By Kevin O’Reilly, Right to Repair Campaign Director, U.S. PIRG
You read that right: a North Carolina jury found Philips’ Right to Repair restrictions illegal under the state’s Unfair and Deceptive Trade Practices Act. Among other wrongdoings, evidence presented made the case that Philips sought to make hospitals that pursued independent repair “suffer” and “feel some pain.”
We’ve long argued that locking hospital and independent biomedical repair technicians out of fixing critical medical equipment is bad for patient safety and increases health care costs. But getting this ruling from the courts is a big deal. It’s confirmation that the repair restrictions we campaign against are wrong – and it could springboard future Right to Repair victories.
How did Philips illegally restrict Right to Repair?
Andy Wheeler and his late father, Dan, went into business together nearly a decade ago. Their vision for their company, Transtate Equipment Co., was to provide hospitals with an independent, full-service option for buying, installing and servicing cath labs – medical devices used to diagnose and treat patients who suffer certain strokes and some of the most severe types of heart attacks.
Independent service organizations (ISOs) such as Transtate (which has since been acquired by Avante) provide hospitals with important alternatives to manufacturer repair. In many cases, ISO repair can be the more timely and affordable option. In 2018, the Food & Drug Administration (FDA) even concluded that “the continued availability of third-party entities to service and repair medical devices is critical to the functioning of the U.S. health care system.”
But early on, the Wheelers ran into a problem all too common in the medical device servicing world. Philips, like makers of medical devices ranging from ventilators to infusion pumps, restricts access to necessary repair materials. The manufacturer refused Transtate’s requests for access to the information and software required to fix Philips’ Allura and Azurion cath labs – or even training to justify access to those materials.
A manufacturer refusing repair access probably isn’t news to you. What is news is that Transtate’s claims were confirmed by the jury, which found that “Philips refused to provide documents, programs, or information necessary to perform repair and maintenance on systems, in a timely or unhindered manner, to Transtate … so that they could properly service Allura and Azurion cath labs and/or CT systems.”
In addition to proving the limitations that Transtate itself faced, it was able to prove broader wrongdoing. The jury ruled that “Philips refused to provide training to ISOs including Transtate … that Philips says is required to service its medical systems, even where the ISOs are willing to pay for such training.” Philips was also found to have “deliberately delayed service or response to Transtate.”
With these rulings, the jury made clear that stonewalling hospitals’ and ISOs’ requests for repair materials, as Philips did, is illegal.
Hospitals without service contracts made to ‘suffer’ and ‘feel some pain’
Some of the most shocking (publicly available) evidence presented in the case suggests that Philips sought to punish hospitals that pursued independent repair rather than signing a service contract with the company by delaying service response.
These lucrative service contracts are a significant reason that manufacturers restrict repair in the first place. That was the argument that Rep. Neil Dunn (FL) made in a congressional subcommittee meeting last summer. The idea to lock out independent repair of the linear accelerators he uses in his cancer treatment clinic, he said, was “probably born in a C-suite somewhere where they’re saying, ‘We’re leaving 30% on the table. We should probably service our own equipment.’ I love these machines … but, I think the C-suite is wrong in this case.”
Ostensibly, Philips delayed service to protect that service revenue. Transtate presented evidence that a North Carolina field service engineer (FSE) was “instructed by Philips to not provide same-day service for customers that did not have service contracts with Philips; ‘If they don’t have a contract, they’d have to suffer.’ ” Similarly, an FSE was told to make non-contract customers “feel some pain.”
It’s particularly shocking to hear that kind of language in the context of devices that are used to treat patients who have suffered strokes and heart attacks. How is delaying the repair of cath labs in the best interest of anyone or anything other than the manufacturer’s bottom line? Here, service revenues were clearly prioritized over patient safety. That’s a problem – and one that makes the call for change that much more urgent.
What the Philips ruling means for the Right to Repair movement
Digging into the legal weeds, the fact that the company’s practices were found unfair and deceptive is significant. While a Texas jury ruled in 2017 that General Electric had a monopoly on the servicing and sale of anesthesia machines, proving that a manufacturer has monopolized a given market is very difficult. Indeed, many device-makers haven’t. That makes it difficult to replicate and build upon the result to increase hospitals’ repair choices.
Unfair and deceptive practices, however, do not rely on a manufacturer’s market share – it is the nature of the practice that matters. This precedent could help deliver pro-Right-to-Repair outcomes in future lawsuits against other device-makers.
Does that mean we put all of our eggs in the legal basket? Absolutely not. We need to continue pushing for Right to Repair legislation to require manufacturers to put repair materials in the qualified hands of hospital and ISO biomeds. In doing so, we might just reduce the amount of “pain” and “suffering” felt by independent fixers and patients alike.
Kevin O’Reilly is PIRG’s Right to Repair campaign director. Follow him on Twitter and LinkedIn.
