Allianz Insurance Co. v. Guidant Corp.

SUPREME COURT CASES

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State: Illinois

Court: 2nd District Appellate

Docket No: 2-04-1038 Rel

Case Date: 01/28/2005

No. 2--04--1038

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

ALLIANZ INSURANCE COMPANY,

Plaintiff-Appellee,

GUIDANT CORPORATION,

Defendant-Appellant

(Zurich Specialties London Ltd., Gerling Konzern
Allgemeine Versicherungs-AG, Liberty
International Insurance Company, Intervenors and
Third-Party Plaintiffs-Appellees; American
International Specialty Lines Insurance Company,
Westchester Fire Insurance Company, Lumbermens
Mutual Casualty Company, Third-Party
Defendants-Appellees).

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Appeal from the Circuit Court
of Du Page County.

No. 03--L--1178

Honorable
Bonnie M. Wheaton,
Judge, Presiding.

JUSTICE GROMETER delivered the opinion of the court:

Defendant, Guidant Corporation (Guidant), appeals an order of the circuit court of Du PageCounty denying its request for a partial stay of this insurance coverage lawsuit. We affirm.

I. BACKGROUND

A. The Ancure Device and the Underlying Claims

Guidant, through its wholly owned subsidiary, Endovascular Technologies, Inc. (EVT),developed and manufactured a medical device known as the Ancure Endograft System (AncureDevice). In September 1999, the Food and Drug Administration (FDA) approved the Ancure Devicefor commercial sale. The Ancure Device was sold and distributed by Guidant Sales Corporation(GSC), another wholly owned subsidiary of Guidant. The Ancure Device was used to treatabdominal aortic aneurysms, a potentially life-threatening condition arising from the development ofa weak area in the wall of the aorta. The Ancure Device, which is inserted through an incision in thepatient's leg, uses a delivery system to place a woven fabric graft into the aorta to prevent rupture. Prior to the introduction of the Ancure Device, treating an abdominal aortic aneurysm requiredtraditional surgery in which the patient's abdomen had to be cut open to allow the surgeon to reachthe aorta.

After sales of the Ancure Device commenced, EVT became aware of various malfunctionsassociated with the delivery system used to place the graft. Some of these malfunctions resulted inthe delivery system becoming improperly lodged in a patient's body, often requiring the removal ofthe delivery system by traditional open surgical repair. As a result, some EVT sales representativesinformed doctors about a procedure involving breaking or cutting the handle of the Ancure Device'sdelivery system when the delivery system became lodged and could not be removed without resortingto traditional open surgical repair. This procedure, which became known as the "Handle-BreakingTechnique," was not presented to the FDA for approval.

Under federal law, a company is required to file a medical device report (MDR) with the FDA when it appears that a device has malfunctioned in such a way that it may have caused or contributedto a death or serious injury, or has malfunctioned and would be likely to cause or contribute to adeath or serious injury if the malfunction were to recur. 21 U.S.C.