Today’s guest post is from Reed Smith’s Matt Jacobson. He addresses the latest and greatest result from litigation that has been generating favorable decisions nationwide applying various states’ so-called “blood shield” statutes (practically every state has one) that declare the use of human cells or tissue in medical treatment to be services rather than products, which has the effect of limiting liability to negligence. As always our guest posters deserve 100% of the credit (and any blame) for their work.

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Milovich v. Aziyo Biologics, Inc., No. 1:24-cv-01208-CL, 2025 U.S. Dist. LEXIS 50935 (D. Or. Feb. 24, 2025), involves Oregon’s human blood and tissue shield statute.  The Drug & Device Law Blog has written about similar cases before, but this one might be the best.  Blood shield laws have been around for over 60 years.  They sound like something that Dracula should fear, along with a knife through the heart, the sun, holy objects, and garlic.  But they are not something that should scare anyone who manufactures blood or tissue based products.  While states have different statutory language, the gist of blood shield laws is that blood transfusions and transplants are a service and not a sale (Dracula would agree he is performing a service), thus barring claims for breach of warranty and strict liability.

In Milovich, plaintiff underwent cervical spine surgery and was implanted with a product that is made from human bone particles mixed with demineralized cortical fiber.  Federal regulations would define the product as a “human cellular and tissue based product,” which are “articles containing or consisting of human cells or tissues that are intended for implantation, infusion, or transfer into a human recipient.”  21 C.F.R. § 1271.3(d).  For present purposes, in this blogpost the product in this case is called simply:  processed human bone tissue.  Per federal regulations, human cellular and tissue based products must be “minimally manipulated,” which is defined as processing that does not alter the relevant biological characteristics of the cells or tissues.  21 C.F.R. § 1271.3(f)(2).

Plaintiff claims that the processed human bone tissue he was implanted with was contaminated with tuberculosis, and he ultimately contracted that infectious bacterial disease.  Plaintiffs alleged the normal, all too familiar products liability claims:  negligence, strict liability, breach of implied and express warranties, and loss of consortium (there is probably a joke about Dracula and Counts in here somewhere).  The defendants then moved to dismiss arguing that the strict liability and breach of warranty claims failed to state a claim.

Milovich started with a discussion of Oregon’s blood and tissue shield statute.  The plain language of the statute precludes implied warranty claims:

1) The procuring, processing, furnishing, distributing, administering or using of any part of a human body for the purpose of injecting, transfusing or transplanting that part into a human body is not a sales transaction covered by an implied warranty under the Uniform Commercial Code or otherwise.

2) As used in this section, “part” means organs or parts of organs, tissues, eyes or parts of eyes, bones, arteries, blood, other fluids and any other portions of a human body.

Milovich, 2025 U.S. Dist. LEXIS 50935 at *5 (citing Or. Rev. Stat.§ 97.985 (emphasis in original)). 

The decision then discussed precedent in two other cases finding that, although the statute does not expressly mention strict liability, those claims are barred too, because “activities undertaken to manufacture the blood- or tissue-based products are services, not sales transactions.”  Id.  Royer v. Miles Lab’y, Inc., 811 P.2d 644 (Or. App. 1991), held that the Oregon blood and tissue shield statute is clear that these transactions do not constitute sales.  2025 U.S. Dist. LEXIS 50935, at *6-7.  And without a sale, there cannot be strict liability.  Id. (citing Royer, 811 P.2d at 647 (“because strict liability and warranties, either implied or express, arise only from sales transactions, it follows that they cannot arise from one of the activities that the statute declares ‘is not a sales transaction.’”))  The second case was In re Coloplast Corp. Pelvic Support Sys. Prods. Liab. Litig., No. 2:13-cv-15065, 2017 U.S. Dist. LEXIS 206349 (S.D. W. Va. Dec. 15, 2017) (applying Oregon law), finding that warranty claims are contractual in nature and “without a sale under contract, there is no consensual nexus between the parties and thus no warranties may attach.” Milovich, 2025 U.S. Dist. LEXIS 50935, at *7 (citing In re Coloplast, 2017 U.S. Dist. LEXIS 206349 at *4).

While plaintiffs tried to argue that their case was distinguishable from Royer and Coloplast, Milovich did not bite.  Instead, it found that the case law is not limited to pure blood and blood derivatives, as opposed to the processed human bone tissue in this case that was a more manufactured product.  Id. at *9.  Plaintiffs’ argument that Coloplast did not apply because it involved Ohio law, also saw no light, since plaintiffs were misleadingly relying on another case from the Coloplast MDL, instead of the Coloplast case cited above that clearly applies Oregon law.  Id.  If all of that was not enough, Milovich listed cases in other jurisdictions that have applied other states’ blood and tissue statutes to the exact product here barring claims for strict liability and warranty.  Now if that is not a wooden dagger through the heart, nothing is.

Even though Milovich slew the warranty and strict liability claims, it did not stop there. The decision went on to discuss the nationwide public policy rationale to protect human blood and tissue products from strict liability and warranty claims.  “Oregon’s blood and tissue shield statute mirrors similar blood and tissue shield statutes which have been enacted in virtually every state.”  Id. at *12.  Public policy favors “the availability of human blood and tissue for therapeutic purposes [and] should be encouraged by protecting the procurement, processing, and distribution of blood and tissue from no-fault legal liabilities.”  Id. at *13.  Milovich discussed how this policy is reflected in cases from California, Utah, and Illinois.  Finally, it found that Oregon’s statute applies to both nonprofit and for-profit organizations, and while some states’ blood shield statutes only apply to nonprofits, the Oregon Court of Appeals has expressly rejected that idea.  Id. at *15.

That’s where the analysis in most decisions stops.  But this post hints of the paranormal, so the saga continues.  Milovich stated that even if the processed human bone tissue was considered a medical device so that the blood shield statute did not apply, the strict liability claims would still fail under Oregon law.  Why?  Because “Oregon has adopted Restatement (Second) of Torts, § 402A Comment k, which precludes liability for manufacturers of prescription medical devices under a theory of strict products liability.”  Id. at *16 (citing Or. Rev. Stat. § 30.920(3)).  “Comment k exempts ‘unavoidably unsafe products,’ like prescription medical devices, from strict liability claims based on the recognition that such products have inherent risks that are incapable of being designed away.”  Id. at *18.  The processed human bone tissue has an inherent risk of disease transmission, as does any live human tissue product, which cannot be designed away.  Id.  Milovich even cited the IFU for the product, which warns that there could be transmission of infection or disease.  Id.  And with that, all the blood was sucked from plaintiffs’ strict liability claim.

Just like Dracula, plaintiffs’ strict liability and warranty claims met a brutal, but well-deserved, fate, but as with the book, it made for a great ending.