Seven Traits that Will Sink Your Risk Management Program

During a recent webinar on managing corporate crises, a consultant identified seven behaviors that spell trouble regarding crisis management. In a different context, we can adapt these headings and apply them to the realm of product liability for medical device companies. Medical device firms can win the “game of risk” by cultivating winning habits. By contrast, other habits and traits can undermine the quest to manage product liability risks effectively.

Avoidance is a recognized risk management tool and avoiding the following seven traits can help safeguard your product safety program:

1. Denial

As the old saying goes, “‘Denial’ is not just a river in Egypt.” Among management teams, this trait often manifests itself in comments such as, “We didn’t do anything wrong,” “Our products are the best,” “None of our competitors incorporate those features in their products” and “We’ve never paid that much before on a claim.”

Management teams may react to a serious product liability claim by denying the existence of a problem. They may deny that a claim has any merit or insist that the company could have designed a product differently, such as incorporating heightened safety factors. They may deny that prior notices of adverse patient outcomes constituted any kind of notice of a developing safety problem.

This is not to say that management teams should reflexively be alarmist. Over-reaction has its own perils. The latter, however, is rarely the biggest risk or most typical corporate reaction to product meltdowns. More often, corporate group-think can lead management teams to marginalize the significance of an incipient product liability problem. This can blind companies to the reality of what they are facing and forestall needed steps to address problems.

2. Victim Confusion

In a product liability claim, who is the victim? A jury often sees the injured plaintiff as a victim. By the time the case goes to court, there typically is a seriously injured patient who suffered an adverse medical outcome associated with a device. The medical manufacturer may be viewed as a big, out-of-state corporation. Chances are, the company is not a local employer.

That doesn’t necessarily mean the product was defective, but few plaintiff attorneys will let a case get to a jury unless they feel they can make at least a prima facie case for defect. However, many medical device companies and management teams have a tough time wrapping their heads around this reality. They may think that they are the victims.

They feel victimized because they believe they have been unjustly sued. They feel victimized due to the money they must spend, either directly or indirectly, to defend the claim and possibly even to settle the case. They feel victimized by the amount of time they must spend huddled with lawyers and the insurance company on defending the claim, time that could be better used running their business.

Certainly, few jurors will view the targeted corporation as the victim. No matter how sympathetic or how worthwhile the company’s efforts have been, a jury often only will view the case as a corporation versus an injured patient. Viewing the corporation as the victim can blind companies to the genuine dangers of a court and courtroom setting, creating the risk of substantial financial penalties.

3. “Testosterosis”

Testosterosis isn’t a word in the dictionary, but it nevertheless aptly captures the mindset of some management teams.

Symptoms of this ailment include:

• Determining to “roll the dice” at trial even when the downside risk is significant;

• Hiring an expensive and high-profile law firm, thinking that the move will by itself cause the plaintiff and opposing attorney to cower in fear and abandon a claim;

• Having an inflated sense of legal invulnerability; and

• Marginalizing adverse patient outcomes because the outcome was “statistically insignificant.”

Shortly before the battle of Little Big Horn, General George Custer may have surveyed the Western Sioux Nation arrayed against him and thought, “We have them just where we want them.”If so, he suffered from Testosterosis. Medical device management teams also fight battles on many fronts, with one of them being the courtroom. Overweening confidence blended with a macho posturing of “teaching the plaintiff a lesson” can result inLittle Big Horn-type litigation debacles. “Macho Man” was a catchy Village People disco song from the late 1970s but it is not a productive stance to take when managing the risks of product liability litigation.

4. Arrogance

“We made the best product, better than anyone else. How dare they sue us! That attorney must be an idiot! Probably an ambulance-chaser. Another frivolous lawsuit. We will take them to court and crush them. They don’t stand a chance against us, because we are the market leader and our products save lives. I cannot imagine that any jury would ever believe that our product malfunctioned or contained a defect.”

Unfortunately, hubris can seep into corporate board rooms. Some companies have a tough time imagining perspectives outside of the boardroom. There is, however, a difference between boardroom reality and courtroom reality. Companies may harbor a naïve faith in the excellence of their product and, perhaps more importantly, in the weight that jurors in a product liability trial will give to that perception. Unfortunately, medical product manufacturers may not necessarily rank high in the pantheon of public trust. Consumers are conditioned to hear about scandals and misadventures and may punish any corporate representative who comes across as being arrogant and overconfident.

5. Scapegoating

Some management teams feel compelled to find scapegoats in the wake of a product misstep. Product safety and liability debacles are no exception. Rather than asking, “What went wrong—and what can we do to prevent this again?” the question becomes, “Who can we blame?” It is more consoling to think that the problem is a “bad egg” rather than admit that processes and procedures must be improved.

It is easier to fire an employee than to undertake the hard work of making systemic changes. So, blame the qualityassurance director or fire the vice president of quality control. Moreover, shoot the messenger if someone blows the whistle on quality issues or potential patient safety concerns.
Personalizing theproduct problem is more reassuring, (mis)leading management teams to think that having the right people in place addresses the problem. To be sure, it is vital to have the right people in place. However, the right people must be matched with having sound product quality and patient safety procedures.

6. Media-phobia

A symptom of this trait is to hunker down and ignore the media aspect of a product liability crisis. Maybe the media storm will blow over. Perhaps the corporate response to media is, “We will not try this case in the press” or, worse still, “No comment.”

Well-meaning attorneys may coach firms to be tight-lipped and say nothing to the media. As well-intentioned as the advice is, it may be misguided. Nowadays, skeptical consumers tend to equate “No comment” with “I am guilty.” Companies need a well-conceived media plan. This should be part of any crisis management contingency preparation program. The battle for market share and stock price not only is waged in courtrooms, but also in the arena of goodwill and public opinion.

7. Whine Parties

“Woe is me! Why do we have to deal with this lawsuit? It isn’t fair that our good name is getting dragged through the mud. I resent the amount of time and resources that I have to spend dealing with the defense attorney, with the insurance company, and with the court system. I wish I could just make it all go away. Isn’t that what the defense attorney is for, to make it all go away?”

Years ago, “Saturday Night Live” had a recurring comedy skit involving a married couple, Doug and Wendy Whiner, who recited all their lines in a nasal, whiny tone. Sadly, some Dougs and Wendys reside in corporate offices, wringing their hands and lamenting the injustice of it all instead of focusing efforts and energies into making better products and dealing with the hand they have been dealt.

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In his 1989 book, “The Seven Habits of Highly Effective People,” author Stephen Covey identifies traits that position people for long term success. We may view the preceding list as “Seven Habits of Highly Ineffective Risk Management Programs.” Being aware of these pitfalls is the first step to overcoming them, and a milestone toward building a strong product liability and safety program.

Kevin Quinley is vice president of Risk Management Resources for Berkley Life Sciences, LLC. Berkley Life Sciences is a leading insurance underwriter for lifescience companies. The views expressed here do not constitute legal advice, are those of the author alone and do not necessarily reflect those of Berkley Life Sciences, W.R. Berkley Corporation or its customers. Kevin can be reached via email at [email protected].