Source: Austin American-Statesman
By Amy Schatz

Jury says company waited too long to issue warning on faulty hip
A Corpus Christi jury awarded more than $15 million Thursday to three elderly Texas women who received faulty hip implants manufactured by Austin based Sulzer Orthopedics Inc.

It is the first verdict against Sulzer, which faces more than 1,200 lawsuits from patients who received hip and knee implants coated with oil that prevented them from bonding properly. The jury awarded about $4.5 million in actual damages and $11 million in punitive damages.

The verdict could hinder Sulzer's ability to get other plaintiffs to accept a proposed class-action settlement that would pay them much less. Several personal injury lawyers representing hundreds of patients already are advising clients to reject the settlement offer in the belief they can win more from juries.

Sulzer said that the verdict was unreasonable and unfair and that it will appeal.

The Corpus Christi jury decided that Sulzer acted with malice by not informing patients and doctors about the problem with the implants sooner and continuing to sell them while investigating what had gone wrong.

Sulzer learned that something was amiss with the implants in July 2000 but did not begin investigating until September. It recalled about 40,000 hip implants on Dec. 5 - the day after Lillian Sallinger, 79, underwent hip replacement surgery.

"My doctor came in and let me know just before I left the hospital. He had tears in his eyes," Sallinger said Thursday. She is still recovering from an operation to replace the defective implant.

The Nueces County Court jury awarded her $1.5 million in actual damages and $7.15 million in punitive damages. Naomi Bonorden, 68, was awarded $1 million in actual damages and $3.85 million in punitive damages. Helen Rupp, 73, got $1.75 million in actual damages but no punitive damages because Sulzer discovered the problem after her surgery.

"The verdict in my view sends a strong message to the medical device industry that surgeons and their patients deserve to be the first to know and not the last to know" when defects are discovered, said Mikal Watts, the lead lawyer for the women.
Bill Miller, Sulzer's Austin spokesman, called the jury's decision "totally out of the line."

"What happened today was exactly what we said would happen: A few patients would do well, and the rest would get nothing," because the company will be forced into bankruptcy protection, Miller said.

Several other lawsuits are set for trial in Texas and California this fall. Sulzer is trying to head off as many individual cases as possible by offering a class-action settlement valued at about $750 million. That settlement would pay patients between $57,500 and $97,500 each in cash and stock in Sulzer Medica AG, the Swiss based parent company, as well as covering medical and related expenses.

But the settlement also would put a lien against Sulzer Medica's assets until 2008. The company says that patients who don't accept their offer could not get any compensation until then.

On Wednesday, a federal court judge in Ohio ruled that Sulzer can start asking plaintiffs to accept the offer. She will decide at a later hearing whether the offer is fair.

Patients can reject the settlement and pursue individual lawsuits, but it might take years to collect any damages awarded.

Sulzer lawyers say the lien means it could be years before the three Texas women collect any money.

"To ensure that the company can fulfill its obligations to all patients, the company has secured its assets for many years to come, such that plaintiffs like those in Corpus Christi will be virtually unable to collect," said Richard Scruggs, a Mississippi trial lawyer who designed the deal for Sulzer.

However, lawyers with cases against Sulzer say they will fight the settlement in court.

"What Sulzer proposed to that judge (in Ohio) has never been tried," said Watts, who has filed 30 other cases against Sulzer. "I don't think the court of appeals will allow it to stand. I think it's unconstitutional."

Andres Pereira, a Houston lawyer who has filed 25 lawsuits against Sulzer, filed an appeal in federal appeals court Thursday against the proposed settlement.

"We don't want Sulzer to go bankrupt, but they need to compensate people fairly," Pereira said.

"They're hoping the lien provisions will force people to not opt out and coerce people into not opting out," he added.

Pereira's first case is set for trial in Marshall in October. Class-action settlements are designed to limit a company's legal costs while still providing fair compensation to people injured by the company's product.
If too many people opt out and pursue individual lawsuits, a company could increase its offer to make it more attractive or might be forced to seek bankruptcy protection against a possible wave of adverse verdicts.
The Corpus Christi verdict could hinder Sulzer's ability to persuade patients who received the bad hips to accept the proposed class-action settlement.

However, news of the federal judge's ruling Wednesday sent Sulzer Medica's stock up almost 20 percent Thursday. The shares closed at $7.95 on the New York Stock Exchange, an increase of $1.29.