A Decade Later, Surgin Prevails Against Insurer
Allergan Says Make it Alphagan P; Beckman Lands $400 Million Credit Line
HEALTHCARE by Vita Reed
Surgin Inc., a Tustin maker of disposable medical devices, has prevailed against its insurance carrier in a dispute stemming from Surgin’s battle with eye products maker Alcon Inc. in the early 1990s.
California Court of Appeals Associate Judge William Rylaarsdam and two colleagues recently affirmed a judgment in Surgin’s favor against Truck Insurance Exchange, a unit of Farmers Group Inc., the Los Angeles-based insurer.
The case, which dates back to 1991, centered around charges that Truck failed to defend Surgin at a time when the privately held device maker was embroiled in a lawsuit with Alcon, a unit of Nestle SA that employs nearly 600 people in Irvine.
“Our client described (Alcon) as the 800-pound gorilla,” said Paul Gale, a partner at Stradling, Yocca, Carlson & Rauth, Surgin’s Newport Beach-based law firm.
Last week, Gale said he’d heard that the appeals court denied Truck’s petition for rehearing the case.
It’s not likely, though, that the case could move to the California Supreme Court, contended Richard Goodman, who worked with Gale and other Stradling, Yocca attorneys on the case. The case doesn’t involve either a legal precedent or a public policy matter, he said.
“There is not an automatic appeal in civil cases,” Goodman said.
Surgin’s Tustin HQ: includes 10,000 square foot clean room (right).
Surgin filed its complaint against Truck five months after settling litigation filed against Alcon in 1989 and 1990 on “unfavorable terms,” according to court papers. Surgin sued Alcon in federal court after the latter allegedly disparaged some of its products, including the Multi-Spike, which allows ophthalmologists performing cataract surgeries to extract multiple doses from one bottle of saline solution.
Alcon later denied those charges and filed a countersuit, along with federal patent infringement actions against two other Surgin devices, the Camlock and 10M Cassette. The Camlock case was later dismissed, while Surgin stopped selling 10M cassettes after Alcon obtained one of two preliminary injunctions, court papers show.
Surgin eventually obtained a default judgment in Orange County Superior Court against Truck based on Truck’s “purported failure to comply with discovery orders,” according to a copy of the opinion written by Rylaarsdam. The appeals court then reversed the judgment and sent the case back to the lower court for further proceedings.
When that happened, the lower court found that Truck owed Surgin a duty to defend it in the false advertising and unfair competition cases,a jury awarded Surgin $73,500 in contract damages and an additional $4.5 million in tort damages for lost profits.
Additionally, the court also awarded Surgin another $156,853 in attorneys’ fees and the court entered judgment, according to the opinion.
Truck appealed, claiming, among other things, that it didn’t have a duty to defend Surgin. It also said it offered a defense but Surgin rejected it and that the jury erred in awarding Surgin $4.5 million for lost profits on the Multi-Spike and the 10M cassette.
Allergan Switches Drug Focus
Allergan Inc., the Irvine-based drug maker, said it’s planning to discontinue U.S. distribution of Alphagan, its glaucoma and ocular hypertension medication, in favor of Alphagan P, a newer formulation of the drug.
Alphagan P, according to Allergan, has been shown in clinical studies to be comparable to the original Alphagan, but with lower rates of certain side effects, such as the reduction in the incidence of ocular allergy. Alphagan P is preserved with a compound called Purite.
Allergan said that research demonstrated that a majority of ophthalmologists and optometrists preferred Alphagan P to the original Alphagan and didn’t see a medical need for having both products on the market.
Bits and Pieces:
Beckman Coulter Inc., Fullerton, recently closed a three-year, $400 million revolving credit line and said it was oversubscribed with total commitments of $525 million. The new credit line replaces one that’s currently at $317 million, set to expire in October and will be used for general corporate purposes, Beckman officials said RxConnect, a subsidiary of PacifiCare Health Systems Inc., Santa Ana, changed its name to MEDeMORPHUS Healthcare Solutions. Officials said the name change was related to expanding its product line beyond its core electronic prescription processing function Beech Street Corp., Lake Forest, said it was awarded case management accreditation by URAC, also known as the American Accreditation HealthCare Commission. Beech Street said it received the designation after having its processes and structures evaluated and demonstrating compliance with commission standards The University of California Irvine’s Graduate School of Management said a Webcast of its 2002 Health Care Forecast Conference, which was held in February, is available at www.gsm.uci.edu/go/hccvideo. The conference featured Norman Ornstein, a resident scholar at the American Enterprise Institute Western Medical Center-Anaheim now is using Afx, a surgical system that uses common microwave technology to treat atrial fibrillation, the most frequent form of cardiac arrhythmia.
