Intuitive Surgical Insurer Alleges Company Hid Legal Claims

Intuitive Surgical Inc., the maker of robotic-surgery devices targeted by patient lawsuits, was sued by an insurer alleging the company hid the number of legal claims it might face when buying product liability insurance.

Illinois Union Insurance Co. seeks to rescind an Intuitive insurance policy, saying the maker of the $1.5 million da Vinci robot system concealed material facts about its legal risks.

The insurer said it was told Intuitive was confronting 25 claims during the policy application process earlier this year. Intuitive didn’t disclose that it had entered agreements with plaintiffs’ lawyers to suspend deadlines for additional legal claims over the da Vinci system, according to an Oct. 21 complaint filed in federal court in San Jose, California.

“Had plaintiff been informed of the tolling agreements and the increasing number of claimants during the application process, plaintiff would not have proceeded with the application process and would have withdrawn any quote for the policy,” Illinois Union said in the complaint.

The existence of the agreements “has been repeatedly disclosed” in Intuitive’s Securities and Exchange Commission filings, Angela Wonson, a spokeswoman for the company, said in an e-mail. The Illinois Union policy provides $15 million in coverage after Intuitive spends $5 million, according to the complaint.

Intuitive is facing scrutiny over the marketing, cost effectiveness and safety of its robotic devices. Bloomberg News reported in February that U.S. regulators were surveying surgeons about the robots after a rise in adverse-event reports.

In July, Intuitive received a warning letter from the Food and Drug Administration after an inspection found the company hadn’t adequately reported product corrections and patient adverse events.

In an Oct. 18 regulatory filing, the Sunnyvale, California- based company said it’s defending about 50 product liability lawsuits brought by patients who allege injures linked to robotic surgery.

U.S. hospitals used robot-assisted surgery in more than 350,000 operations last year. The robots help perform hysterectomies, gall bladder removals, prostate cancer treatment and many other soft tissue operations.

The case is Illinois Union Insurance v. Intuitive Surgical, 13-cv-04863, U.S. District Court, Northern District of California (San Jose).

(With assistance from Robert Langreth in New York. Editors: Stephen Farr, Fred Strasser)