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Court paves way for rash of lawsuits against Sulzer Medica

Faulty hip implants produced by Sulzer Medica have given the company major headaches Keystone Archive

An appeal court in the United States has decided to allow hundreds of liability lawsuits against Sulzer Medica to proceed.

This content was published on October 30, 2001 - 11:12

The ruling by the federal appeals court is a blow to the medical technology company, which had attempted to settle out-of-court claims arising from faulty product recalls.

It overturns a temporary injunction granted by a lower court that had blocked individual suits while a settlement was under discussion.

Sulzer Medica in August proposed a $780 million (SFr1.27 million) settlement of lawsuits concerning faulty knee and hip implants. The company fears it could be put out of business if it loses many individual suits.

But the company said on Tuesday it remained confident it could reach a comprehensive settlement.

"This decision is not surprising and does not change our strategy," chief executive, Stephan Rietiker said in a statement.

However, shares in Sulzer Medica plunged more than 40 per cent on the news to an all time low of SFr39 after they resumed trading following a brief suspension requested by the firm.

"It's really serious," UBS Warburg trader, Christian Häfti told swissinfo, "Because they have already said they can't accommodate a large amount of claims without being forced into bad financial trouble to the point of bankruptcy."

Häfti says the dramatic reaction of the market shows that investors believe the company has few options left open to it.

The crisis began last December when 17,500 hip implants were recalled after it was found that lubricant residue on the artificial joints had prevented many from bonding properly with the bone, causing painful loosening.

Thousands of patients are having to undergo revision surgery. In addition, knee implants were also found to be faulty.

The joints were produced at the Sulzer Orthopaedics unit in Austin, Texas.

Sulzer Medica reorganised its entire orthopaedics division in light of the crisis.

Concerns about the extent of the company's litigation liabilities have seen its share price plummet since the beginning of the year.

swissinfo with agencies

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