Wearables and Looming Regulation by Litigation

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By Kyle Laudadio

The fast-growing wearable and app subsectors of virtual care generally operate with lighter regulation than that governing the technology that healthcare providers prescribe, recommend or use in their facilities. That said, the more widespread wearables and apps become, the more likely it is that ‘regulation by litigation’ will grow, as plaintiffs’ attorneys probe the numerous potential liabilities attaching to the use of these new technologies.     

The commercial potential of devices (often wearables) and apps that can help consumers achieve wellness and lifestyle goals is clear. Healthcare is focused increasingly on preventing and minimizing the incidence and impact of chronic conditions among populations in both the developed and developing world. The connectivity of devices and their ability to track, analyze and share data is driving significant growth in this sector.



According to Tractica, a market research firm that focuses on human interaction with technology, the worldwide market for healthcare wearables is projected to increase from 2.5 million units in 2016 to 97.6 million units by 2021, by which point it will be worth an estimated $17.8 billion annually.

For the United States alone, the wearables market in 2018 is estimated at just shy of $3 billion and some 3.7 billion health apps were downloaded worldwide in 2017.

The rapidly growing global mobile health app market, estimated to be worth $28 billion, is projected to increase to $102 billion by 2023, according to Research and Markets.

The most intense debate about new medical technologies to date has mainly focused on interconnected devices intended for the delivery of treatment, or for the monitoring of existing conditions, such as insulin pumps, pacemakers and defibrillators. Consumer-led devices and apps, geared towards the maintenance of general levels of fitness and wellness, or towards keeping track of particular conditions, have been in the spotlight less.

But where there is successful and profitable technological innovation, there will often be controversy surrounding the claims made on behalf of that technology.
We have already seen examples of consumer fraud lawsuits against wearable device manufacturers and developers, many of them brought as class actions. These lawsuits commonly claim that a device’s features have been overstated or misrepresented, or that the scientific justification for the device’s alleged benefits and purpose is flawed or fraudulent.

The circle of liability can be expected to spread wider. Increasingly, consumers are likely to turn to doctors and other healthcare professionals for approval of the use and/or efficacy of wearables or apps; technical assistance in using them; or medical advice based on their output. This in turn will create professional liability exposures for those individuals, particularly in situations in which they have not have prescribed the devices and may be unfamiliar with how they work.

Privacy issues are also a major concern. Health and wellbeing devices and apps commonly gather and store large volumes of data. Some prominent data privacy and security specialists have issued warnings about the increased potential for such devices to pose a security risk. As the number of consumers using connected health and fitness gadgets rises, attackers will seek to gain access to personal data that often is not adequately secured.

Currently, consumer-facing devices and apps are not generally considered to be subject to the Health Insurance Portability and Accountability Act (HIPAA). Although the position would likely be different if a device manufacturer planned to market its product to covered entities, they could still confront other privacy litigation where there has been a breach of the information stored. Many such devices/apps will use cloud storage, which presents a separate dimension of vulnerability.     

The likelihood of heavy-handed regulation crimping the growth of the market for health and wellbeing devices and apps seems low at present.  But plaintiffs’ lawyers can be just as ingenious as technology pioneers; and with such devices and apps already relied upon by tens of millions of Americans, the lawyers’ incentives are high.

Kyle Laudadio is an underwriter in Beazley’s US private enterprise miscellaneous medical team.

Sources:

http://news.sys-con.com/node/3768495

https://www.researchandmarkets.com/reports/4435917/mobile-health-mhealth-app-market-industry

https://www.statista.com/outlook/313/109/fitness/united-states

https://www.imobdevtech.com/Blog/mhealth-fitness-app-industry-future-value-of-the-global-market/

https://www.americanbar.org/groups/litigation/committees/products-liability/practice/2017/three-risks-and-regulations-affecting-wearable-devices.html

https://medicalconnectivity.com/2018/01/08/medical-device-security-threat-predictions-for-2018/

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