New Report Looks At Intersection of “Medical Lending” and Pelvic Mesh Lawsuits

A recent article in Reuters shed an interesting and potentially disturbing light on the “medical lending” industry, which operates in some cases by funding surgeries for patients involved in litigation over allegedly defective medical devices. The article focused on pelvic mesh lawsuits against device companies—one of the biggest sources of personal injury litigation in the country. Financers here will “invest” in operations to remove implants from women suing the device makers, and “reap an inflated share of the payouts when cases settle,” according to the report.

The way this works, in short, is that medical funders, often through a middleman representative or attorney, contact surgeons to perform operations to remove pelvic mesh implants in patients involved in the tort litigation. The funder might offer surgeons a guaranteed $2,500 per procedure (in the Reuters example), which might be similar or slightly higher than the discounted rates insurers might pay for the procedure. The funders then wait for the patient’s legal case to settle and place liens against those settlements for the full, non-discounted costs of the surgeries. Reuters reports that medical lenders have asked patients to pay as much as $62,000 for the removal surgery. The standard insurance reimbursement rate is between $2,000 and $7,000, according to the article.

And there are arguments in support of this arrangement. The surgically inserted mesh devices, while intended to treat urinary incontinence and pelvic organ prolapsed, have been linked to problems such as chronic infection, associated pain, and even death. Thus, medical funders and certain surgeons believe the financial arrangement is a valuable service, offering patients corrective surgeries they otherwise might not be able to afford. The inflated, non-discounted, costs are a fair transaction, argue the lenders, due to the risks they take on by paying for the surgeries despite an uncertain settlement future. “By guaranteeing surgeons revenue…[medical lenders] give patients access to good doctors who don’t want to wait years for bills to be paid from settlement proceeds,” adds the Reuters article.

However, the most disturbing allegations in the Reuters article relate to the influence medical lenders may have on the settlement from which they will ultimately, they hope, be paid from. The article reveals that lenders or their agents may recruit doctors willing to overstate injuries or may manipulate what doctors are documenting about their patients. For example, one surgeon profiled in the story suggested the he was urged to include “key phrases in the operative report,” for the best result in federal court. These would include phrases like “defective mesh” and “mesh erosions.” 

Additionally, some argue that funders promote potentially unnecessary surgery. Patients who undergo surgery “typically receive larger settlements than plaintiffs who don’t have devices removed or replaced,” according to the Reuters article. For example, while almost half the mesh plaintiffs who received implants to treat incontinence did not have surgery to remove or repair the devices, their suits account for just 10% of the estimated value of the litigation. Based on the Reuters investigation, “at least several hundred women with claims against mesh makers appear to have used medical lenders to fund surgery to remove their implants.”

Underscoring the magnitude of these settlements, Modern Healthcare outlined the recent payouts related to mesh litigation:

Boston Scientific agreed in April to pay $119 million to settle nearly 3,000 cases and claims over its transvaginal surgical mesh products though the company did not admit to wrongdoing. In May, a jury ordered Boston Scientific to pay $100 million to a woman who still had pieces of the mesh embedded inside her despite two surgeries. Last year, Endo International agreed to pay an $830 million settlement over the mesh but it also did not admit liability or fault, according to the Reuters.

The full Reuters report goes into detail about one patient’s experience with a medical lending arrangement here, but the article suggests wider issues that will be important for the life sciences industry to follow.