Articles on Law, Science, and Engineering

The Biomaterials Access Assurance Act of 1998

By

Charles F. Walter, Ph.D. and Edward P. Richards, III, 18 IEEE Engineering In Medicine And Biology Magazine #2, 125-7 (1999).

INTRODUCTION

Last year Congress passed legislation protecting suppliers of bulk components and raw materials for implants from lawsuits. The legislation is called the "Biomaterials Access Assurance Act of 1998" ("BAAA"). The BAAA applies to all implant raw materials and components except the silicone gel and the silicone envelope utilized in a breast implant containing silicone gel. The new law supersedes otherwise applicable state laws and procedures by precluding any civil action, regardless of the legal theory upon which it is based, for harm, other than commercial loss or loss of or damage to an implant, caused by an implant.

The BAAA was passed in response to a serious problem: the embargo by manufacturers of bulk biomaterials such as silicone gel and Teflon. This embargo arose from some legal decisions making the suppliers of bulk biomaterials liable for injuries allegedly caused by finished implants. Unfortunately, Congress and the President lost sight of the original goal in the flurry of lobbying by plaintiff's lawyers and component part manufacturers. The result is a bill that provides a much broader umbrella than is necessary to protect biomaterials suppliers, and no protection for suppliers of silicone gel, one of the bulk materials that led to the legislation.

Definitions

If the devil is in the details, then in legislation, the most important details are the definitions.  The broad scope of the BAAA is established in the definitions, rather than in its substantive provisions.

The BAAA uses the definition of a "medical device" that is part of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. §321(h)], including any device component of any combination product as that term is used in 21 U.S.C. §353(g).  The BAAA introduces an unusual definition of implant:

"(5) IMPLANT.--The term "implant" means--

   (A) a medical device that is intended by the manufacturer of the device‑‑

    (i) to be placed into a surgically or naturally formed or existing cavity of the body for a period of at least 30 days;  or

    (ii) to remain in contact with bodily fluids or internal human tissue through a surgically produced opening for a period of less than 30 days; and

   (B) suture materials used in implant procedures."

Part (i) makes sense: a device becomes an implant if it is left in the body more than 30 days.  This is a logical distinction between implants and other devices that may be used temporarily inside the body, but are not left there long enough to raise chronic toxicity or long-term failure issues.  Part (ii) deals with medical devices that are in the body less than 30 days, and seems to exclude from the definition of an implant those are in natural cavities, as opposed to surgically created cavities.  Thus a urinary catheter that remains in the body for less than 30 days is not an implant under the BAAA, while an arterial catheter is an implant without regard to how long it is in the body.  This reflects the different toxicity and sanitation problems posed by devices in these sites.

A "claimant" is any person who brings a civil action, or on whose behalf a civil action is brought, arising from harm allegedly caused directly or indirectly by an implant.  There are three exclusions from the definition of claimant, and thus from the limitations of the BAAA: 1) health care providers who implant the devices; 2) other medical device or biomaterials suppliers; and 3) breast implant litigants suing over silicone.  The first two exceptions allow buyers (it is the provider who buys the implant, the patient only pays for it), sellers, and manufacturers to sue each other for commercial law losses.  Exception 3) allows breast implant claimants to sue silicone gel suppliers, which gained the support of plaintiffs' attorneys for the BAAA.

A "supplier" of bulk component parts or raw materials for implants is an entity that directly or indirectly supplies a component part or raw material for use in the manufacture of an implant. A "component part" is any manufactured piece of an implant, and "raw material" is any substance or product that has a generic use and may be used in an application other than an implant (except the silicone gel and the silicone envelope utilized in a breast implant containing silicone gel).

It is this definition of supplier that changed the character of the BAAA.  There is fundamental distinction between the supplier of a bulk biomaterial and a component part.  Bulk suppliers of plastics and metals - materials that are true generic substances with multiple uses - have two strong claims.  First, they exercise little control over the final use of their product.  Second, the potential profit from selling bulk biomaterial is too low to justify the almost unlimited risk. This justifies limits on their liability as necessary to assure a proper supply of raw materials.

In contrast, component part manufactures who sell into the implant business are selling parts with a high added value and they have considerable control over the use of their products: while such components may have a non-implant use, they are not generic items bought at the hardware store.  They are made specifically with the implant market in mind, and may represent a substantial part of the cost of an implant.  Giving component manufacturers immunity was clearly the price of support by the industry lobbyists.

An implant "manufacturer" is any entity engaged in the manufacture, preparation, propagation, compounding, or processing of the implant, and who is required to register with HHS. As used herein, "register with HHS" means "register with the Secretary of the Department of Health and Human Services pursuant to 21 U.S.C. §360 and to include the implant on the list of devices filed pursuant to 21 U.S.C. 360(j)."

A implant "seller" is any entity that, in the course of a business conducted for that purpose sells, distributes, leases, packages, labels, or otherwise places an implant in the stream of commerce. However, an entity acting only in a financial capacity with respect to the sale of an implant, or a provider of professional health care services in which the sale or use of the implant is incidental to such services and the essence of the services is the providing of judgment, skill or services is not a seller for purposes of the BAAA.

Supplier Liability

The BAAA bars nearly everyone from maintaining a suit against suppliers. Those barred include injured parties who survive and their representatives, parties who are killed and representatives of their estates, and parents and guardians of minors and incompetents. Other suppliers, the implant manufacturer or seller, and health care providers whose sale or use of an the implant is incidental to services the essence of which is skill or judgment may maintain an action against suppliers. Actions by health care providers who purchase implants in connection with their services to patients are governed by applicable commercial or contract law with damages limited to their commercial loss.

Under the BAAA there are four circumstances under which a supplier may be liable for harm caused by an implant:

  (1) Suppliers may be liable if they are also the manufacturer of the implant;

  (2) Suppliers may be liable if they are also sellers of the implant;

  (3) Suppliers may be liable if the raw materials or component parts fail to meet applicable contractual requirements or specifications; and

  (4) Suppliers may be liable for negligence or intentionally tortious conduct that was an actual and proximate cause of the harm to the claimant.

1. Liability as Manufacturer

There are three situations where a supplier is considered also to be the manufacturer of the implant, and therefore not covered by the BAAA. First, a supplier is the manufacturer if the supplier registered or was required to register with HHS. Second, a supplier is the manufacturer if it is the subject of a declaration by the Secretary of Health and Human Services that it should have registered with HHS, but failed to do so. Third, a supplier is a manufacturer or if it is related by common ownership or control to an entity that registered or was required to register with HHS, and the court finds that it is necessary to impose liability on the supplier because the related manufacturer lacks sufficient financial resources to satisfy any judgment that the court feels it is likely to enter should the claimant prevail.

2. Liability as Seller

There are three situations where a supplier is considered also to be the seller of the implant, and therefore not covered by the BAAA. First, a supplier is the seller if the supplier held title to the implant and then acted as a seller of the implant after the initial sale by the manufacturer. Second, a supplier is considered also to be the seller of the implant if the supplier acted under contract as a seller to arrange for the transfer of the implant directly to the claimant after the initial sale by the manufacturer. Third, a supplier is considered also to be a seller if it is related by common ownership or control to an entity that registered or was required to register with HHS, and the court finds that it is necessary to impose liability on the supplier because the related manufacturer lacks sufficient financial resources to satisfy any judgment that the court feels it is likely to enter should the claimant prevail.

3. Liability for Failure to Meet Contractual Requirements

There are four situations where a supplier may be liable for supplying raw materials or component parts that fail to meet contractual requirements or specifications. The first is where the raw materials or component parts are not the product described in the contract between the supplier and the entity that contracted for the supplying of the product. The second is where the raw materials or component parts fail to meet specifications agreed to, published, or provided by the supplier to the entity that contracted for the supplying of the product. The third is where the raw materials or component parts failed to meet specifications in a master file submitted by the supplier to the Secretary of Health and Human Services and that is currently maintained by the supplier for purposes of premarket approval. The fourth is where the raw materials or component parts fail to meet approved and accepted specifications in submissions for purposes of premarket approval or review under 21 U.S.C. §360, 360c, 360e, or 360j.

Even in these situations, a supplier is not liable under the BAAA unless the failure to meet the contractual requirements or specifications was an actual and producing cause of the harm to the claimant.

4. Liability for Negligence or Intentionally Tortious Conduct

A supplier who has been dismissed from suit pursuant to the BAAA may find itself nevertheless liable for negligence or  intentionally tortious conduct. Within 90 days after entry of final judgment in an action against a manufacturer, either the manufacturer or the claimant may implead a supplier who has been dismissed back into the litigation.

Under the BAAA, the action by the manufacturer to bring the supplier back into the litigation may occur if the manufacturer has asserted at any time during the litigation that the supplier was negligent or committed intentionally tortious conduct, and the court finds, based on its independent review of the evidence in the record, that such negligence or intentionally tortious conduct was an actual and proximate cause of the harm to the claimant, and that the manufacturer's liability for damages should be reduced in whole or in part because of such negligence or conduct.

The action by the claimant to bring the supplier back into the litigation requires that the claimant make a motion to implead the supplier. Then the supplier can be held liable if the court finds, based on its independent review of the evidence in the record, that such negligence or intentionally tortious conduct was an actual and proximate cause of the harm to the claimant, and that the claimant is unlikely to be able to recover the full amount of its damages from the remaining defendants.

The Practical Effect of the BAAA

In theory, a supplier who has been dismissed may regret the dismissal because it did not remain in the litigation to defend itself. However, this is not likely to happen. The supplier knows that the litigation is going on and can monitor it. During this period, discovery from the supplier is limited to that for other nonparties. Moreover, prior to entry of judgment on the claim against it, the impleaded supplier is permitted to supplement the record of the entire proceeding, including the portion developed while it was not a party.

The principle effect of the BAAA is to eliminate plaintiffs' use of state strict liability causes of action governing unreasonably dangerous defective products and causes of action governing unintentional deceptive trade practices against suppliers of raw materials and component parts. However, the BAAA is not evenhanded because it does not affect any defense available to a defendant under any other provision of state law. Thus, the affirmative defense of a supplier's comparative fault remains available to defendants in tort reform states. Using such affirmative defenses, defendants may still designate nonparties who are potentially liable under strict products liability theories. Since such tort reform often includes the elimination of joint liability, manufacturers and sellers will be able to escape at least a portion of the liability for defective products and deceptive trade practices by designating suppliers who have been dismissed pursuant to the BAAA as potentially liable nonparties. This puts the legal system back about fifty years because, now, under the BAAA, as then, unless the claimant can prove that the conduct of the supplier was negligent or intentionally tortious, full recovery for damages caused by defective implants is unavailable.

An example illustrates the point. The claimant is Ms. Marie Hurt, a patient who received an implant in a Denver hospital. Parts, Inc. is the supplier of component parts Ms. Hurt's  implant, and Organ, Inc. manufactures the implant. Parts, Inc. holds the patents on the component parts its produces and sells to Organ, Inc. and on an alternative form of the part that would cost about 10% more. Parts, Inc. conforms to all contractual requirements and specifications with respect to Organ, Inc. and the Department of Health and Human Services.

Ms. Hurt is seriously injured by the implant and files a products liability suit against Organ, Inc. and Parts, Inc. in a Colorado state court. Parts, Inc. is dismissed pursuant to 21 U.S.C. §1605(a) (the applicable section of the BAAA). Organ, Inc. asserts C.R.S. §13-21-406 (Colorado's comparative fault statute for products liability actions), claiming Parts, Inc. is wholly or partly at fault for the dangerous condition of the implant. Organ, Inc. also asserts C.R.S. §13-21-111.5(3) (Colorado's pro rata nonparty liability statute) and C.R.S. §13-21-111.5(1) (Colorado's statute eliminating joint liability for joint tortfeasors). The jury finds that Ms. Hurt's damages are one million dollars--$500,000 for medical bills, $350,000 for her past and future lost earning capacity, and $150,000 for past and future pain and suffering. It also finds no negligence by Parts, Inc., that the implant was defective and unreasonably dangerous because the same device manufactured with the alternative parts would have been safer, and that Organ, Inc. was 25% at fault and Parts, Inc. 75% at fault for the unreasonably dangerous nature of the implant. Since Parts, Inc. was not negligent and complied with all contractual requirements, it escapes paying its share of Ms. Hurt's damages. And since Organ, Inc. and Parts, Inc. are not jointly liable, Ms. Hurt receives only $250,000 and can't even pay her medical bills. Results: Increased profits for Parts, Inc. shareholders, but one more victim added to the Colorado welfare rolls. BAAA HUMBUG.

Conclusions

The implant business poses a special business problem: implants are a very high added-value product made with very cheap raw materials, relative to the value of the finished product.  This is not unique, computer chips and industrial diamonds are extreme examples of the problem. What makes implants unique is that they have almost unlimited legal risk.  A supplier of raw silicone or Teflon, who might make a few cents profit on the small amount of material in an implant, can be liable for millions in damages for each implant.  The BAAA protects this supplier and makes the risk inherent in the transaction consistent with the profit.

Unfortunately, the BAAA would also protect high value added component part suppliers whose parts were assembled by a jobber into the final device, much as computers are assembled by low margin jobbers from high value components.  This will create the possibility of sheltering most of the value of the implant business from products liability, without a proper public debate on role of law in implant safety.