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US court freezes Sulzer Medica claims

A mediator will try to find a settlement between Sulzer Medica and claimants Keystone

A United States federal appeals court has confirmed a freeze on individual claims against the Sulzer Medica company.

The court in Cincinnati, Ohio, ruled that the freeze against the medical technology company resulting from faulty hip and knee implants, would remain in force till February 1. If an agreement between the claimants and Sulzer Medica has not been reached by then, it will be lifted.

However, the company’s star lawyer, Richard Scruggs, said that the freeze could be extended if both parties consented.

Scruggs said he was satisfied with the court decision, hoping that the two months leeway would give all parties concerned the opportunity to carry out a constructive dialogue.

A federal judge is to be named as a mediator to lead the conciliation talks for a negotiated settlement.

Shares prices

Sulzer Medica’s shares have fallen by more than 85 per cent over the last year after the company received more than 1,800 lawsuits from US patients who had to undergo revision surgery after being fitted with faulty hips.

“We are very pleased to have achieved a mutual agreement to put the litigation on hold for two months while we engage a mediator in hearing the claims and working with both parties to resolve them,” said Sulzer Medica chief executive Stephan Rietiker in a statement on Friday.

“While this is not the final resolution, it does represent significant progress towards reaching a settlement. We remain convinced that a negotiated settlement represents the fastest, fairest and most equitable remedy for the shareholders, the patients, and the best solution for all parties,” he added.

In August, the company proposed a $783 million (SFr1.296 billion) settlement to cover all the cases, arguing that a class settlement was the best avenue to deal with the claims “quickly and fairly”.

However, it is clear that individual claims would be far more costly and damage the future of the company.

Texas case

In a recent case in Texas, a court awarded three patients a total of $15 million in compensation, including punitive charges, roughly 50 times the sum per patient offered in the class settlement.

Sulzer Medica said on Wednesday that the settlement was its highest priority.

“We will fight with every legal measure against preferential treatment for only a few, which openly discriminates against the majority of affected patients,” Rietiker said.

Analysts believe that had Sulzer Medica lost the court ruling, it might have been forced to file for Chapter 11 bankruptcy protection for its US subsidiary.

Under the terms of the proposed settlement, Sulzer Medica would pay patients needing multiple corrective surgeries $97,500 in cash and equity, while those requiring a single operation would receive $57,500. The spouse of the patients would also receive compensation.

Patients who received a hip shell or tibial baseplate and did not require corrective surgery would receive $2,750 in cash and equity and their spouses would also receive compensation.

The compensation payments would be financed by Sulzer’s insurance coverage and by 50 per cent of group net income “over the next few years”, but no less than $25 million per year and no more than $50 million cumulatively per year.

swissinfo with agencies

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR