On 14 November 2013, the Court of commerce of Toulon, France, ordered the Notified Body TUV Rheinland, i.a., to pay a provisional compensation of 3,000 Euro per person to approximately 1,700 patients (5 million Euro total) who were fitted with defective breast implants produced by the French company Poly Implant Prothèse S.A.S (PIP), pending assessments of further compensation by experts.

The immediate and provisional character of the compensation was upheld and confirmed by the Court of Appeal of Aix-En-Provence, France on 21 January 2014. An appeal on the merits of the Court of commerce decision is still pending.

The Court of commerce's decision represents a rare victory for women fitted with the defective PIP implants since attempts in Germany to find TUV Rheinland liable have been unsuccessful, as most recently confirmed by the German Court of appeal OLG Zweibrücken in a decision of 30 January 2014, and the First Instance Court Landgericht Görlitz in a decision of 17 April 2014. It also signifies an important development for product liability actions as it imposes a duty of diligence and thoroughness on the Notified Bodies and, for products subject to the review and control of Notified Bodies, offers a potential additional debtor to victims confronted with the bankruptcy of the actual manufacturer of the defective products.

Background

PIP, a manufacturer of breast implants, was obliged to ensure that implants it produced were compliant with the requirements of the Medical Devices Directive 93/42/EEC (MDD). PIP was also obliged to commission a Notified Body to review its quality assurance system and design dossier.

Notified Bodies are independent public or private third-party organizations or companies designated by the European Union Member States (Member States) to carry out control of manufacturers of medium and high risk medical devices offered for sale in the EU. A control made in one Member State is valid for the whole EU. TUV Rheinland is one of the most important Notified Bodies in Europe and, for approximately 13 years, was commissioned by PIP to review its quality assurance system and design dossier.

The breast implant scandal and the court's decision

When the PIP breast implants scandal came to light in 2010, it was revealed that PIP had, on a large scale, used sub-standard industrial gel instead of medically approved gel in the production of its breast implants. The use of the unapproved gel caused numerous implants to leak, which may have led to infections in patients. Up to 400,000 patients have been fitted with PIP implants worldwide.

In response to the scandal, senior managers at PIP were prosecuted and sentenced to severe jail terms and fines, and PIP declared bankruptcy.

Patients and certain implant distributors turned against TUV Rheinland, likely in part because of PIP's bankruptcy and the insolvency of its management. They claim that TUV Rheinland is also liable due to its failure to diligently perform its duties as a Notified Body.

A key criticism of TUV Rheinland is of its practice of announcing when it would conduct on-site audits. This allowed PIP to substitute sub-standard gel with medically approved gel in anticipation of the audits. Hence, TUV Rheinland never discovered the French manufacturer's malpractice.

According to the claimants, TUV Rheinland also failed to discover the mismatch between the volume of the proper approved gel ordered by PIP and the volume of gel needed for PIP's actual production.

TUV Rheinland asserts that it was a victim of PIP's fraudulent behavior. It also pointed out that the manufacturer affixes the CE marking on its products and, further, that in Europe market surveillance is conducted exclusively by the competent supervising authorities of the Member States and that a Notified Body has no powers and thus no liability in this respect.

The Court of commerce rejected TUV Rheinland's arguments and ruled in favor of the patients (and distributors of PIP implants). It stated that TUV Rheinland had breached its obligations to asses both design and manufacture, and thus contributed to effects of PIP's fraud.

Appreciation

While the French court ruled against the Notified Body, courts in Germany, where numerous cases are pending, have, until now, (also in appeal) consistently ruled in favor of TUV Rheinland.

Although the facts presented are almost identical, German courts have generally accepted that TUV Rheinland diligently performed its duties and did not have the means and powers to uncover the fraudulent acts of PIP.

German and French courts have thus reached seemingly contradictory conclusions about the scope of the obligations and powers of the Notified Bodies under the MDD. This difference in approach by EU courts leads to increased forum shopping by patients, who now are looking to initiate claims in France.

It is interesting to note that the Regulation Brussels Ibis (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (O.J. 20.12.2012, L 351/1)) which will be applicable to the enforcement of judgments rendered in judicial proceedings instituted after 10 January 2015, has drastically simplified the enforcement in one Member State of court decisions rendered in another Member State. While the Brussels Ibis Regulation is not applicable to the decision of the French Court of commerce, it may very well be applicable to the future proceedings which will be initiated in 2015 in the aftermath of this decision.

Even before the French Court of commerce decision, the European commission had taken steps to restore patient confidence in the medical devices sector.

The European Commission has, without creating new obligations or rights, fixed a common interpretation of the main elements of the criteria for the designation and extension of the designation of the Notified Bodies within the EU, as well as set common minimum requirements for the surveillance and monitoring of the Notified Bodies by the designated monitoring authorities of the Member States.

These harmonizing rules and recommendations are set forth in the following measures taken by the European Commission on 24 September 2013:

  • The Commission Implementing Regulation (EU) No 920/2013 of September 24, 2013 on the designation and the supervision of Notified Bodies under Council Directive 90/42/EEC on active implantable medical devices and Council Directive 93/42/EEC on medical devices (O.J. 25.9.2013, L 253/8).
  • The Commission Recommendation of September 24,  2013 on the audits and assessments performed by Notified Bodies in the field of medical devices (2013/473/EU) (O.J. 25.9.2013, L 253/27), the "Recommendation."

We discussed the scope and impact of these measures in our newsletter of October 24, 2013.

Going forward, Notified Bodies are required to conduct unannounced audits and to check samples. To increase efficient control, Notified Bodies are also directed to extend their unannounced audits to the premises of the manufacturer's critical subcontractors or crucial suppliers.

In view of the decision of the Court of commerce of Toulon and the regulatory initiatives of the European Commission, it is clear that medical device manufacturers can expect an increased diligence in the controls performed by their Notified Bodies as well as an increase in unannounced audits and sample testing. Manufactures should not only anticipate the consequences and impact of such unannounced controls and audits in their own internal organization but also in their agreements concluded with their critical subcontractors and/or crucial suppliers.