California Jury Rules Against Alphatec Spine

Following a month-long trial, a jury for the Superior Court of California in Los Angeles County, issued a verdict of fraud against Surgiview SAS, a subsidiary of Alphatec Spine Inc., in favor OrthoTec LLC.

Surgiview, a subsidiary of Scient’x SAS, which was acquired by Alphatec in 2010, was found to have transferred assets for less than fair market value in connection with Surgiview’s purchase of certain assets of Eurosurgical S.A. in May 2006, and to have interfered with certain contractual rights of OrthoTec.

The jury awarded monetary damages in the amount of $47.9 million, plus interest against Surgiview related to various causes of action alleged by OrthoTec. OrthoTec estimates that, with interest and attorneys’ fees, the award will total about $73 million. Prior to a judgment being entered against Surgiview there will be a second trial to determine if Alphatec can be held responsible for the amount of the damages assessed against Surgiview. This second trial is scheduled to occur by mid-April.

“While Alphatec is disappointed with the outcome, we continue to believe that the facts and the law do not support the jury’s findings and Alphatec will vigorously defend itself in any future litigation related to this matter,” said Les Cross, chairman and CEO of Carlsbad, Calif.-based Alphatec Spine. “Moving forward, Surgiview will file appropriate legal motions.”

This action against Surgiview was initiated in 2008. Following Alphatec’s acquisition of Scient’x SAS, Alphatec was added as a defendant in this case in 2012.

“Surgiview and Alphatec refused all offers from OrthoTec to reasonably settle this dispute choosing instead to spend millions in litigation,” said OrthoTec CEO Patrick Bertranou. “I personally find this choice regrettable, but I am not in charge of Alphatec’s decision-making process; their board is.”

Bertranou said that OrthoTec now would turn its attention to New York, where the same issues are slated to be tried later this year.

As a result of the jury’s decision Alphatec is postponing the release of its financial results and conference call for the fourth quarter and fiscal year 2013. Originally scheduled for Feb. 27, the company now will release the results on March 17 after the close of the market.

“Given … [the] jury verdict in the OrthoTec vs. Surgiview SAS legal matter, we believe that it is in the best interest of all stakeholders that Alphatec takes the appropriate time to fully explore the options available to us going forward,” said Cross. “We understand the importance of bringing greater clarity to this matter and this additional time will allow us to provide as much information as possible on our upcoming call.”

Alphatec Spine makes technology for the treatment of spinal disorders associated with trauma, congenital deformities, disease and degeneration. OrthoTec is based in Beverly Hills, Calif., also makes spinal surgery technology.