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Carestream tries to recoup recall costs

Carestream Health Inc. is trying to recover its costs for a 2014 recall of Kodak DirectView DR 7500 System X-ray machines from the Spanish company it holds responsible for installing faulty parts in the equipment. 

In a lawsuit filed Feb. 12 in U.S. District Court in Rochester, Carestream blames Madrid-based Sociedad Española de Electromedicina y Calidad S.A. for improperly installing a part in DR-7500 machines.

Carestream did on-site inspections of more than 500 of the X-ray machines and sent technicians to hospitals and other facilities to repair some of the stationary equipment, the company states in court papers.

Known as SEDECAL, the Spanish firm Carestream seeks payment from is an original equipment manufacturer specializing in X-ray equipment. It employs around 600 people and brings in $202 million a year in revenues.

Citing a policy of not commenting on pending litigation, Carestream spokesman Robert Salmon declined to comment on the lawsuit or the recall that prompted the court action.

In court papers, Carestream describes a June 2014 incident at an Italian hospital, in which part of a DR-7500 unit came loose from an overhead crane and fell on a patient, sparking a recall.

When Carestream personnel inspected the Italian hospital’s DR-7500 unit, they found a locknut and lock washer that were supposed to hold an assembly in place had come completely unscrewed, court papers state.

An Aug. 10, 2014, a U.S. Food and Drug Administration notice states Carestream initiated a Class 2 recall of the DirectView device to deal with a defect that could cause part of the system fall on patients being X-rayed. The notice cites a tab that had not been properly bent into position to keep the lock washer from unscrewing as the root of the problem.

Carestream planned to notify more than 500 DR-7500 customers of the defect, send field engineers to inspect the machines and send teams to fix any that needed repair. The company expected any problems to be resolved within two to four weeks, the FDA notice states. 

Carestream found defects in no fewer than 11 of some 580 machines its engineers looked at and fixed any problems the inspections revealed. SEDECAL as well as Carestream sent notices to possibly affected DR-7500 system owners. SEDECAL also sent notices to owners of non-Carestream equipment whose machines had the same parts, Carestream’s court complaint states.

The partnership of SEDECAL and Carestream dates to 2005 agreement between Eastman Kodak Co.’s Switzerland-based subsidiary, Eastman Kodak S.A., and Suinsa Medical Systems S.A., a firm later acquired by SEDECAL.

After Kodak’s 2006 sale of Care-stream to the Canadian private-equity firm Onex Corp., the agreement, which calls for SEDECAL to install some DR 7500 components and software, was modified and reaffirmed several times by SEDECAL and Carestream, most recently in 2012, Carestream’s court complaint states.  

The contract calls for SEDECAL to guarantee any parts it installs in DR-7500 machines, to pay any costs incurred because of defective parts and to pay any injured parties’ expenses. Despite its initial support of Carestream’s efforts to find and fix defective DR-7500 components, SEDECAL has not paid any bills racked up in the recall, Carestream claims. 

Carestream’s court brief does not detail the recall’s costs or say how much more, if any, than the $75,000 statutory minimum in damages required to file such a suit it believes it is entitled to collect.

SEDECAL officials did not respond to a request for comment.

2/20/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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