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Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
119
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. As of April 29, 2016 and April 24, 2015, accrued certain litigation charges were approximately $1.0 billion and $879
million, respectively. The ultimate cost to the Company with respect to accrued certain litigation charges could be materially
different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s
consolidated earnings, financial position, or cash flows. The Company includes accrued certain litigation charges in other accrued
expenses and other long-term liabilities on the consolidated balance sheets.
In addition to litigation contingencies, 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 the Company'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
The Company estimates law firms representing approximately 6,000 claimants have asserted or intend to assert personal injury
claims against Medtronic in the U.S. state and federal courts involving the INFUSE bone graft product. As of June 1, 2016, the
Company has reached agreements to settle approximately 3,900 of these claims. The Company recorded an additional expense of
$26 million in the second quarter of fiscal year 2016 related to probable and reasonably estimable damages in connection with
this matter. The Company's accrued expenses for this matter are included within accrued certain litigation charges in other accrued
expenses and other long-term liabilities on the consolidated balance sheets as discussed above.
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. In September of 2015 the Court granted Medtronic’s motion to dismiss the
primary allegations, including the RICO claims, in Humana’s complaint. In April of 2016 the Court denied Humana’s motion to
file an amended complaint. 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
The Company, through the acquisition of Covidien, is currently 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, C.R. Bard (Bard), named in the litigation. The litigation
includes a federal multi-district litigation in the U.S. District Court for the Northern District of West Virginia and cases in various
state courts and jurisdictions outside the U.S. Generally, complaints allege design and manufacturing claims, failure to warn, breach
of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. In July 2015, the Company and
Bard agreed that Bard would pay the Company $121 million towards the settlement of 11,000 of these claims. The $121 million
settlement was recorded as an opening balance sheet adjustment related to the Covidien acquisition in the first quarter of fiscal
year 2016. That agreement does not resolve the dispute between the Company and Bard with respect to claims that do not settle,
if any. As part of the agreement, the Company and Bard agreed to dismiss without prejudice their pending litigation with respect
to Bard’s obligation to defend and indemnify the Company. The Company estimates law firms representing approximately 15,800
claimants have asserted or may assert claims involving products manufactured by Covidien’s subsidiaries. As of June 1, 2016, the
Company has reached agreements to settle approximately 6,200 of these claims. The Company's accrued expenses for this matter