On Monday, November 3, 2014, Stryker Corporation announced it would pay at least $1 billion to settle cases brought by thousands of patients over injuries sustained by faulty hip implants manufactured by its subsidiary, Howmedica Osteonics Corp.
In June 2012, Stryker voluntarily recalled its subsidiary’s Rejuvenate and ABG II devices and terminated global distribution “due to the potential for fretting and/or corrosion at or about the modular-neck junction, which may result in adverse local tissue reactions manifesting with pain and/or swelling.” Some of the possible adverse reactions attributed to the devices included metallosis, necrosis and osteolysis.
A little over two years after issuing the recall, Stryker negotiated a resolution with those claiming to be injured by the devices. According to the Stryker Modular Hip Settlement website, www.strykermodularhipsettlement.com, the Company and Court-appointed committees of attorneys representing plaintiffs in state and federal court negotiated the settlement agreement following a successful early mediation program initiated by New Jersey Superior Court Judge Brian R. Martinotti and chief mediator, former U.S. Magistrate Judge Diane M. Welsh.
While the estimated amount of the global resolution is anticipated to be at least $1 billion, Stryker did not place a cap on the settlement award. Accordingly, the company has already recorded charges to earnings totaling $1.425 billion, which it believes represents the actuarially determined low-end of the range of probable loss to resolve claims involving its subsidiary’s Rejuvenate and ABG II devices.
Under the settlement, only those individuals that have undergone at least one “revision” surgery in one or both hips prior to November 3, 2014 are eligible for payment. For those patients that qualify, Stryker will provide a base payment of $300,000 per failed implant requiring surgery, however, the payment may be either reduced or enhanced based on a number of factors, including age, number of hip revisions, any complications encountered during revision surgery, and whether the patient will require future surgeries.
Stryker anticipates that it will make a majority of the payments pursuant to the settlement by the end of 2015.
This settlement resolves claims pending in 39 states against the Western Michigan-based manufacturer, including over 2,100 cases consolidated in New Jersey Superior Court and in excess of 1,800 cases in U.S. District Court for the District of Minnesota.
The consolidated New Jersey case is: In Re Stryker Rejuvenate and AGB II Modular Hip Implant Litigation, Case No. 296 BER-L-936-13 (N.J. Superior Court, Bergen County).
The consolidated federal MDL case is: In Re Stryker Rejuvenate and AGB II Hip Implant Products Liability Litigation, 13-MDL-2441 (D. Minn.)
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