Sulzer says U.S. court gives go-ahead for individual claims

Tuesday, October 30th 2001, 12:00 am
By: News On 6

ZURICH, Switzerland (AP) _ A U.S. appeals court in Texas has cleared the way for individual claims against a Swiss company which made faulty hip and knee replacements, the firm said Tuesday.

The decision, pending a final ruling on individual claims, was a setback to the hopes of Sulzer Medica to settle the claims in a single dlrs 783 million class-action settlement and means the company may now face hundreds of state court lawsuits.

Spokeswoman Beatrice Tschanz said the U.S. subsidiary Sulzer Orthopedics Inc. might be forced into seeking bankruptcy protection if it was inundated with individual claims.

The company was forced to recall thousands of artificial joints last December after it was discovered that a manufacturing change had contaminated some with an oily residue that prevented the new joint from bonding with patients' bones.

It calculated that about 4,000 patients would need new operations for fresh hip and knee joint replacements. Of these, so far 2,600 people have been given new hip replacement joints and 470 knee joints.

Sulzer Medica said despite the decision, it would continue to work for a class settlement ``guaranteeing every patient fast and fair compensation.''

``We will continue to oppose individual legal actions with every means possible,'' said Stephan Rietiker, chief executive officer. ``We are convinced that only a just class settlement can guarantee every claimant fair compensation.''

``The newest court decision does not alter our opinion in any way,'' he said in a statement.

The latest twist in a complex legal battle came late Monday when the U.S. Court of Appeals for the Sixth Circuit issued an order to stay enforcement of a Sept. 17 injunction granted by Federal Judge Kathleen O'Malley.

The appeals court allows for the individuals to pursue their separate claims pending its review of O'Malley's injunction. The appeals court is expected to issue a final ruling on the injunction by next April, Sulzer said.

O'Malley, who gave preliminary approval to the dlrs 783 million settlement, issued the injunction to ban state lawsuits against Sulzer Orthopedics Inc. _ the U.S. subsidiary _ pending a final ruling March 12 by a federal court in Cleveland on the fairness of the Sulzer offer.

Under the proposed settlement, Sulzer would pay for surgeries to replace the recalled joints and would provide compensatory payments.

Patients who require more than one follow-up surgery would receive dlrs 97,500 worth of cash and Sulzer stock as compensation, while those requiring one surgery would receive dlrs 57,500 in cash and equity. Those who did not require corrective surgery would get dlrs 2,750.

Sulzer Medica is worried that a precedent for individual claims may be set by a court ruling in Corpus Christi, Texas, granting granted three people dlrs 15.1 million in damages for faulty hip-replacements.

Upon news of the appeals court ruling, Sulzer Medica shares fell by 48 percent to 34 Swiss francs (dlrs 21.25) in midday trading. Its shares have slumped by more than 80 percent since January.

The company reported a loss of 608 million francs (dlrs 375 million) for the first six months of the year.