Medtronic 2015 Annual Report Download - page 132

Medtronic plc
Notes to Consolidated Financial Statements (Continued)
(c) Includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 13).
(d) Relates to foreign currency cash flow hedges that were reclassified from AOCI to other expense, net or cost of products
sold and forward starting interest rate derivative instruments that were reclassified from AOCI to interest expense, net
(see Note 9).
16. Commitments and Contingencies
The Company and its affiliates are involved in a number of legal actions involving product liability, intellectual property
disputes, shareholder related matters, environmental proceedings, income tax disputes, and other matters. The outcomes of these
legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some
actions, the claimants seek damages, as well as other relief (including injunctions barring the sale of products that are the
subject of the lawsuit), that could require significant expenditures or result in lost revenues. When determining the estimated
loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of
probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to
predict, particularly when the matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve
unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines or punitive damages; or could result in
a change in business practice. In addition to the litigation contingencies referenced below, the Company also has certain
guarantee obligations that may potentially result in future costs. While it is not possible to predict the outcome for most of the
matters discussed below, the Company believes it is possible that costs associated with them could have a material adverse
impact on the Company’s consolidated earnings, financial position, or cash flows.
Product Liability Matters
Sprint Fidelis
In 2007, a putative class action was filed in the Ontario Superior Court of Justice in Canada seeking damages for personal
injuries allegedly related to Medtronic, Inc.’s Sprint Fidelis family of defibrillation leads. On October 20, 2009, the court
certified a class proceeding but denied class certification on plaintiffs’ claim for punitive damages. Pretrial proceedings are
underway. The Company has not recorded an expense related to damages in connection with this matter because any potential
loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company cannot reasonably estimate
the range of loss, if any, that may result from this matter.
INFUSE Litigation
As of June 1, 2015, plaintiffs had filed approximately 800 lawsuits against Medtronic in the U.S. state and federal courts,
reflecting approximately 1,500 individual personal injury claims from the INFUSE bone graft product. Certain law firms have
advised Medtronic that they represent a large number of similar claimants against Medtronic. The Company estimates those law
firms represent approximately 4,600 unfiled claimants. Medtronic recorded expenses of $37 million and $140 million in fiscal
years 2015 and 2014, respectively, related to probable and reasonably estimated damages and expenses in connection with these
matters. See “Accrued Certain Litigation Charges” within Note 1 for additional discussion.
Other INFUSE Litigation
On June 5, 2014, Humana, Inc. filed a lawsuit for unspecified monetary damages in the U.S. District Court for the Western
District of Tennessee, alleging that Medtronic, Inc. violated federal racketeering (RICO) law and various state laws, by
conspiring with physicians to promote unapproved uses of INFUSE. The Company has not recorded an expense related to
damages in connection with this matter because any potential loss is not currently probable or reasonably estimable under U.S.
GAAP. Additionally, the Company cannot reasonably estimate the range of loss, if any, that may result from this matter.
Pelvic Mesh Litigation
Covidien currently is involved in litigation in various state and federal courts against manufacturers of pelvic mesh products
alleging personal injuries resulting from the implantation of those products. Two subsidiaries of Covidien supplied pelvic mesh
products to one of the manufacturers named in the litigation and Covidien is indemnifying that manufacturer on certain claims.
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