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Judge Rules in Favor of Utah Medical on Every Point and Against the FDA

Posted on: Monday, 24 October 2005, 21:00 CDT

By Bob Mims, The Salt Lake Tribune

Oct. 22--A federal judge handed Utah Medical Products Inc. a resounding victory Friday, rejecting the U.S. Food and Drug Administration's bid to shutter the company's Midvale plant.

U.S. Senior District Judge Bruce Jenkins, who chided the agency for its August 2004 filing of "an extended and in some instances nitpicking case," found for the Utah gynecological/neonatal and electrosurgical device-maker on every point.

"As this case progressed, the court wondered how it had evolved into litigation with hundreds of exhibits, endless depositions and high cost 'experts,'" Jenkins wrote. "Product safety is not an issue in this case."

Utah Medical CEO Kevin Cornwell acknowledged being emotional after reading the 15-page memorandum opinion. "It's a slam dunk," he whispered.

"After a long ordeal, we believe the court has vindicated Utah Medical's robust quality system," he added. "Now we hope to move on and repair our relationship with the government while we continue to serve our customers' needs."

Fifteen months ago the FDA sued to close Utah Medical's 160-employee plant, claiming its inspectors had uncovered several regulatory violations related to such things as validation protocols for computer software, review procedures for data analysis and other technical shortfalls.

The agency alleged similar violations in inspections conducted in 2001, 2002 and 2003 -- problems Utah Medical insisted had been addressed. The company also said it sought to use mediation to settle differences in interpretation on remaining issues, but the FDA sued instead.

The impact was immediate: In the three days after the Aug. 9, 2004 filing, Utah Medical's stock plunged from $26.75 to $17.50, or 35 percent. Then came rumors, possibly planted by competitors, of an impending shutdown and that the company itself was near collapse. The company countered with strategic stock repurchases to buoy its share prices, and offered loyal customers financial incentives to renew contracts, but the legal costs took a big toll on the bottom line, company officials said.

While Jenkins suggested both sides could have done a better job communicating with each other, he blasted FDA regulations cited in the case as having both "the virtue of generality and the vice of imprecision."

Calls to FDA headquarters seeking comment went unreturned. However, the Justice Department -- which tried the case for the agency -- issued a terse reaction.

"We are disappointed with the court's decision and we have made no determination as to what our next step will be," said spokesman Charles Miller.

Richard Nelson, president and CEO of the Utah Information Technology Association, said the ruling was "great news for Utah's high-tech community. "It's a solid decision, one that shows the FDA was overreaching in this case," he said.

News of the decision, which Jenkins had taken under advisement on Oct. 4 following a seven-day bench trial, was just breaking as markets closed Friday. Still, Utah Medical's stock was up to $26.28 per share in after-hours trading -- an 83-cent, or 3 percent jump from Thursday.

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Copyright (c) 2005, The Salt Lake Tribune

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UTMD,

Source: The Salt Lake Tribune

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