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.

The ruling by the court in Ohio is a blow to the medical technology company, which had attempted to settle out-of-court claims arising from the recall of faulty products.

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 says it remains confident of reaching a comprehensive settlement.

“This decision is of course a setback on our way to finding a fair and quick solution for our patients,” spokesman Andy Bantel told swissinfo. “But we have to say it is a preliminary decision taken by a minority of three judges.”

Appeals considered

Sulzer Medica is looking at a number of ways to challenge the judgement. It indicated that it would submit a request for all 12 Ohio appeal judges to hear the case and said that recourse to the highest judicial body in the US, the Supreme Court, had not been ruled out.

Shares in Sulzer Medica plunged more than 40 per cent 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. “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.”

Sulzer Medica on Tuesday was playing down such fears.

“Even if there are a lot of complaints against us and this leads to big pay-outs, this would lead in the very worst case to our American subsidiary being forced to take out Chapter 11,” said Bantel.

Under US law, Chapter 11 gives a company legal protection while it restructures.

Production recall

But doubts remain about how far Sulzer Medica’s legal liabilities stretch and investors on Tuesday voted with their feet.

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.

More than 3,000 patients have undergone revision surgery after being fitted with the faulty hip and knee implants.

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

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

by Michael Hollingdale