Swisslog sues risk-management firm alleging negligence in acquisition 

BROOMFIELD — Swisslog Healthcare, the tradename for Translogic Corp., which manufactures systems for material transport and supply-chain management for health-care systems, is suing its risk management firm for allegedly failing to perform during an acquisition that led to a now-defunct client losing millions of dollars. 

In 2017, Swisslog bought Talyst Systems LLC, makers of the InSite medication packaging and dispensing machine, according to a complaint filed this week in U.S. District Court in Denver.

That same year, Swisslog contracted with insurer and risk manager Marsh USA Inc. Part of Marsh’s duties, according to Swisslog, was to communicate with the firm’s other insurers such as  Hudson Specialty Insurance Co. about acquisitions. 

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Shortly after the Talyst Systems deal, the now-defunct medication automation firm Wellfount Corp. bought a series of orders of InSite systems. The systems, court documents allege, were faulty.

“According to [a lawsuit filed by Wellfount against Swisslog and Talyst], Wellfount sustained losses of $17 million as a result of a large number of [InSite] failure events between July 2017 and September 2018,” court documents say. “Wellfount further alleged that those losses were increasing, and its damages expert now opines that damages may exceed $110 million.”

Wellfount collapsed in 2019, according to media reports from that time. 

Swisslog turned to its insurers during settlement negotiations with Wellfount, but court documents show that in 2018, Hudson wrote Swisslog lawyers a letter “to Swisslog raising a number of issues concerning Swisslog’s August 2017 acquisition of Talyst Systems LLC, and indicating that the failure of Swisslog to timely notify Marsh of the acquisition presented serious coverage issues concerning Wellfount’s claims related to the allegedly faulty machines.”

Hudson claimed it was not properly informed about the Talyst Systems acquisition when Swisslog’s policy was last renewed, so the insurer shouldn’t be on the hook for settlement costs.

“The failure to provide the required notice to Hudson is squarely Marsh’s responsibility,” the complaint alleges. 

The Wellfount debacle caused Swisslog to sustain “mounting losses as a result of this failure because of the ongoing time and effort that employees and representatives must devote to litigation efforts,” according to court documents. “Moreover, Swisslog faces the risk of liability to Wellfount in an amount that greatly exceeds its insurance coverage.”

Marsh declined to comment.

Swisslog is seeking unspecified compensatory damages.

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