healthronics getting suedPosted by Scott R on 9/29/03 at 09:55 (131620)
'The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market, and by failing to disclose material information that plaintiffs contend defendants had a duty to disclose, between January 4, 2000 and July 25, 2003. More specifically, the complaint alleges that defendants made material misrepresentations and/or omitted to make material disclosures during the Class Period concerning the efficacy, testing and market acceptance of OssaTron®, its leading product for the treatment of heel pain. Among other things, the complaint charges, defendants failed to disclose that some of the Company's own tests failed to support defendants' statements that OssaTron® was more effective, safer and less costly than alternative, non-surgical treatments for heel pain. In addition, the complaint alleges that defendants misrepresented the market acceptance of OssaTron® because Defendants knew, or were severely reckless in disregarding at the time these statements were made, that serious questions existed among the medical community concerning the effectiveness of extracorporeal shock wave treatment (ESWT) for heel pain, which in turn raised serious issues as to whether insurance carriers and other third party payors would cover OssaTron® procedures. As a result, and because the Company was experiencing difficulty in its billing and collection department, which further made insurance reimbursement difficult to obtain, the complaint claims, the company's January 28, 2003 earnings projections lacked any reasonable basis in fact when made. '
Re: healthronics getting suedDr. Z on 9/29/03 at 12:08 (131627)
Could you tell Dr. Z where you can find the full complaint
Re: healthronics getting suedScott R on 9/29/03 at 13:35 (131636)
Re: healthronics getting suedBrianG on 9/29/03 at 20:03 (131678)
God, I hate class action suits. Only the lawyers will win. BUT, if anyone out there has had the Ossatron treatment, and is not 92% happy, it would be wise to read this article! I have to wonder if this will be contagious? Also, could this be why the European ESWT providers are mostly all low strength?
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 20:20 (131679)
ScottR, Dr. Z:
Whew, 50 pages long. My initial reaction is that it is primarily an action based on investors attempting to recoup securities losses. There are many such suits out there. The interesting accusation is that of Healthtronics not anticipating the market response, ie. reaction from the payors. That is a tough one. Companies bringing products to market have to anticipate an optimistic response otherwise they cannot bring those products forth. The attorneys brought up the flawed Buchbinder study which has largely been discredited. Interestingly, they brought forth the decision from my state's workers comp. carrier, the Washington State Dept. of Labor and Industries. That 47 page report shows considerable evidence supporting ESWT, minimal evidence against ESWT and then , on the last page states that the evidence is 'inconclusive.' A number of us looked at that report and shook our heads.
Sometimes the Healthtronics people would shoot themselves in the foot as they did not seem to mind criticizing competing technology.
As far as I am concerned this is another obstacle thrown in the path of technology that is helping people and a testament to the sad state of affairs the political end of healthcare is in the US.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 20:26 (131680)
I cannot see the connection between this situation and the use of low energy in Europe. Conversely, I can see a connection between the current state of political affairs in US healthcare and the slow progress of low energy ESWT in the US. Talk about obstacles-- one has to have titanium testicles to introduce a new technology in this country.
We have some of the best docs in the world and some great scientists but the politics of healthcare in our country are really pathetic at times.
Re: healthronics getting suedDr Z on 9/29/03 at 20:27 (131681)
This isn't about the technology ESWT. This is about Healthronics and what they told their stockholders. We all know that ESWT is more expensive then plantar fascia surgery.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 20:33 (131683)
I am not one of their shareholders so I don't know the whole story. Much of the complaint is based on Healthtronics too optimistically predicting market acceptance --- that is a hard call, I just cannot envision many companies bringing a product to market without some reasonable optimism.
What is reasonable? Who knows? Maybe the jury, if it makes it to court.
The complaint also states that Healthtronics product is not as efficacious as the company claims but uses flawed data to make that claim, in my opinion.
Re: healthronics getting suedBrianG on 9/29/03 at 20:57 (131686)
I hope there are no roof jumpers out there. HTRN has lost about 50% of it's value since summer time. I looked at it when it went public, but I was already taking a bath with PALM. I just can't buy a break !!!
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 21:06 (131687)
It was speculative buy to begin with. The stocks that have done the best in the last market downturn include many of the health insurance companies.
Re: healthronics getting suedScott R on 9/29/03 at 21:19 (131688)
the lead plaintiff 'Thomas Thomas' bought $910 worth on 6/3/2003 and sold for a loss of $300 on 8/8/2003, after the severity of the outlook was more carefully judged and reported by healthtronics, although the charges date back to 2000.
2.5 years ago i tried to get them to explain how insurance reimbursement would be possible, but they weren't able to convince me that it was, despite their insistent optimism.
Re: healthronics getting suedPeter R on 9/29/03 at 21:49 (131690)
I am suspicous of the recent heavy stock selling activity among the Healthtronic personal named in the lawsuit. The vp also sold options she had at $1-$3/share at around $12.
Re: healthronics getting suedPeter R on 9/29/03 at 21:52 (131691)
Will we now see legal action by those who had ossatron treatments and who are unhappy with the results. Like the stockholders they can also claim that they were also misled.
Re: healthronics getting suedDr Z on 9/29/03 at 21:54 (131692)
Healthronics should have know that their product was just too expensive in this healthcare market. They should have known that foot surgery is cheaper then ESWT with their model.
I agree with you regarding the flaw information used to make the allegation that Healthronics overstated the effectiveness of the ossatron
Maybe this will completely change the model for the ossatron from an ASC model to an office based model.
If Healthronics had listen to Dr. Z years ago when I approached them with the mobile unit model things would be different.
Re: healthronics getting suedDr Z on 9/29/03 at 22:00 (131693)
It is my opinion that this entire lawsuit is only about the stockholders and the mis-information that they received about how the healthcare market and insurance companies will take hold of the ossatron ESWT product.
The FDA study was very straight forward. How do you see ossatron patients being mis-led. I just don't see the correlation.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 22:23 (131695)
THAT is a good find. One of the dilemnas that Healthtronics is dealing with is that their treatment model is an expensive one. That is a tough sell in a tight healthcare market -- something that would have taken off a lot easier in the 1980's. They are utilizing technology which I view as already one generation behind. Yes, their machine works. I have not used one of their machines in 8 months because I can offer Dornier machines at a lower cost and low energy technology, Sonocur at a lower cost yet.
Intsead of arguing about was really wrong with the Buchbinder study, they waved the darn thing around claiming that all the Buchbinder study did was show that Dornier had inferior technology. I warned them that that strategy would backfire.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 22:27 (131696)
As in my response to Peter below, their treatment model was to expensive and needed to be revised. The healthcare market was too tight for their model. Did they mislead investors on purpose? I tend to doubt it in the early stages but they had to figure out something was wrong by last Spring. Peter notes insider stock sales. They actually seemed to think they could use the Buchbinder study to bash Dornier when they should have been pointing out its real flaws and revising their treatment model.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 22:34 (131697)
Predicting the response of the insurance industry is tricky. They generally view new services as 'add on' expenses. It is very difficult to convince them that a new service will save them money. In theory, a worker's comp. carrier should embrace the concept because they pay both the health insurance bill plus time loss. The time loss payments in plantar fascial release surgery can be enormous as you could predict.
Re: healthronics getting suedEd Davis, DPM on 9/29/03 at 22:38 (131699)
Part of the suit involves a claim against the technology itself so that could be the source Peter sees. I do think that that portion of the lawsuit will go down in flames and could even hurt the rest of the lawsuit if too much of the suit relies on that premise.
Re: healthcare market placeEd Davis, DPM on 9/30/03 at 00:41 (131704)
As a corollary to your comments and mine, we need to remind readers that the healthcare market place is very different from many, if not most industries -- it is not a free market. The health insurance industry generally sets fees by fiat (supposedly by negotiations with providers but that is a myth, to say the least). The health insurance industry by electing to cover certain services and not others, controls, to an extent what services are provided and in many areas of the country (eg. California) by whom. Unlike other industries, the purchaser of the service and the utilizer of the service are different entities -- decision making by the utilizer can be limited.
In a hypothetical free healthcare marketplace, ESWT would have taken off like a rocket, in my opinion. Of course, Healthtronics knew they were not entering a free market. How well understood by the shareholders? My guess is that that level of awareness is not widespread.
Re: healthronics getting suedJan R. on 9/30/03 at 07:06 (131709)
I do not want to comment on the legal aspects of this conflict.
However, there are obvious discrepancies between scientific results and those results made available to the public by HealthTronics.
For example, only a few moths ago, HeathTronics received FDA approval for ESWT to treat tennis elbow (http://www.fda.gov/cdrh/pdf/p990086s003.html)
Let´s have a look at their 'Effectiveness Analysis':
'a. Investigator Assessment:
The subjects randomized to active ESW treatment improved from a mean baseline VAS score Forty-three of the 82 subjects (52.4%) randomized to active ESW treatment met the success criteria for this parameter. Twenty-six of the 83 subjects (31.3%) randomized to placebo ESW treatment met the success criteria (minimum 50% improvement and VAS score of 4.0 or less) for this parameter. The difference between the active treatment and placebo group was statistically significant.
b. Subject Self-Assessment of Pain:
Forty-eight of the 82 subjects (58.6%) randomized to active ESW treatment met the success criteria (minimum 50% improvement and VAS score of 4.0 or less) for this parameter. Thirty-six of the 83 subjects (43.4%) randomized to placebo ESW treatment met the success criteria (minimum 50% improvement and VAS score of 4.0 or less) for this parameter. The difference between the active treatment and placebo group was not statistically significant.
c. Use of Pain Medications:
Seventy-one of 82 subjects followed to 8 weeks (86.6%) randomized to active ESW treatment met the success criteria for this parameter. Sixty-one of 83 subjects followed to 8 weeks (73.5%) randomized to placebo ESW treatment met the success criteria for this parameter. The difference between the active treatment and placebo group was not statistically significant.
d. Overall Success/Fail Status:
Of the 82 subjects followed to 8 weeks after an active OssaTron ESW treatment, 33 (40%) met all 3 success criteria, compared to 20 of 83 placebo treated subjects (24 %) who met all 3 criteria. The difference between the active treatment and placebo group was statistically significant.
The majority of the treatment effect was observed in the blinded evaluator's assessment of elbow pain. The subjects' self-assessments of pain with activity did not indicate large treatment differences through 8 weeks, and were not statistically different. The active treatment subjects showed greater improvement use of pain medications and in SF-36 scores than did placebo subjects. However, none of the primary or secondary outcome measurements demonstrated statistically significant treatment differences.'
Now, what do we read when clicking at 'NOW FDA APPOVED TO TREAT TENNIS ELBOW (http://www.healthtronics.com/ossatron/le_index.html)?
'What Are The Expected Results?
90% of patients receiving Orthotripsy® with the OssaTron® received a benefit with only one treatment. Some patients have reported immediate pain relief after treatment, although it can take up to four weeks for pain relief to begin.'
'The OssaTron® has a proven success rate that is equal to or greater than surgery, usually with just one treatment and without the risks, complications, and lengthy recovery time of invasive surgery. The OssaTron® treatment procedure requires a minimal amount of time and patients can go home the same day the OssaTron® procedure is performed. Patients can return to normal activity within a few days of the procedure.'
In my opinion, data provided on this website do not agree with the data provided in the FDA trial. The information on this website mislead the public.
Re: healthronics getting suedPeter R on 9/30/03 at 07:15 (131710)
I didn't mean to imply that I thought that there was any legal basis for a class action suit against the technology nor was I advocating that there should be one. However, lawyers are always trolling for opportunities to start legal actions like hookers on a dark dowtown street trolling for johns. I believe that an investor bears the major amount of the resposibility in assuring that their monies are being invested soundly. As in many other aspects of life people are more and more ignoring the 'R' word. RESPONSIBILITY -Take responsibility for your actions- people probably spend more time reading the label on a box of breakfast cereal than we do reading the prospectus of a company they are going to invest in.
A masochistic lawyer married a sadistic lawyer. On their honeymoon she put on her sexiest business attire and said 'Sue me' and he said 'NO'
Re: healthronics getting suedPeter R on 9/30/03 at 08:24 (131722)
Another lawsuit filed this morning against Healthtronics
Re: healthronics getting suedEd Davis, DPM on 9/30/03 at 10:09 (131734)
In fairness, there is so much gobbledygook in the prospectus, which also is written by attorneys, that many would get very little good information by that read. One basically has to know how to read 'between the lines.'
Presumably, when one uses a 'full service' broker, the client is paying for a fair evaluation of the equity in question.
Most of the action is disagreeable because, as you pointed out, it is an attempted transfer of responsiblity that people try to get away with because the legal system allows it.
Re: healthronics getting suedEd Davis, DPM on 9/30/03 at 10:13 (131735)
There are other studies on this that show better numbers. ESWT works for tennis elbow but the Ossatron would probably not be the machine of choice for tennis elbow. A smaller focal spot and lower energy may be better in this circumstance. Sort of a big hammer for a small nail.
Re: healthronics getting suedJan R. on 9/30/03 at 10:26 (131737)
Which studies do you refer to? I am only aware of similarly negative results from randomized controlled trials: Crowther, JBJS [Br]2002; Speed, J Orthop Res 2002; Haake, JBJS [Am] 2002; Melikyan, JBJS [Br] 2003)
And which device would you prefer?
Re: healthronics getting suedEd Davis, DPM on 9/30/03 at 10:40 (131738)
Remember that the Sonocur entered the market via FDA approval for tennis elbow in July 2002. The ismst.com web site has large numbers of studies on various applications. Perhaps David Lowy of Sonorex may see this string to let us know the specific studies used in the approval of the Sonocur.
Re: Jan R. = Jan Rompe ?Ed Davis, DPM on 9/30/03 at 11:43 (131742)
Is that you?
Re: healthronics getting suedDavid L on 9/30/03 at 11:45 (131743)
The study to which you refer (FDA Clinical Trial) that was used for the approval of the Sonocur Basic can be viewed at
Re: healthronics getting suedDr. Z on 9/30/03 at 13:50 (131749)
The ossatron still met the FDA criteria to receive its PMA. How it magnified these results may be another story. There is no question that the ossatron met all of the criteria to receive a pma from the FDA. There is no challange to this study that I am aware of.
Re: healthronics getting suedTed B on 9/30/03 at 20:12 (131797)
We at Lithitron Limited recognized the pricing problem Healthtronics would have in this market. The $500,000 price tag takes it our of reach of most in the field. Our OrthoLith unit has been approved for FDA testing that will commence in about 30 days. Using high energy shock wave this revoluntionary design of a fully portable unit that will sell for under $200,000, and be leased for under $4,000 per month, will bring this technology within the financial capabilities of most in the field. Certainly the use of high energy, as opposed to the low energy units on the marjket, will open this treatment protocol to the entire market.
Re: Jan R. = Jan Rompe ?Jan R. on 10/01/03 at 02:25 (131819)
Re: healthronics getting suedDr Z on 10/01/03 at 11:02 (131829)
Could you give me a web site for additional information. Always looking for good high energy eswt machine. Where are you located. Any additional information would be appreciated
Dr. Zuckerman ]1-856-848-3338
Re: healthronics getting suedTed B on 10/01/03 at 12:11 (131835)
Our Webb Site is in the process of construction. My offices are in Oklahoma with my mnaufacturing facility in Wisconsin. This newly designed Lithotripter is an outgrowth of the technology I pruchased in 1996 from a group of Urologists in Ohio who has started their Human Trials. The story as to why they didn't comptete them is too long to relate other than it has nothing to do with the efficacy of the units I purchased. We deteermined through our market studies that both the Urologists and the Orthopedists wanted a smaller, portable and less costly unit. We now have a unit 34'x32'x46' that will meet not only the medical needs of the pyhsician but the cost limitations also. We have FDA approval for our Human Trials for both the Kidney Stone and Plantar Fasciitis applications. The same basic unit is applicable to each area except the Urology unit has the treatment head in a different position and is designed to work with the C-Arm. We will price the OrthoLith at $175,000 and the UroLioth, without the C-Arm, at $185,000. Both units will be available on a 5 year lease for less than $4,000 per month with a $0.15 per shot fee that will include the Electrodes, Membranes and the chemical water additive. The unit is designed with the most modern and up-to-date electronics for easy and efficient servicing.
Re: healthronics getting suedTed B on 10/01/03 at 12:43 (131839)
THE ABOVE INCLUDES THE CORRECTIONS IN TYPOS!
Re: Jan R. = Jan Rompe ?Ed Davis, DPM on 10/01/03 at 13:01 (131840)
Welcome again. There has been quite a bit of research activity in the last year and I expect some interesting papers to be published in the next 4 months or so. Werber and Norris have a study that I have read (but they could not give me a copy)and can be disseminated as soon as it is accepted (within the next few weeks) and is particularly good. My email is (email removed) Please send me your email address and I will try to get the information to you as it becomes available.
Re: Jan R. = Jan Rompe ?Dr Z on 10/01/03 at 15:45 (131858)
Is this the dornier epos high energy study you are talking about?
Re: healthronics getting suedScott D. on 10/01/03 at 16:03 (131863)
Am I correct in understanding from your post that you have approval from the FDA to do clinical trials on each of these machines in the hopes of then marketing them? Or have you already received approval from them to market these products?
Re: healthronics getting suedDr Z on 10/01/03 at 16:42 (131867)
Sounds like an approval to do FDA double blind studies
Re: healthronics getting suedTed B on 10/01/03 at 17:11 (131872)
FDA has asaked us to do 15 pateints for the safety factor. Not a double blind study. We anticiapte they will require more but feel that with the previous studies done on Plantar Fasciitis they will be minmum. In the Urology area we will use a 510K which requires on 20 oatients due to the fact the Lithotripsey is a Class 2 device and non-critical. Thank you for your interest.
Re: healthronics getting suedDr Z on 10/01/03 at 17:15 (131873)
Do you realize that you will have to do a class three double blind study with a minimum of 150 patients ? The initial 15 patient study is required before they ( FDA) allows you to move forward with the double blind study. typical time frame for your completion is about 18-24 months from what I have seen. Any thoughs ?
Re: healthronics getting suedTed B on 10/01/03 at 17:24 (131875)
We have our IDE approval for hunan trials in each specialty. In that the technology that I purchased had already been involved in human trials in the Urology field this becomes an expensive formality. We know our design is the most efficient in the market place our unit being only 34'x32'x42'. The onl;y difference between the OrthoLith and UroLith is the placement of the treatment head and the design of the UroLith to accept the C Arm. The sales price of these most advanced units will be $175,000 for the OrthoLith and $185,000 for the UroLith without the C Arm. If we can furnish you with any further information please contact us.(800)416-7323 or (email removed)
Re: healthronics getting suedTed B on 10/01/03 at 17:36 (131876)
We reognize the time frame in the Orthopaedic field but will have a much shorter period for the Urology trials. We aniticpate the UroLith unit to be on the market first and serve in part as the funding vehicle for the OrthoLith testig. We have in place 3 high traffic locatioins for the Orthopaedic human trials thus, we feel, shortening the period to our PMA considerably. Would enjoy meeting you. What part of the country are you ocated?
Re: Jan R. = Jan Rompe ?Ed Davis, DPM on 10/01/03 at 18:12 (131883)
Yes. Werber is president of ACFAS and practices in Rhode Island, where, according to Dr. Norris of United, the procedure is widely covered for both on label and off label uses. That is why Werber was able to obtain such a large sample size.
Re: Jan R. = Jan Rompe ?Dr Z on 10/01/03 at 18:19 (131887)
Great. I can't wait to see this in print !!!
Re: Law Suit #3Peter R on 10/01/03 at 20:37 (131895)
Link to law Suit #3
Re: Law Suit #3Dr Z on 10/01/03 at 20:54 (131896)
How can you have a class action suit by three different law firms when the claims is the same? I though a class action suit was one lawyer or law firm representing the interests of a class of people with the same claim.
Any lawyers out there.
Re: Law Suit #3Ed Davis, DPM on 10/01/03 at 21:01 (131897)
I was of the same impression.
Re: Dr. Z must be boredDr Z on 10/01/03 at 21:46 (131899)
Republicans file class action suit against Heelspurs.com . The allegation
is lack of file space on the social board. Supreme Court will hear complaint today after the jduge visits his podiatrist. Depending on how well the podiatrist makes his orthosis will determine his ruling. Seriously I miss the social board.!!
Re: healthronics getting suedScott D. on 10/02/03 at 08:13 (131924)
Do you know what the dimensions of the EPOS are? I wasn't sure myself so I just went and measured it, it's 36'x22'x40'.
If the FDA finds out that you are marketing your new device before receiving approval to do so do you think you will have any chance of ever getting it approved??
Re: healthronics getting suedTed B on 10/02/03 at 10:00 (131936)
Please be advised that we are not marketing our units but merely releasing information as the level of development of our project and where we project our market pricing. We made it very clear that only with the final approval from the FDA would the unit be available. We made no comparisons with any other device on the market and made no claims as to efficacy or any comparison to the efficacy to any other unit on the market We have merely indicated the results of our market studies and our engineering to meet the needs of the professions based on those market studies. Any claim that we are attempting to market our units prior to FDA approval is a total and misdirected assumption on your part!
Re: healthronics getting suedDr Z on 10/02/03 at 20:34 (132016)
I agree with you 100%. I appreciate your information. Thanks
Re: healthronics getting suedTed B on 10/02/03 at 21:24 (132018)
Thanks for your assurance on the positions we have taken in the development of our product. It is always very satisfying to have members in the profession who have had your experience be in agreement with our position. Let's keep in touch!
Re: healthronics getting suedDr Z on 10/02/03 at 21:48 (132019)
It is companies like you that will eventually change the world of ESWT and make it widespread. Good luck.