$20M Legal Battle Between Arthrex and Insurance Companies
A legal battle has started between Naples, Florida-based Arthrex, Inc. and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) and Federal Insurance Company (Federal).
Earlier this month, Arthrex filed a lawsuit against the insurance companies in the United States District Court for the District of Delaware. At the same time, the insurance companies filed a lawsuit against Arthrex in the United States District Court for the Middle District of Florida.
In 2019, Arthrex purchased an insurance policy from National Union which was meant to provide $10 million of coverage. During that same time Arthrex also purchased an excess policy from Federal for an additional $10 million of coverage.
Arthrex is asking the court to award them the full $20 million policy limits of the two policies. Arthrex is alleging that the companies have breached their contractual obligations under the insurance policies. The company has also asked for a jury trial.
The lawsuits stem from the insurance companies’ denial of coverage for a $16 million settlement that Arthrex agreed to over kickback allegations. Last year, Arthrex agreed to the payment to resolve allegations involving Colorado-based orthopedic surgeon Peter Millett, M.D., MSc.
According to the settlement, Arthrex allegedly paid Dr. Millett millions of dollars in royalty payments for the SutureBridge™ and SpeedBridge™ kits. However, the United States claimed that these payments were actually illegal kickback payments used by Arthrex to induce Dr. Millett to order or recommend the kits. For OTW’s coverage of the matter, see “Arthrex Pays $16M To Settle Kickback Allegations.”
The two insurance companies claim that Arthrex failed to describe the settlement to National Union and that “other than the settlement amount, Arthrex never disclosed any of the terms of the preliminary agreement to the Insurers.” The insurance companies are seeking a judgment that they do not have a duty to indemnify or reimburse Arthrex.