KINETIC CONCEPTS, INC., v. HILLENBRAND INDUSTRIES, INC., (W.D.Tex. 2003)

FRED BIERY, United States District Judge

The case before the Court technically involves an antitrust controversy about hospital beds, the latest in a long running series of lawsuits among several related corporations. In a larger sense, it is about two good up-by-the bootstrap families who have done much to improve healthcare, and who have been blessed with enormous wealth as a result of their innovations, but who have a propensity to sue each other if one perceives wrongdoing by the other. Of course, the one being sued thinks the other is filing frivolous claims.

See e.g., Hill-Rom Co. Inc. v. Kinetic Concepts, Inc., 209 F.3d 1337 (Fed. Cir. 2000); Kinetic Concepts, Inc. v. Support Sys. Int'l, Inc. SSI Medical Servs., Inc., SA-91-CA-0927 (W.D. Tex. 1994).

A Farmer came to a neighboring Lawyer, expressing great concern for an accident which he said had just happened. One of your Oxen, continued he, has been gored by an unlucky Bull of mine, and I should be glad to know how I am to make you reparation. Thou art a very honest fellow, replied the Lawyer, and wilt not think it unreasonable that I expect one of thy Oxen in return. It is no more than justice quoth the Farmer, to be sure; but what did I say? — I mistake — It is your Bull that has killed one of my Oxen. Indeed says the Lawyer, that alters the case: I must inquire into the affair; and if — And If! said the Farmer — the business I find would have been concluded without an if bad you been as ready to do justice to others as to exact it from them.

What were once the classical professions helping people with the physical, legal and spiritual challenges of life are now the medical and legal "industries," and institutions of the clergy threaten bankruptcy to protect silver chalices and earthly wealth from claimants and creditors. While these changes have negative implications, positives exists as well, in this instance the technological creations plaintiffs and defendants have brought to the alleviation of patient suffering.

Suzenne Goldenberg, Boston Archdiocese Threatens Bankruptcy, THE GUARDIAN, Dec. 3, 2002, available at http://www.guardian.co.uk/Print/0,3858,4559359,00.html.

The cycles of health and disease and life and death have been extant on this small planet since the Cambrian Era and beyond six hundred million years ago. The context of this case is the recent blink of the past seventy-five years of health care in the United States.

In a more simple time, the Leininger and Hillenbrand ancestors tilled the soil in Indiana. Dr. James Clarence Mudd of Springfield, Kentucky, assisted by his granddaughters opening farm gates, ministered to the sick and wounded. Dr. Joaquin Gonzalez of San Antonio, Texas, made house calls to patients, using his wife's vintage handbag to carry tools of his profession until he could afford a proper physician's valise. Exercising their medical arts, and often compensated with poultry and produce, the bedside manner was no doubt excellent but infant mortality was high, poho crippled, life spans were short and medical technology incipient. Some would say the good old days were not all that good.

See generally Dr. J.C. Mudd Died Suddenly Saturday Night, SPRINGFIELD KY. NEWS, Dec. 3, 1945.

See generally The Medical News, (Bexar County Med. Soc'y, San Antonio, TX), May 1978, at 7; Sept. 1979, at 3.

In the mid to late twentieth century, an amendment to the social contract evolved resulting in the chickens and vegetables being replaced with pictures of George Washington and Abraham Lincoln sent by public and private third-party payors. Physician incomes rose exponentially. The infusion of capital enabled medical science to augment medical art to delay death — even though nature still bats last.

See Jonathan B. Oberlander, Managed Care and Medicare Reform, 22 J. Health Pol., Pol'y L. 595, 597 (1997) (although medical profession opposed Medicare, prepaid group plans and HMO coverage as introduced in the post World War II era, opinions seemed to change when monthly payments began being made). Court research can find no instances of U.S. physicians who do not take payments from insurance companies or government sources.

Compare physician incomes, which rose from an average of $13,432 in 1951, to $195,500 in 1995, see Phillip L. Burnstein Jerry Cromwell,Relative Incomes and Rates of Return for U.S. Physicians, 4 J. HEALTH ECON. 64, 65 (1985) (1951 through 1980); AMA CENTER FOR HEALTH POLICY RESEARCH, SOCIOECONOMIC CHARACTERISTICS OF MEDICAL PRACTICE 1988 (Martin L. Gonzalez David W. Emmons eds., 1988) (1978 through 1987); AMA CENTER FOR HEALTH POLICY RESEARCH, SOCIOECONOMIC CHARACTERISTICS OF MEDICAL PRACTICE 1997 (Martin L. Gonzalez ed., 1997) (1985 through 1995), with the annual minimum wage, which rose from $1,500 to $8,500 during this same time period. See 29 U.S.C. § 206 (including Historical and Statutory Notes).

The professional heirs of Drs. Mudd and Gonzalez are now often corporate employees caught between ancient Hippocratic devotion to patients and social policy questions of allocation of resources, and between historic vows of service when health care was the domain of religious and charitable institutions and modern business organizations seeking profit from human suffering and owing allegiance to stockholders, not patients. It might even be said that health care in America is the modern version of the Golden Rule: Those who have the gold rule.

The reasonable balance sought by people of goodwill to the challenge of fairly and efficiently sharing the blessings of better health and longevity for the most part must be struck in the market place and in the political laboratories of the elected legislative and executive branches of government. Before this part of the judicial branch, however, is now the latest chapter in this medical-legal dispute.

Jury Verdict and the Proposed Resolution

Instead of anarchical violence, the parties came to court for the trial process of resolving their dispute. Extraordinarily able counsel and their staffs prepared and presented the facts and law.

After four weeks of trial, a jury of eight citizens, several of whom are employed by corporations even larger than those in this case, found unanimously in favor of plaintiffs on all issues submitted. The jury system worked, just as it has for hundreds of years, and just as Mr. Hamilton and his compatriots intended.

The friends and adversaries of the plan of the convention, if they agree on nothing else, concur at least in the value they set upon the trial by jury; or if there is any difference between them it consists of this: the former regard it as a valuable safeguard to liberty, the latter represent it as the very palladium of free government.
THE FEDERALIST No. 83, at 491, 499 (Alexander Hamilton) (Clinton Rossiter ed., 1961).

The Court observes that counsel could have switched sides and it would of course not have changed the evidence or credibility of the personalities being evaluated by the jury. Nor would different lawyers have changed the jury's conclusion in its search for the Truth.

Nevertheless, the factual verdict is but another step along a very long road. Both sides face continuing legal expense and distraction from their business missions. Most importantly, neither party knows how this Court or the appellate courts will rule on legal issues and sufficiency of evidence questions if they risk going for the Whole Enchilada.

A South Texas phrase for which the Court can find no citation, but assumes the reader will get the picture or ask a South Texan for definition.

Conclusion

There is a concept in less materialistic Eastern religious thought that power and privilege and wealth corrupt the soul. The Western rural expression of that idea is "pigs get fat; hogs get slaughtered."

To none of the good people in this controversy do those aphorisms apply, as evidenced by the reasonable proposal, outlined in Appendix A, to compromise their differences and, hopefully, evolve beyond their litigious era. Should that metamorphosis not occur, the Court may invoke its inherent power to require these corporate and community leaders to kiss on the lips in front of the Alamo.

Accordingly, the proposed settlement is APPROVED by the Court, and IT IS HEREBY ORDERED that this case is DISMISSED. All motions pending are also DISMISSED AS MOOT.

PEACE.

APPENDIX A Kinetic Concepts, et al. v. Hillenbrand Industries, Inc., et al. SA-95-CA-755-FB KINETIC CONCEPTS REACHES SETTLEMENT ON ANTITRUST AWARD San Antonio, Texas, December 31, 2002 — Kinetic Concepts, Inc. ("KCI) today announced that it has settled its anti-trust lawsuit with Hillenbrand Industries, Inc. and Hill-Rom Company (together "Hillenbrand"). Under the settlement, Hillenbrand agreed to pay KCI up to $250 million. The parties released each other from all claims relating to the litigation. In connection with the settlement, the parties will ask the United States District Court for the Western District of Texas, San Antonio Division to dismiss the lawsuit with prejudice. Upon dismissal of the lawsuit by the court, Hillenbrand will pay KCI $175 million. Pursuant to the terms of the settlement agreement, Hillenbrand will pay to KCI an additional $75 million one year following the payment of the initial settlement amount, subject to certain conditions.

Kinetic Concepts, Inc. develops and markets innovative therapeutic healing systems that address skin breakdown, circulatory problems and pulmonary complications associated with patient immobility and chronic wounds. The Company's healing systems include specialty beds, mattress replacement systems. negative pressure wound therapy and related medical devices. Kinetic Concepts serves hospitals, long-term care facilities and patients in home care settings both in the U.S. and abroad.