer our devices."
The Karl Storz lawsuit poses no direct threat to hospitals and other providers, but it still should get the attention of risk managers, says Steve Johnson, director of risk management for WellStar Health System in Marietta, GA. There is no problem with the overall concept of using third-party repair companies, he says, and WellStar uses a third-party repair company. The Storz lawsuit indicates a serious protest by the company, however, and Johnson fears that providers could get caught up in the fight.
Risk managers should evaluate the language in the repair relationships closely to make sure the facility’s exposure is minimized. It is possible that providers could become involved in lawsuits alleging that a scope was not repaired properly and injured someone, he says.
There have been cases in which the hospital, the repair company, and Storz all were sued, says the attorney representing Storz. Any scope manufacturer is likely to claim it is not liable because its product was altered significantly, says William Speranza, JD, with Wiggin & Dana, also in Stanford.
"We’ve had cases where we were sued along with the hospital and the surgeon, and it turned out that equipment that had the Karl Storz label on it had been repaired by someone else," says Speranza. "In at least one or two of those, Karl Storz was dismissed from the lawsuit as not liable. That still leaves the surgeon and the hos pital to be sued."
Johnson says the hospital should have a contract with the third-party repair company that specifically indemnifies the user against any claim that should arise as a result of the scope repair. Insist on actually seeing proof of the insurance, he says.
Sources
o Rick Kilgus, Manager of Repair Services, Karl Storz Endoscopy America, Karl Storz Endoscopy-America, 600 Corporate Pointe, Culver City, CA 90230-7600. Telephone: (310) 338-8100 or (800) 421 0837. Fax: (310) 410-5527.
o Steve Johnson, Director of Risk Management, WellStar Health Systems, 805 Sandy Plains Road, Marietta, GA 30066. Telephone: (770) 792-7536.
o William Speranza, Wiggin & Dana, 301 Tresser Blvd., P.O. Box 11325, Stanford, CT 06911. Telephone: (203) 363-7600.
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