BY BEN L. KAUFMAN
The Cincinnati Enquirer
U.S. District Judge S. Arthur Spiegel gave preliminary approval Wednesday to an innovative national settlement of claims against the maker of potentially deadly heart pacemakers.
Telectronics Pacing Systems of Englewood, Colo., will pay at least $57 million into a court-administered patient benefit fund to end the hard-fought three-year class action.
Individuals will get between $500 and $1 million.
Possibly 20,000 patients - many of them in the Tristate - received Telectronics pacemakers with J-shaped metal leads holding current-carrying wires to their hearts.
Possibly 20 people died after failed J-leads pierced their hearts or surgery to remove broken wires failed, according to Richard S. Wayne, an attorney for the patients.
Another 12,000 are living with J-leads, many of them unbroken, he said, and 8,000 survived removal.
Louis F. Gilligan, co-counsel for the patients with Mr. Wayne and Stanley M. Chesley, said a broken J-lead could move "like a scythe" in or against the heart muscle and the most active recipients were in the greatest danger.
Telectronics quit making pacemakers, and federal suits from all over the country were consolidated in Judge Spiegel's court. Wednesday, Judge Spiegel said he wanted audits of Telectronics' finances, but he accepted the lawyers' assurance the company had limited assets and virtually no insurance.
In addition to the patient fund, the settlement sets money aside for other Telectronics obligations.
If there is anything left after those commitments are satisfied, it will enrich the patient fund, Mr. Wayne said. "This is a very fair way to compensate everyone."
The settlement's novelty involved a proposed $5 million Telectronics payment to the federal Health Care Financing Administration (HCFA). In return, HCFA won't pursue refunds for J-lead Medicare treatments. "It's the first time it's been done," said Mr. Chesley. "By paying a set sum to them we are certain that all past and all future Medicare claims are resolved."
Otherwise, he said, Medicare could have sued the patient fund or patients.
"That's a big deal," Mr. Chesley added; an estimated 80 percent of J-lead patients are 65 and older and entitled to Medicare.
Largely negotiated by Telectronics lawyers, led by Charles P. Goodell of Baltimore and Cincinnatian Frank C. Woodside III, the HCFA deal drew Judge Spiegel's praise.
"It's quite creative what you have been able to do with the U.S. government," he told them.
Mr. Goodell assured Judge Spiegel that the proposed settlement was the best deal possible.
The settlement leaves Telectronics with $6.7 million for suits against its other products, $20 million to stay open while it complies with research and other demands from the Food and Drug Administration, and $4 million for state suits involving the J-lead.
That $4 million is most likely to end up in the patients fund because Judge Spiegel ordered state cases postponed until he decides whether to approve the settlement.
The settlement will bar individuals from pursuing further litigation against Telectronics.
Mr. Wayne said Star Bank would notify patients of the proposed settlement by mail in mid-September, using a Telectronics data base.
Ads will be placed in USA Today, he said, to reach J-lead patients and physicians unknown to the company.
That leaves 30 days for objections, and Judge Spiegel will hold a fairness hearing - at which both sides will argue for approval and dissidents will be heard - in late November.
Lawyers indicated they will ask for 28 percent of the patient fund, operating fund and reserve funds for their work and expenses, or at least $22.7 million. Judge Spiegel will decide how much the lawyers will get.
