Saturday, August 18, 2001

Hip surgery settlements stayed

Too many questions about lawsuits, money remain, judge says

The Associated Press

        CLEVELAND - A federal judge rejected a company's request Friday to quickly approve a $700 million settlement to resolve 1,200 lawsuits by people who received faulty hip replacements.

        U.S. District Court Judge Kathleen O'Malley said there were too many unresolved questions. She scheduled another hearing Aug. 28 to give time for people to speak out against the settlement, which was announced Wednesday.

        Judge O'Malley questioned whether plaintiffs could opt out of the settlement and file their own lawsuits and what would become of any money left over after the claims are paid.

        The faulty Inter-Op hip implants were made by Sulzer Orthopedics Inc., a U.S. subsidiary of Swiss medical technology company Sulzer Medica.

        The subsidiary, based in Austin, Texas, announced in December it was recalling the implants after discovering that lubricant residue on the artificial joints could prevent the implant from bonding properly with the bone, causing it to loosen and become painful.

        Backers of the proposed settlement said anyone could sue the company on their own and any leftover money would be used to sweeten the deal for others or go to charity.

        An opponent welcomed the judge's decision.

        “This is a victory for the victims of Sulzer's misconduct,” said Andrews Pereira, a Houston attorney representing a group of plaintiffs. “The court wisely put on hold this absurd deal.”

        George Yasenchack, 59, of suburban Berea, whose faulty Sulzer hip was replaced by an improved version in April, endorsed the settlement, which would pay him $57,500, plus medical costs.

        “They made a mistake and honestly admitted to it,” Mr. Yasenchack said. “I believe this will never happen again.”

        Under the proposed settlement, Sulzer would pay for surgeries to replace the recalled joints and provide compensatory payments.

        Patients who require more than one follow-up surgery would receive $97,500 worth of cash and Sulzer stock as compensation, while those requiring one surgery would receive $57,500 in cash and equity. Those who did not require surgery would get $2,750.

        Executives expect the number of revision surgeries for hips and knees to reach 4,000. About 17,500 patients received Sulzer hip implants overall, primarily in the United States.

        More than 100 attorneys from across the country filled the judge's courtroom for the hearing.

        Stanley Chesley, a Cincinnati attorney representing people who received the implants, called the tentative settlement “very, very innovative” because it pledges the company's assets in fulfillment of the claims and will provide victims with 4 million shares of stock representing one-third of the company's value.

        The settlement would avoid a possible bankruptcy filing by Sulzer Medica, Mr. Chesley said. “This is a company worth saving,” he said.

        In trading on the New York Stock Exchange Friday, U.S. shares of the company fell 74 cents, or 9 percent, at $7.04.

        Richard Scruggs, a Pascagoula, Miss., attorney representing Sulzer Medica, told the judge he would withdraw for now a request for an order freezing lawsuits that are pending against the company in state courts. The judge said she wasn't sure if she had such authority.

        Judge O'Malley was selected to handle the case on a consolidated basis because lawsuits have been filed all across the country.


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