Plaintiffs’ Leadership Counsel Announce a Settlement Program for Wright Medical Metal-on-Metal Hip Implants
Anthonia Spencer | November 2, 2016
After a hard-fought, almost 5-year battle in federal court in Atlanta, Georgia and in California state court, we are pleased to announce a settlement program that will resolve a significant number of claims against Wright Medical. Wright Medical has agreed to settle approximately 1,300 claims of certain Wright Medical metal-on-metal hip implant patient-claimants whose hips were revised at least 150 days and no more than eight years post-implant. There are approximately 2,300 pending claims involving Wright Medical’s Conserve, Lineage, and Dynasty metal-on-metal hips. Plaintiffs’ Leadership Counsel’s retained financial analysts have been evaluating Wright Medical’s ability to settle these cases for years. Based on that analysis, we believe that Wright Medical was not in a position to and therefore could not agree to settle the remaining claims involving revisions occurring after eight years or other cases that it deemed not qualified at this time. During the negotiations with Wright Medical, it was made clear that claims for revised Wright metal-on-metal hips that are not included in this settlement will be part of subsequent settlement programs.
The Wright Conserve Multi-District Litigation (MDL) was consolidated in February 2012 in federal court in the Northern District of Georgia before the Hon. William S. Duffey, Jr., United States District Judge. Additionally, a Judicial Council Coordination Proceeding (JCCP) petition was approved in May 2012 before the Hon. Jane Johnson, Los Angeles Superior Court Judge, consolidating California state-court cases involving Wright Medical hip replacement and revision matters, including Wright Medical’s Conserve, Lineage, and Dynasty hip implants. The Hon. Diane M. Welsh (Ret.), led the extended settlement negotiations and tirelessly worked with the parties for several years to help facilitate the settlement.
Wright Medical’s hip and knee division (OrthoRecon) was sold in January 2014, and the successor corporation has a defense that it did not inherit the liability. Our financial analysts’ review further indicated that Wright Medical’s ability to fund this settlement depended largely on insurance coverage and a bond issue used, in part, to raise money for this settlement. Wright Medical has been engaged in litigation in Memphis with most of its insurance carriers and recently finalized an agreement with 3 of the carriers. It remains in litigation or coverage disputes with its remaining carriers. In light of our analysis of Wright Medical’s financial condition, this is a timely and meaningful settlement, offering $170,000 to claimants who had the monoblock Conserve Cup, the device with the most frequent failures, and $120,000 to those who had the metal-liner Dynasty and Lineage devices. An additional, but capped, limited fund is also available for claimants who suffered discrete and defined claims of extraordinary injury. More importantly, the settlement program calls for pre-qualification, without registration, coupled with a very simple administrative process for claimants not pursing extraordinary injury claims that will lead to expeditious payments expected to be largely complete by summer 2017. Counsel for eligible claimants will be notified of their pre-qualification by February 3, 2017.
Plaintiffs’ Leadership Counsel consists of Michael L. McGlamry of Pope McGlamry, P.C. in Atlanta, Georgia, firstname.lastname@example.org / 404-523-7706; Raymond P. Boucher of Boucher LLP in Woodland Hills, California, email@example.com / 818-340-5400; Helen Zukin of Kiesel Law in Beverly Hills, California; Peter Burg of Burg Simpson in Englewood, Colorado; Christopher Yuhl of Yuhl Carr, LLP in Marina del Rey, California; Sean Jez of Fleming Nolen & Jez, L.L.P. in Houston, Texas; and Ellen Relkin of Weitz & Luxenberg, P.C. in New York, New York.
Written by Eric Oliver Date created | Thursday, 03 November 2016 20:07
Amsterdam, Netherlands-based Wright Medical Group entered into a Master Settlement Agreement over litigation on its Hip Implant products.
Here's what you need to know.
1. Wright and the lawyers representing the plaintiffs agreed to settle 1,292 revision claims concerning its Conserve, Dynasty or Lineage hip implants
2. Wright will settle for up to $240 million with $180 million in cash and $60 million for insurance recoveries.
3. The settlement requires a 95 percent opt-in clause. Wright Medical will void the settlement if more than 5 percent of the plaintiffs opt out of it.
4. CEO Robert Palmisano said he was pleased to reach the settlement, and the company will now focus on "accelerating growth opportunities in its extremities and biologics markets."
5. Wright will "vigorously defend" any claims that were not settled. The company estimates there are 600 cases that will not be included in the settlement.
Wright Medical Group N.V. Announces Entry Into Metal-On-Metal Hip Litigation Settlement AgreementPreviously Disclosed Agreement In Principle with Three Insurance Carriers Also Finalized Settlement In Line with Previously Disclosed Range of Loss
AMSTERDAM, The Netherlands, Nov. 02, 2016 (GLOBE NEWSWIRE) -- Wright Medical Group N.V. (NASDAQ:WMGI) today announced that on November 1, 2016, its wholly owned subsidiary Wright Medical Technology, Inc. (WMT) entered into a Master Settlement Agreement (MSA) with Court-appointed attorneys representing plaintiffs in the previously disclosed metal-on-metal hip multi-district litigation known as In Re: Wright Medical Technology, Inc., CONSERVE® Hip Implant Products Liability Litigation, MDL No. 2329 (MDL) and the consolidated proceeding pending in state court in California known as In re: Wright Hip System Cases, Judicial Council Coordination Proceeding No. 4710 (JCCP). In addition, on October 28, 2016, the Company entered into a Settlement Agreement with three of its insurance carriers (Three Settling Insurers).
Under the terms of the MSA, the parties agreed to settle 1,292 specifically identified CONSERVE, DYNASTY or LINEAGE revision claims which meet the eligibility requirements of the MSA and are either pending in the MDL or JCCP, or are subject to tolling agreements approved in the MDL or JCCP, for a total settlement amount of $240 million, of which approximately $180 million will be funded from cash on hand and $60 million will be funded from insurance recoveries.
Eligibility requirements of the MSA include that the claimant has a pending or tolled case in the MDL or JCCP, has undergone a revision surgery within eight years of the original implantation surgery, and that the claim has not been identified by WMT as having possible statute of limitation issues. Claimants who have had bilateral revision surgeries will be counted as two claims but only to the extent both claims separately satisfy all eligibility criteria.
The MSA includes a 95% opt-in requirement, meaning the MSA may be terminated by WMT prior to any settlement disbursement if claimants holding greater than 5% of eligible claims in the Final Settlement Pool elect to “opt-out” of the settlement. No funding of any individual plaintiff settlement will occur until the 95% opt-in requirement has been satisfied or waived.
Robert Palmisano, president and chief executive officer, commented, “We are very pleased to have reached this settlement agreement, in particular the population of claims that the settlement covers as well as the required 95% opt-in rate for those claims. With this clarity, we will continue to focus on accelerating growth opportunities in the extremities and biologics markets. This settlement addresses approximately 85% of the known U.S. revision claims that do not have potential statute of limitations issues and removes a great deal of the uncertainty that has been associated with this litigation.”
Wright will continue to vigorously defend metal-on-metal hip claims not settled pursuant to the MSA. As of September 25, 2016, the company estimates there were approximately 600 outstanding metal-on-metal hip revision claims that would not be included in the MSA settlement, including approximately 200 claims with an implant duration of more than eight years, approximately 300 claims subject to possible statute of limitations preclusion, approximately 30 claims pending in U.S. courts other than the MDL and JCCP, approximately 50 claims pending in non-U.S. courts, and approximately 20 claims that would be eligible for inclusion in the settlement but for the participation limitations contained in the MSA. The company also estimates that there were approximately 700 outstanding metal-on-metal hip non-revision claims as of September 25, 2016. These non-revision cases are excluded from the MSA.
The final MSA settlement amount (not to exceed $240 million), and the final number of claims settled under the MSA, will depend on, among other things, the number of claimants electing to participate in the settlement and the mix of products implanted in the settling claimant group. Claims which do not meet the eligibility requirements of the MSA, new claims, and claims which have opted-out of the settlement will not be settled under the MSA and the company will continue to defend these claims.
The company previously disclosed a loss range applicable to a substantial portion of revision cases of $150 million to $198 million and, in accordance with U.S. generally accepted accounting practices (US GAAP), recognized as a charge within discontinued operations in the second quarter of 2016 $150 million, the low end of the range of probable loss for these cases. During the third quarter of 2016, the company recorded charges of approximately $39 million to increase its accrual from the low end of its previous range of probable loss to the amounts in line with the final agreements and to record accruals for certain other revision cases. Please refer to the disclosures in the company’s third quarter 2016 quarterly report on Form 10-Q for a full discussion of our accruals and disclosures related to this matter.
WMT has agreed to escrow $150 million to secure its obligations under the MSA, and parent corporation Wright Medical Group N.V. has agreed to guaranty WMT’s obligations under the MSA.
The MSA will help bring to a close significant metal-on-metal litigation activity in the U.S. Some lawsuits, however, will remain and Wright will continue to defend against remaining claims and any future claims that could be filed. The ultimate cost to entirely resolve these matters will depend on many factors that are difficult to predict and may be materially different than the amounts accrued to date, including future revision claims and additional insurance recoveries. Further charges may need to be recorded in the future as additional information becomes available.
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Wright routinely posts information that may be important to investors in the “Investor Relations” section of its website at www.wright.com. The company encourages investors and potential investors to consult the Wright website regularly for important information about Wright.
About Wright Medical Group N.V.
Wright Medical Group N.V. is a global medical device company focused on extremities and biologics products. The company is committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and is a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. For more information about Wright, visit www.wright.com.
™ and ® denote trademarks and registered trademarks of Wright Medical Group N.V. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as “will,” “may,” “continue,” “anticipate,” “expect,” “could,” “believe,” “estimate,” “future,” other words of similar meaning and the use of future dates. Forward-looking statements in this release include, but are not limited to, statements about the effects of the settlement agreements and the amount and funding of the settlement amounts. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forward-looking statement contained in this release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, risks and uncertainties associated with the MSA and the settlement agreement with the Three Settling Insurers, including without limitation, the final MSA settlement amount and the final number of claims settled under the MSA, the possibility that the 95% opt-in requirement may not be achieved, the resolution of the remaining unresolved claims, the effect of the broad release of certain insurance coverage for present and future claims, the resolution of the company’s dispute with the remaining carriers; and the other risks identified under the heading “Risk Factors” in Wright’s Annual Report on Form 10-K for the year ended December 27, 2015 filed by Wright with the SEC on February 23, 2016 and Wright’s Quarterly Report on Form 10-Q for the quarter ended September 25, 2016 anticipated to be filed by Wright with the SEC on November 2, 2016. Investors should not place considerable reliance on the forward-looking statements contained in this release. Investors are encouraged to read Wright’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this release speak only as of the date of this release, and Wright undertakes no obligation to update or revise any of these statements. Wright’s business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.
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