Why Do You Hate Health-Care Companies So Much?

Last year, the Supreme Court gave Medtronic (NYSE: MDT  ) and the rest of the medical device industry a gift in a decision that barred patients or their estates from suing in state court over devices approved by the FDA under federal law.

That decision has protected drug-eluting stent makers Boston Scientific (NYSE: BSX  ) and Johnson & Johnson (NYSE: JNJ  ) , surgical-robot maker Intuitive Surgical (Nasdaq: ISRG  ) , and the rest of the industry from liability claims, but that could all change. Members of Congress plan to introduce a bill that would give patients legal recourse essentially nullifying the Supreme Court decision.

Wyeth (NYSE: WYE  ) and the rest of the drug companies are waiting to hear from the Supreme Court about a similar case over whether drug companies can be sued in state court; presumably the bill would preemptively put aside that ruling if it went in favor of Wyeth.

Those who have followed the health-care industry can probably guess who one of the sponsors on the House bill is -- none other than Rep. Henry Waxman, D-Calif. Waxman's no friend to the industry; he wants to ban some direct-to-consumer advertisements and is most famous for making it simpler for generic-drug companies like Teva Pharmaceutical (Nasdaq: TEVA  ) and Mylan (NYSE: MYL  ) to bring copycats to market.

I do find it ironic that Congress and the president complain about the high cost of health care, but are interested in making it easier for patients to sue. (Then-Sen. Barack Obama was one of the co-sponsors on a Senate version of the bill last year, according to one report.) The extra liability is only going to drive up the cost of health care.

Investors need to keep a close eye on this bill. Turning back the clock could re-open the companies you invest in to some serious liability.

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