American Bentley Sued for Breach of Contract

A small Irvine manufacturer of heart surgery equipment has sued giant American Hospital Supply Corp. and its Irvine-based American Bentley subsidiary for $320 million for breach of contract and unfair competition.

The federal court suit filed this week by Cardiovascular Products Inc. in Los Angeles alleges that American Hospital of Evanston, Ill., broke a three-year-old agreement calling for it to sell Cardiovascular’s “Gas-Stat,” a device that monitors oxygen and carbon monoxide levels in the blood during open-heart surgery.

Terms of the agreement, signed in October, 1982, call for American Hospital’s American Bentley subsidiary to handle the distribution of the “Gas-Stat.” However, the suit alleges that American Bentley failed to adequately promote it and, in fact, substituted devices made by its own company for those manufactured by Cardiovascular.

The suit, which seeks $20 million in actual damages and $300 million in punitive damages, also charges American Hospital with breach of good faith, unfair competition and violation of anti-trust laws. The marketing agreement, which was to have lasted 10 years, has been canceled.

“A key issue here was that American Hospital and Bentley would use their best efforts to sell the product,” said Howard Fine, a San Francisco attorney representing Cardiovascular, a privately held firm with about 90 employees.

Jerry Mezger, Cardiovascular’s vice president, declined to say how much money his company has lost as a result of the alleged breach of contract. Fine refused to disclose how much the “Gas-Stat” devices sell for but said they “are not something you pick up in a five-and-dime store.”

Last November, American Hospital merged with Baxter Travenol Laboratories Inc. of Deerfield, Ill., in a deal worth $3.8 billion. Baxter Travenol officials Wednesday said they were unaware of the suit, while officials at American Bentley could not be reached for comment.