San Diego, Calif.-based NuVasive Inc. is facing a breach of contract lawsuit from Andrew Cappuccino, M.D., an orthopedic surgeon in Buffalo, N.Y. In a civil complaint filed on Jan. 16, Cappuccino contends that NuVasive failed to pay a $60,000 “milestone payment” connected with a U.S. Food and Drug Administration (FDA) approval of a medical device used in spinal procedures. The product was developed by Cervitech, Inc., a company in which Cappuccino was a prime investor and which was acquired by NuVasive in 2009.
NuVasive bought the Rockaway Township, N.J.-based company in a cash and stock deal for $80 million, contingent on FDA approval of Cervitech’s PCM cervical disc system, a cervical disc-replacement device. NuVasive agreed to pay $47 million up front and another $33 million when regulatory approval was given. Under terms of the share-purchase agreement, Cappuccino and his fellow Cervitech investors were to receive payments within 30 days of FDA approval of the Cervitech-developed device. That approval was granted on Oct. 26 last year, and all other former Cervitech shareholders were paid with the exception of Cappuccino.
Alan Bozer, a partner with Buffalo law firm Phillips Lytle LLP, said NuVasive admitted that Cappuccino is entitled to the payment but is withholding the money for reasons “unrelated” to the Cervitech matter. Cappuccino ended his consultancy position with NuVasive in 2011.
Cappuccino now chairs the Surgeon Advisory Board of Lanx Inc., a Broomfield, Colo.-based medical device developer of spinal device. The doctor is renowned for providing spinal injury treatments to Buffalo Bills football player Kevin Everett. He has been on the Bills’ medical team since 1995 and is an attending orthopedic surgeon at several New York hospitals.
NuVasive did not respond to a request for comment.