Capstone Orthopedic Defeats Hanger in Federal Court
Capstone Orthopedic, Inc. has successfully defended itself against an anti-competitive lawsuit brought by prosthetic and orthotic industry giant Hanger Prosthetics & Orthotics, Inc. a division of Hanger Orthopedic Group (NYSE: HGR). That lawsuit was served by Hanger on Capstone and two individual defendants just days before Christmas in 2006. After more than two years of litigation, culminating in 5 days of testimony from more than fifteen witnesses, a U.S. Federal Court jury took less than two hours to determine unanimously that there was no evidence of any wrongdoing on the part of Capstone Orthopedic or any defendant.
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Capstone Orthopedic thwarts industry giant in lawsuit
Sacramento, CA (MMD Newswire) February 26, 2009 — Capstone Orthopedic, Inc. has successfully defended itself against an anti-competitive lawsuit brought by prosthetic and orthotic industry giant Hanger Prosthetics & Orthotics, Inc. a division of Hanger Orthopedic Group (NYSE: HGR). That lawsuit was served by Hanger on Capstone and two individual defendants just days before Christmas in 2006. After more than two years of litigation, culminating in 5 days of testimony from more than fifteen witnesses, a U.S. Federal Court jury took less than two hours to determine unanimously that there was no evidence of any wrongdoing on the part of Capstone Orthopedic or any defendant.
Capstone Orthopedic, Inc. was formed in July 2006 by Glen Ellis CPO, Ann Hurley, CO and Charles Drayton, MBA. Ellis and Hurley each have over 20 years of experience in the O&P industry. Mr. Drayton has worked for 30 years in finance with various public and private companies.
Capstone Orthopedic was served with the lawsuit just a few days before Christmas in 2006. The suit launched by industry giant Hanger Prosthetics & Orthotics a division of Hanger Orthopedic Group (NYSE: HGR), claimed more than 30 charges against Capstone, Ellis and other Capstone employees. The claims included misappropriation of trade secrets, unlawful access to Hanger computer systems, unlawful solicitation of referral sources and employees, breach of contract against Ellis and breach of loyalty and fiduciary duty. Hanger abandoned its claims for solicitation of referral sources sometime before the case went to trial on February 10, 2009 in US Federal court in Sacramento, CA.
Fifteen witnesses were called by Hanger over the course of 5 days of trial including two experts – one of whom was a computer forensics expert. Hanger informed the court that it paid over $100,000 for the two reports from its experts. Hanger’s corporate representative testified for more than 4 hours claiming, among other things, that blank patient intake forms were trade secrets of Hanger and that patients rarely follow their prosthetist when the practitioner changes employers. The week prior to trial, Hanger served subpoenas to 5 Capstone employees either at their homes in the evening, or at their offices in blatant disregard for the request from Capstone’s attorney that he would accept service on behalf of the Capstone employees. In what eventually seemed to be an attempt to intimidate Capstone employees, Hanger never called any of the 5 to testify.
Capstone presented its defense by calling 4 witnesses in a little less than 3 hours. After closing arguments, the jury returned its verdict in favor of Capstone and its employees on all remaining counts in just over an hour.
Glen Ellis CPO, owner and CEO of Capstone Orthopedic said “It’s a good feeling to have the courts affirm what Capstone has always contended in this matter; namely, that we didn’t do anything wrong. However, it is a tremendous burden for a young start-up company to be pushed into the legal system to defend itself against found-less accusations especially in these challenging economic times.” Capstone and its employees believe that Hanger used the lawsuit in an attempt to eliminate competition and are considering their options, including pursuing a countersuit against Hanger.
In contrast to Hanger’s 677 nationwide offices, Capstone Orthopedic owns and operates 5 clinics providing prosthetic and orthotic patient care services in northern California. Capstone offers clinic buy-in opportunities to O&P practitioners.
