Stryker Settles Hip Implants Lawsuits, Records $1.425 Bln In Charges

(RTTNews) - Orthopedics devices maker Stryker Corp. (SYK) said Monday that it has agreed to settle lawsuits related to the recall of its Rejuvenate and ABG II artificial hip implants. The company added that to date, it has recorded charges to its earnings totaling $1.425 billion to resolve these matters.

Kalamazoo, Michigan-based Stryker said that the settlement agreement will compensate eligible U.S. patients who had surgery to replace their Rejuvenate Modular-Neck hip stem and ABG II Modular-Neck hip stem, known as a revision surgery, prior to November 3, 2014.

Stryker noted that the settlement agreement follows from a successful early mediation program initiated by New Jersey Superior Court Judge Brian Martinotti and efforts by the chief mediator, former U.S. Magistrate Judge Diane Welsh.

Bill Huffnagle, President of Reconstructive Division, Stryker Orthopaedics said, "The health and well-being of patients is Stryker's top priority. Following our voluntary recall and our patient support program for recall related care, this Settlement Program provides patients compensation in a fair, timely and efficient manner."

The plaintfiffs' counsel, Lieff Cabraser Heimann & Bernstein LLP, said in a separate statement that under the settlement, Stryker will provide a base payment of $300,000 to patients who received the Rejuvenate or ABG II hip systems and underwent revision surgery by November 3, 2014, to remove and replace these devices.

The deadline for eligible patients to submit their claim for payment under the settlement is March 2, 2015. The first payments under the settlement program are expected to begin in the Summer of 2015, with enhanced payments being projected for disbursement at the end of 2015 and early 2016.

The lawfirm noted that the total amounts of payments under the settlement is expected to exceed $1 billion.

Stryker began selling the Rejuvenate hip system in 2009 and the ABG II hip system in 2010. However, in 2012, Stryker recalled these hip implants, citing "fretting and/or corrosion" in the implant which could result in metallosis, or the release of metal ions into the tissue and blood stream, and thus ultimate failure of the hip implant.

Stryker said that to date, it has recorded charges to its earnings totaling $1.425 billion, representing the "actuarially determined low end of the range of probable loss" to resolve these matters. The company added that no additional charge to earnings is being recorded in connection with entering into the settlement agreement.

The company expects that a majority of the payments under the settlement agreement will be made by the end of 2015.

SYK closed Monday's regular trading at $86.85, down $0.68 or 0.78 percent on a volume of 1.24 million shares. However, in after-hours, the stock gained $0.01 or 0.01 percent to $86.86.