IN THE BUSINESS OF MEDICINE: WHY HOSPITALS SHOULD BE SUBJECT TO THE THEORY OF STRICT LIABILITY AS ANY OTHER SELLER.

• Author: Baulac, Sarah

INTRODUCTION

Drug pumps, pacemakers, and transvaginal mesh--each of these implantable medical devices (1) have saturated the courts with their own defect litigation in recent years. (2) Plaintiffs have alleged that the devices cause terrible pain, bowel problems, opioid overdose, and in the most severe cases, even death. (3) "[S]upersized federal court litigation" has attempted to hold ultra-profitable device manufacturers accountable for the devastation caused by these defective devices (4)

In 2020, the Food and Drug Administration ("FDA") recalled thirty-three additional medical devices. (5) The FDA categorized each of these as a Class I recall--denoting the most serious degree of risk. (6) The FDA defines a Class I recall as "[a] situation where there is a reasonable chance that a product will cause serious health problems or death." (7)

Considering the quantity and severity of recalls in 2020, it is unlikely that this "supersized federal court litigation" will slow down any time soon. (8) In fact, product liability cases swelled in 2019, and pharmaceutical and medical device manufacturers faced the brunt of these lawsuits. (9) Pharmaceutical and medical device companies topped the list of most active product liability defendants. (10) Recent jury verdicts have required medical device manufacturers to pay more than $1.9 billion to plaintiffs, in large part to compensate for injuries from defective hip implants. (11) Similarly, there are almost 15,000 hernia mesh device lawsuits structured as class actions currently pending against three other medical device manufacturers. (12) This is only a sample of the current litigation brought in attempt to compensate blameless plaintiffs for injuries that they sustained from so-called innovative, life-saving devices.

Although plaintiffs have slammed medical device manufacturers with litigation over defective products, courts have largely spared hospitals from liability for their roles in the cases. (13) Typically, manufacturers and those in the chain of product distribution can expect to be subject to strict liability when they sell a defective product. (14) However, "[a]n overwhelming majority of jurisdictions have refused to apply strict liability principles to claims against hospitals . . . involving the distribution of allegedly dangerous . . . medical devices." (15) Courts have fashioned this exception to the theory of strict liability, reasoning that hospitals (even though they are instrumental in distributing medical devices to patients) are not sellers of medical devices and that public policy should guard against this type of liability. (16)

This Note will consider whether a hospital should be subject to strict liability when it plays a role in the implantation of a defective medical device. The purpose of this Note is to expose the profiteering nature of hospitals and urge the judiciary to reconsider its treatment of hospitals in strict liability actions. Part I of this Note will set forth the rule for strict liability per the Restatement (Second) of Torts and explain the purpose of the concept.

Part II of this Note will focus on the current state of the law as it relates to hospitals and delve into why most courts have refused to apply strict liability to hospitals. It will use contract theory as an aid to explain the essence of the transaction between hospital and patient, and also describe a hospital's heavy participation in device selection and procurement. These concepts, together, will justify the theory that a modern hospital acts as a seller and is in the business of selling, thus it could properly be subject to the theory of strict liability.

Finally, Part III of this Note will address the policy reasons courts are reluctant to apply the strict liability doctrine to hospitals and prove that this reluctance is not well-founded. To do so, Part III will illuminate the economic maturity of hospitals and their ability to bear the imposition of strict liability. It will also explain how recognizing hospitals as sellers in the chain of distribution will better serve the public, maximizing their protection, in part, by inducing investments in testing and safety.

1. THE THEORY OF STRICT LIABILITY

   Strict liability is meant to protect the public. (17) The purpose of strict liability is, in part, to "insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves." (18) The Restatement (Second) of Torts provides the rule for strict liability:

   (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

   (2) The rule stated in Subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller. (19)

   Strict liability only applies "where the defective condition of the product makes it unreasonably dangerous to the user or consumer." (20) A product is "unreasonably dangerous" if it is "dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics." (21)

   While manufacturers are subject to strict liability, those acting as a link between product manufacturers and injured persons are not necessarily insulated from strict liability. (22) Those in the business of selling are typically subject to the doctrine, and "[i]t is not necessary that the seller be engaged solely in the business of selling such products." (23) The idea is such that:

   the seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public who may be injured by it; that the public has the right to and does expect, in the case of products which it needs and for which it is forced to rely upon the seller, that reputable sellers will stand behind their goods; that public policy demands that the burden of accidental injuries caused by products intended for consumption be placed upon those who market them, and be treated as a cost of production against which liability insurance can be obtained; and that the consumer of such products is entitled to the maximum of protection at the hands of someone, and the proper persons to afford it are those who market the products. (24) A claim for strict liability is different than a negligence claim due to the underlying policy reasons for the tort. (25) The rationale for strict liability is as follows:

   (1) the public interest in human life and safety demands broad protection against the sale of defective products; (2) the manufacturer solicits and invites the use of his products by representing that they are safe and suitable for use; and (3) the losses caused by defectively dangerous products should be borne by those who have created the risks and reaped the profits by placing the products into commerce. (26) An action in strict liability is, thus, focused on the nature of the product, and not necessarily the actions of the defendant. (27) Additionally, the rule "does not require any reliance on the part of the consumer upon the reputation, skill, or judgment of the seller who is to be held liable, nor any representation or undertaking on the part of that seller." (28)

   Historically, courts have been reluctant to impose liability on hospitals as providers of health care except under, inter alia, traditional negligence and malpractice grounds. (29) While there is usually no question that a medical device is a product, (30) imposing strict liability on hospitals typically turns on whether the hospital engaged in a sale of the device and the underlying policy considerations of hospital liability. (31)

2. HOSPITALS AS SELLERS

   Integral to determining whether hospitals should be subject to strict liability when a patient's implanted medical device is defective is deciding whether hospitals are in the business of selling that device. (32) A strong majority of courts hold that hospitals are not sellers of products. (33)

   The "leading case" (34) characterizing a hospital as a provider of services, and not a seller, is Perlmutter v. Beth David Hospital. (35) In Perlmutter, the plaintiff brought an action against the defendant hospital to recover damages for personal injuries sustained as a result of a transfusion of "bad blood." (36) The sharply divided court determined that the hospital did not sell the blood to the plaintiff. (37) Rather, the court reasoned that while the transfer of blood or title thereto may have occurred, the transfer was not synonymous with a sale. (38)

   The court considered "[t]he essence of the contractual relationship between hospital and patient," and noted that "when service predominates, and transfer of personal property is but an incidental feature of the transaction, the transaction is not deemed a sale." (39) The essence of the relationship between the patient and the hospital was one such "to obtain a course of treatment in the hope of being cured of what ails [the patient]," and "not to buy medicines or pills . . . [or] bandages or iodine or serum or blood." (40) "The patient bargain[ed] for, and the hospital agree[d] to make available, the human skill and physical materiel [sic] of medical science to the end that the patient's health be restored," and thus the "contract [was] clearly one for services, and, just as clearly . . . not divisible." (41)

   ...