(Jan. 28, 2020) — A woman whom a jury awarded substantial damages last fall in a medical device lawsuit has filed another suit against Rex Medical L.P.; however, this second lawsuit complaint names three of the company’s top executives as co-defendants in a scheme to defraud the company’s creditors.
The Reed-Brown Fraudulent Conveyance Complaint accuses the three of enriching themselves at the expense of Rex Medical and its creditors, including the woman and other plaintiffs suing the company over the Option IVC filter’s alleged problems, of which Rex was aware or should have been aware.
The suit, filed December 23, 2019, charges that the three transferred virtually all of Rex’s working capital into their own personal accounts one week after the first lawsuit was filed alleging defects with Rex’s vena cava filters, and the company faced a spate of similar litigation. The complaint alleges the three made the large cash transfers to deliberately bankrupt Rex Medical in order to avoid paying for damages the three knew would likely be levied.
$34 Million Verdict against Rex Medical
The case stems from November 2019, when a Philadelphia jury ruled that the Rex Option IVC filter was defective. They awarded Georgia’s Tracy Reed-Brown $34 million in damages. Jurors heard testimony of how surgeons were unable to remove the filter which had perforated outside the vena cava, a vein that returns blood to the heart from the lower body. Attorneys for Ms. Reed-Brown told the jury she lives in constant peril, as the filter’s struts (or legs) continue to progressively perforate into vital organs such as her aorta and pancreas, which could lead to serious complications, including death.
The complaint alleges that W. Whitfield Gardner, James F. McGuckin, and Lindsay L. Carter conspired to bankrupt Rex Medical in order to avoid paying the company’s debts. McGuckin and Gardner were limited partners of Rex L.P., while Carter, along with some others, owned roughly 3% of Rex L.P. “From 1999 onward, Rex L.P. was funded by contributions from Defendant McGuckin and Defendant Gardner,” states the complaint.
Assets Transferred after First Lawsuit Filed against Rex
The petition says the first IVC filter case against Rex Medical, L.P. was filed on March 7, 2016, and that some 1,000 cases have been filed against Rex since that time. One week after Rex L.P. was named as a defendant in that first lawsuit, assets were transferred out of Rex L.P. account into the accounts of McGuckin, Gardner, and Carter.
On March 15, 2016, eight days after the first Rex lawsuit was filed, $23,750,000 was transferred by wire from Rex L.P.’s bank account to the account of Jim McGuckin.
Dr. Jim McGuckin, Defense Witness?
The self-styled inventor of the Option filter, Dr. McGuckin became a central figure in the trial. Defense lawyer Walter “Pete” Swayze tried to distance the company from him, telling the jury in closing: “Rex is not Dr. McGuckin.” The Plaintiff’s attorneys, meanwhile, presented internal emails that showed McGuckin labeling one surgeon a “pussy” for not being able to remove an Option patient’s embedded filter. In one stunning trial exchange, McGuckin ignored a question from Ms. Reed-Brown’s lawyer David Matthews and addressed her directly from the witness stand. That outburst led to her exiting the court room in tears, and McGuckin’s earning a rebuke from the judge.
The petition further states: “Upon information and belief, a slightly larger amount than was paid to McGuckin (reflecting Gardner’s slightly larger ownership interest) was transferred from Rex L.P. to Gardner during this same period.”
Also on March 15, 2016, $2,981,739.60 was transferred from Rex’s account to Lindsay Carter’s personal account. On March 31, 2016, a second payment was made from Rex L.P. to Jim McGuckin for $1,900,000.
$50 Million Plus Transferred
The complaint further states: “Defendants would also have known that, after the substantial transfers (estimated to exceed $50,000,000) were made to Defendants Gardner, McGuckin, and Carter, Rex L.P. was left with inadequate assets to cover its liabilities, debts and obligations.”
One of Ms. Reed-Brown’s attorney’s, Tim Goss, said Rex Medical has failed to post an appellate bond necessary to stop the seizure of the company’s remaining assets by Tracy Reed Brown.
David Matthews said, “Dangerous, untested products injure people, yet Rex Medical doesn’t care. The jury spoke, and included punitive damages; but the president and officers of the company will not listen. With this latest lawsuit, the three who transferred all the company’s assets to themselves may be forced to listen.”
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