Billion-dollar settlement in sight for Sulzer Medica
Sulzer Medica has agreed to tentative settlement terms in an American class-action suit that could cost up to $1 billion (SFr 1.72 billion).
The medical device maker is facing claims from up to 4,000 patients who received defective hip and knee implants. Around 2,780 of them have already undergone remedial hip surgery, while over 260 others have gone through further knee operations.
The agreement with the plaintiffs' lawyers came on Friday, as the deadline set by a US federal court in Cleveland approached. Judge Kathleen O'Malley had originally set February 1 as the final date before allowing individual suits to proceed, before pushing it back three weeks on Friday.
Each patient who was operated on will receive approximately $200,000 from Sulzer Medica and its former parent company, Sulzer. The medical device manufacturer is prepared to pay out $725 million, with $400 million in cash and $300 million in other financial instruments.
No Sulzer responsibility
Sulzer will hand over $50 million in cash, and will also convert $200 million insurance policy to help pay for its share of the settlement. It will also make its packet of 480,000 Sulzer Medica shares, worth $25 million, available.
The former parent company, despite picking part of the tab, still refuses to admit any responsibility for the defective implants though.
"We can close the case satisfactorily and avoid further years of litigation," said Fred Kindle, CEO of Sulzer. "We prefer to spend our time on our customers and markets rather than in court."
Plaintiffs have until May 2 to agree with the settlement, when O'Malley will hold a final hearing. Sulzer Medica expects few patients to turn down the offer, although the company has not said how many were represented by the lawyers who negotiated the deal.
"This agreement allows us to look confidently into the future," said Stephan Rietiker, Sulzer Medica's CEO. "The patients will receive greater compensation and we can proceed under the assumption very few will opt out."
Sulzer Medica had made a previous offer totalling $783 million, partly made up of cash and the rest in shares. Patients at best would have received just under half of what is proposed in the latest settlement.
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