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(Mealey's) Howmedica Osteonics Corp. has set aside at least $1.42 billion to pay patients who had to undergo revision surgery as a result of corrosion or fretting of Stryker metal-on-metal Rejuvenate Modular-Neck and ABG II Modular-Neck hip implants, according to settlement documents released Nov. 3 (In Re: Stryker Rejuvenate and ABG II Hip Implant Products Liability Litigation, MDL Docket No. 13-2441, D. Minn.; In Re: Stryker Rejuvenate Hip Stem and ABG II Modular Hip Stem Litigation, Master Docket No. BER-L-936-13, N.J. Super., Bergen Co.).
(Master settlement agreement available. Document #28-141106-017P.)
In its Oct. 23 Form 10-Q report filed with the U.S. Securities and Exchange Commission, Howmedica subsidiary Stryker Corp. said its probable loss to resolve the recalled hip claims is $1,425,000,000 to $2,290,000,000 before third-party insurance recoveries.
According to the settlement website (www.StrykerModularHipSettlement.com), the settlement will cover Stryker hip patients who received the Rejuvenate and ABG II hip implants and who had revision surgery before Nov. 3, 2014, or who have been found to be physically unable to undergo revision surgery. The settlement will pay base awards and enhanced benefit awards as determined by the claims administrator and a master settlement agreement.
Patients who underwent revision surgery must have had an elevated cobalt level, an abnormal diagnostic scan related to the reasons for the recall or confirmation of adverse local tissue reaction or aseptic lymphocyte dominated vasculitis associated lesions related to the recall. Claimants who cannot undergo revision surgery will receive $75,000.
BMI, Age Reductions
Base awards are subject to certain reductions such as age and a high body mass index (BMI). Age reductions range from 5 percent for patients over 70 to 20 percent for patients over 85.
In addition, claimants who are not represented by an attorney will have their awards reduced by 29 percent.
Enhanced benefits are capped at $450,000 per hip unless an infection occurred, in which case the cap is $550,000. The spouse of a patient receiving enhanced benefits receives a maximum of $1,500.
Factors qualifying for enhanced benefits include re-revision surgery, infection and operative bone fractures, dislocations, foot drop, blood clots, myocardial infarction, stroke, death and lost wages. Enhanced benefits can range from $25,000 to $550,000, according to the master settlement agreement.
Attorney Fees, Insurance Liens
Common benefit fees of 1 percent for costs and 3 percent for attorney fees will be assessed for claimants with lawsuits pending in the MDL or the New Jersey state court. Contingency attorney fees are the responsibility of claimants.
Liens by insurance companies, federal health care programs and attorneys are the responsibility of claimants. Plaintiff attorneys will contact the U.S. Centers for Medicare Services to negotiate a possible Medicare/Medicaid lien resolution agreement.
Patients who are implanted with either hip but who have not had revision surgery before Nov. 3 can continue to participate in the patient support and care program operated by Broadspire Services Inc., a third-party claims administrator, according to the website.
Court-appointed special masters will hear appeals. Former U.S. Magistrate Judge Diane M. Welsh of JAMS in Philadelphia will serve as claims administrator. Special masters will be retired U.S. Judge Arthur J. Boylan of the District of Minnesota, retired Middlesex Superior Court Judge C. Judson Hamlin of Keefe Bartls in New Brunswick, N.J., and Edgar C. Gentle III of Gentle, Turner, Sexton, Debrosse & Harbison in Hoover, Ala.
On Nov. 3, U.S. Judge Donovan W. Frank of the District of Minnesota, who presides over the federal MDL, entered an order appointing the claims administrator and special masters.
(MDL order available. Document #28-141106-018R.)
Howmedica can walk away from the settlement by June 15 if enrollment in the settlement is less than 95 percent of claimants who register with the program.
The master settlement agreement was presented Nov. 3 to Judge Brian R. Martinotti of the Bergen County, N.J., Superior Court, who is presiding over that state’s Stryker multicounty litigation, and to Judge Frank.
4,000 Pending Court Claims
Neither the master settlement agreement nor the settlement website states how many patients it expects to cover, except that the parties expect it to close a “significant number” of U.S. lawsuits. According to a New Jersey court case list, there are 2,148 Stryker cases pending there as of Oct. 29. The Judicial Panel on Multidistrict Litigation lists 1,908 federal cases as of Oct. 15.
The settlement website says Stryker has recorded a charge against earnings of $1.425 billion, “representing the actuarially determined lower end of the range of probable loss to resolve these matters.” It said the ultimate cost of the settlement will depend on many factors that are difficult to predict and that “may be materially different than the amounts accrued to date.”
The website says that further charges may be needed and that the majority of payments are expected to be made by the end of 2015.
1st Deadline Dec. 14
Claimants must register their claims with the claims processor by Dec. 14 and must enroll in the program by March 2, 2015.
The settlement stems from an early mediation program initiated by Judge Martinotti. It also stems from the efforts of former Magistrate Judge Welsh, who served as chief mediator.
The Stryker Rejuvenate and ABG II hips were recalled in 2012 due to corrosion and fretting that released metal debris and caused local tissue reaction in patients. Stryker initiated a patient support program to compensate patients for out-of-pocket expenses.
The Howmedica program will continue for claimants who don’t qualify for the settlement.
The plaintiffs are represented by Ellen Relkin of Weitz & Luxenberg in New York, Peter J. Flowers of Myers & Flowers in Chicago, Thomas R. Anapol of Anapol Schwartz in Philadelphia, Annesley H. DeGaris of Cory, Watson, Crowder & DeGaris in Birmingham, Ala., David R. Buchanan of Seeger Weiss in New York, Wendy R. Fleishman of Lieff, Cabraser, Heimann & Bernstein in New York, Tobias L. Millrood of Pogust, Braslow & Millrood in Conshohocken, Pa., Ben W. Gordon Jr. of Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor in Pensacola, Fla., Tara Sutton of Robins, Kaplan, Miller & Ciresi in Minneapolis, R. Eric Kennedy of Weisman, Kennedy & Berris in Cleveland, C. Calvin Warriner III of Searcy, Denney, Scarola, Barnhart & Shipley in West Palm Beach, Fla., Genevieve M. Zimmerman of Meshbesher & Spence in Minneapolis and Charles S. Zimmerman of Zimmerman Reed in Minneapolis.
Howmedica is represented by Kim M. Catullo and Nora E. Wolf of Gibbons in Newark, N.J.
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