Monday, September 03, 2001

Chesley settlement in hip suit challenged

By Ben L. Kaufman
The Cincinnati Enquirer

        The Cincinnati lawyer who helped settle a class action case involving 32,000 potentially flawed hip implants says greed is motivating recent attacks on the pact.

        The proposed $700 million settlement would ensure a free replacement and/or cash payment to every recipient of the Sulzer Orthopedics implant.

        It also would postpone any huge financial awards to individuals and attorneys that could force Sulzer into bankruptcy, explained Stanley M. Chesley, co-chair of the court-appointed committee representing the class of implant recipients.

        “That means you can't have a rush to the courthouse, where the first ones there get all of the money,” he added.

        Sulzer Orthopedics is an Austin, Texas, subsidiary of a Swiss company. It announced in December it is recalling hip implants after discovering that a lubricant residue could prevent the implant from bonding properly to the bone, causing it to loosen and become painful.

        Last week, U.S. District Judge Kathleen O'Malley in Cleveland granted preliminary approval to the class settlement. Lawyers representing some individual plaintiffs filed an appeal, seeking the 6th Circuit Court of Appeals in Cincinnati to halt the deal. They said the settlement protects the company more than it does their clients.

        Not so, said Mr. Chesley. The settlement could amount to $700 million to more than $1 billion, depending on how many recipients require hip replacements, he said.

        The critics, Mr. Chesley said, are hoping for rich awards and attorney fees, which can be up to 50 percent of damages depending on what lawyers negotiate with individual clients.

        By contrast, lawyers in class actions are limited to fees set by the trial court, typically 20 percent or less of a settlement.

        The proposed implant settlement promises to pay:

        • Medical expenses plus $100,000 cash to each of the estimated 2,000 people nationwide who have had a flawed Sulzer implant replaced.

        • Medical expenses plus $100,000 cash to anyone who has the implant replaced within five years of the agreement becoming final.

        • $3,000 in cash to any recipient who does not seek a replacement implant.

        If recipients don't like the pact, they can opt out and sue on their own, as did three women who won $15.5 million Thursday in a Corpus Christi, Texas, court.

        However, the settlement bars anyone opting out from collecting an award until everyone in the class is paid.

        Mr. Chesley said that reduces the likelihood of individual court victories forcing Sulzer into bankruptcy and delaying or eliminating implant replacements and pay ments for other patients.

        The opposing attorneys' appeals claim that Judge O'Malley ignored precedents against class actions in medical product liability cases. And, the petition said, if the 6th Circuit doesn't intervene now, the settlement could shelter too many Sulzer assets from individual judgments.

        The “unprecedented” element in the settlement, Mr. Chesley said, assures payments to the class by placing liens on the real estate, patents, factories, a $220 million insurance policy and a third of the stock of Sulzer Orthopedics and its Swiss parent, Sulzer Medica.

        Liens bar individuals from collecting awards that might force the company into bankruptcy, Mr. Chesley said. Sulzer also has seven to eight years to pay, further reducing the likelihood of bankruptcy.

        “They make a lot of wonderful medical devices,” Mr. Chesley said. “They made a mistake (with this one hip implant) and they should be saved and not forced into bankruptcy.”


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