A federal judge in the United States has given preliminary approval to a settlement agreement put forward by the Sulzer Medica company of Winterthur in connection with a recall of faulty hip implants.

Earlier this month, the company proposed a package estimated at $780 million (SFr1.3 billion) and asked a US district court to effectively collect all pending lawsuits to meet patients' claims "quickly and fairly".

Sulzer Medica welcomed the decision by Judge Kathleen O'Malley in Cleveland, Ohio.

"The decision is a major milestone on our route to ultimately resolve all claims pending against Sulzer Orthopedics in this case," said Sulzer Medica chief executive officer Stephan Rietiker.

"Together with our legal consultants, we have worked diligently to provide just compensation to all affected patients while remaining a viable company able to continue developing innovative medical devices for patients around the globe," he added.

Company sought decision

Sulzer Medica and its star lawyer Richard Scruggs have opted for a settlement at federal level because the company would not be able to survive if there were many judgements against it at state level.

A court in Corpus Christi, Texas, is expected to rule this week on the first claim against Sulzer Medica at state level.

The company has forecast that there will be up to 4,000 corrective surgeries for hips and the withdrawal of defective knee implants.

Under the terms of the settlement proposal, Sulzer Orthopedics would pay affected patients and their attorneys with a mixture of two-thirds cash and one third equity (Sulzer Medica American Depository Receipts) over a period of several years.

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.

A motion will now be filed to distribute and publish notice of the settlement, informing patients affected of the proposals. Patients will then have the opportunity to evaluate them and to decide if they accept them or wish to opt out.

The motion will also request the court to arrange a fairness hearing for final approval of the settlement.

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