ECJ confirms product defects due to increased risk of failure of medical devices
The judgement
Initial situation
Legal background
Decision
Outlook and Conclusion
The judgement
The European Court of Justice (ECJ) ruled in its decision of 5 March 2015 that even a potential defect in a medical device (in this case, pacemakers and implantable cardioverter defibrillators) could result in all devices of the same model being classed as defective (Case C-503/13 and C-504/13). If the abstract probability of a defect affects the model series, the patient was ultimately not required to prove the existence of the defect in the specific product used. It was then for the manufacturer to bear the costs of any necessary recall and replacement as, in the ECJ’s view, damage caused by personal injury was the reason for the revision surgery.
Initial situation
The cases were concerned with disputes between German health insurance companies and the German distributor of a US pacemaker and defibrillator manufacturer. The proceedings before the ECJ were preceded by requests for a preliminary ruling from the Federal German Court of Justice (Bundesgerichtshof – BGH). The original cause of the dispute were safety precautions issued by the US company following the performance of internal quality controls which found that certain defective parts in pacemakers and defibrillators could cause the devices to fail. The probability of defects occurring in the pacemakers was reported to be 17 to 20 higher greater than normal and a number of defibrillator devices were found to contain defective components. The manufacturer recommended that devices be replaced in medically indicated cases, whereupon the health insurance companies demanded reimbursement of the costs of revision surgery.
The Advocate General’s Opinion was presented at the hearing on 21 October 2014 and the defectiveness of the products affected was confirmed. The ECJ’s decisions support this Opinion.
Legal background and questions referred by the BGH for a preliminary ruling
The decision was passed on the basis of the Product Liability Directive (85/374/EEC) transposed in Germany as the Product Liability Act (Produkthaftungsgesetz – ProdHaftG).
With respect to Article 6 of the Directive and Section 3 of ProdHaftG, the BGH put to the ECJ the question whether a product was already deemed to be defective within the meaning of these provisions if pacemakers of the same product group had a notably higher risk of failure or if a malfunction had occurred in a significant number of defibrillators of the same series (without a defect being identified in the specific implanted device).
The BGH requested a preliminary ruling on the question whether the costs of removing and implanting new devices constitute damage caused by personal injury within the meaning of Article 9 of the Directive and Section 8 ProdHaftG.
Decision by the European Court of Justice
The ECJ largely concurred with the Opinion of the Advocate General and responded to both questions of the BGH in the affirmative.
In the ECJ’s view, the “safety” that the public at large was entitled to expect from a product had to be assessed by taking into account the intended purpose, the objective characteristics and properties of the product in question and the specific requirements of the group of users for whom the product was intended. In the light of their function and the particularly vulnerable situation of the patients using “medical devices” such as the pacemakers and implantable cardioverter defibrillators at issue in the main proceedings, the safety requirements for those devices which patients were entitled to expect were particularly high.
In addition, the “abnormal potential” for possible personal injury constituted a “potential lack of safety” giving rise to the liability of the manufacturer in accordance with Directive 85/374/EEC.
For this reason, a product belonging to a group or production series – such as pacemakers and implantable cardioverter defibrillators – in which a potential defect had been identified, could be classified as defective without the defect having to be identified in the specific case.
With respect to the second question, the ECJ also fundamentally concurred with the Advocate General’s Opinion:
Damage caused by surgery to remove and replace a defective device such as a pacemaker or implantable cardioverter defibrillator was “damage caused by death or by personal injuries” for which the manufacturer was liable if this operation was necessary to rectify the defect in the device in question.
In its grounds, the European Court of Justice stated that where a defective product was concerned, compensation for damage comprised everything necessary to eliminate harmful consequences and restore the level of safety that a person was entitled to expect in accordance with Article 6(1) of the Directive. In the case of “medical devices”, such as pacemakers and implantable cardioverter defibrillators, which are defective within the meaning of Article 6(1) of the Directive, compensation for damage in an individual case might therefore include the costs relating to the replacement of the defective product.
Whether these costs were actually required for the rectification of a defect was a matter for the court in the relevant Member State to decide in the particular case at hand.
Outlook and Conclusion
The proceedings on which the decision is based are concerned with implants which are unusual from a product-law perspective in that a safety precaution or the recommendation of replacement (and subsequent removal and insertion of the medical device) involves the medically indicated personal injury of the patient through revision surgery. In this case, the acknowledgement of an abstract probability of failure throughout an entire product series would mean that the health insurance companies would have an extensive strict-liability claim to reimbursement of the replacement costs without this being based on a technical defect in the specific product replaced. The significant strict-liability risks of product recalls that are sometimes initiated by manufacturers based outside the European Economic Area (EEA) should be familiar particularly to third-party importers to the EEA or private label manufacturers whom the German Product Liability Act treats “like a manufacturer” with regard to liability.
In addition, the ECJ’s grounds for a possible equation “suspected defect = product defect” are in no way merely limited to medical implants. The grounds for the decision are clearly based on the patient’s or consumer’s particular vulnerability with regard to the function and use of a product. In proportion to this, there is also an increase in the degree of safety that can be justifiably expected and is decisive for the concept of the defect. Incidentally, with regard to the medical devices in question here, the ECJ – just like the BGH in its orders for referral of the matter to another court – categorically refers to the degree of safety that a patient would expect and not to the degree of safety that an expert user, such as an experienced heart surgeon, would expect (the latter’s expectations of safety being more likely to include technical residual risks). The patient and consumer perspective as an objective measure of justified safety expectations will – with particular “vulnerability” – presumably result in “zero-defect expectations”.
In conclusion, it can be said that the ECJ has established the merely abstract suspicion of a defect as a (product) defect category. The point of reference is the mere suspicion of a defect throughout the entire model series to which the device in question belongs. Where the suspicion of a structural defect is concerned, this easily falls within the system of product liability law. The situation remains unclear, however, with regard to a limited manufacturing defect: is such a defect capable of rendering a product series sold for many years with no problem, i.e. devices that have long since been marketed, defective with retroactive effect? Aside from the special situation of an implant recall, this raises the question how the causality between an abstract suspected defect and specific injury to the patient might be proved. Finally, it remains to be seen whether the BGH – whose case law emphasizes that a product defect within the meaning of product liability law is analogous to a breach of the duty to ensure public safety – will translate this case law of suspected defects into manufacturer’s liability in tort.
The case law of suspected defects will, in effect, mean that manufacturers and importers – most notably in the medical devices industry – face product liability lawsuits as a result of the greater incentive for consumers and health insurance companies to assert claims on the basis of purely suspected defects. The sector is facing increased challenges with regard to both recall communication and the necessary differentiation of the ECJ’s initially far-reaching specification in defence against liability.
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