WASHINGTON - The Supreme Court yesterday made it harder for consumers to sue manufacturers of federally approved medical devices.
But in another ruling, the court gave 401(k) participants greater rights to sue when their defined-contribution retirement plans suffer losses.
In the medical-device decision, the high court ruled, 8-1, against the estate of a patient who suffered serious injuries when a catheter burst during a medical procedure.
The device case has significant implications for the $75-billion-a-year health-care technology industry. In a recent three-month span, federal regulators responded to more than 100 safety problems regarding devices.
Mark Herrmann, a lawyer with the Jones Day firm in Chicago, called the decision "a home run for the industry," which he represents, and said it might have positive implications for drugmakers in suits against them.
But Thomas Kline, a Philadelphia plaintiff's lawyer, said the case was restricted to medical devices. Congress expressly preempted state courts from reviewing medical devices that undergo a thorough, premarket review but did not grant a similar preemption to drugs, he said.
"They looked right to what Congress did," Kline said. "It's as narrow an unfavorable opinion as they could have drafted."
At issue before the Supreme Court was whether the estate of Charles Riegel could sue a company under state law over a device already cleared for sale by federal regulators.
Under federal law, a company must substantiate the safety and effectiveness of a new medical device before the Food and Drug Administration will approve it for the marketplace.
State lawsuits are barred from imposing requirements that are different from federal requirements, said the ruling by Justice Antonin Scalia.
Riegel's family alleged that the Evergreen Balloon catheter produced by Medtronic Inc. had a design defect and an inadequate warning label.
Although Riegel survived the procedure to unclog an artery in 1996, he sustained permanent disabilities, his family says. He died in 2004.
The Bush administration sided with industry, saying unfavorable state jury verdicts would compel companies to alter product designs or labels that had already gotten FDA approval.
The high court also ruled yesterday that individual participants in the most common type of retirement plan could sue under a pension-protection law to recover their losses.
The unanimous decision has implications for 50 million workers with $2.7 trillion invested in 401(k) plans.
James LaRue of Southlake, Texas, said the value of his stock market holdings plunged $150,000 after administrators at his retirement plan failed to follow his instructions to switch to safer investments.
The issue was whether the Employee Retirement Income Security Act lets an individual account holder sue plan administrators for breaching their fiduciary duties.
The language of the law refers to recovering money for the "plan" rather than for an individual, raising the question of whether a participant can sue solely on his own behalf.
Justice John Paul Stevens, in his opinion for the court, said such lawsuits were allowed. "Fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive," Stevens said.
Linda Wolohan, a spokeswoman for Vanguard, the Malvern mutual fund company, said: "The case deals with a fairly technical issue that - in our view - the court got right. The court ruled that individual participants may sue their plan administrator under ERISA for damages that impact only their separate account, and not the entire plan. If participants have been harmed, they should be able to make themselves whole. The 401(k) system works well, and overall there are relatively few of these suits." She said Vanguard had not had any 401(k) lawsuits brought against it by plans or participants.