In a press release to shareholders, Stryker estimated that the recall of its Rejuvenate and ABG II modular-neck hip replacements would cost between $190 million and $390 million but Stryker might be a little too optimistic for comfort. Johnson and Johnson has already spent $800 million on a similar recall and still faces litigation in over 10,000 cases against DePuy, its subsidiary. Stryker may be overly optimistic about the financial toll of their defective hip replacements because it is waiting to see the result of the first lawsuits against Johnson and Johnson. Stryker executives may want to brace themselves.
Following in the Wake of DePuy
The first lawsuit to be heard against DePuy could have an extremely negative impact on Stryker if the judgment does not work in Johnson and Johnson’s favor. Before assessing the possible cost of litigation, Johnson and Johnson reported costs of roughly $800 million to recall over 90,000 hip replacements in 2010. Stryker recalled its products only six months ago and the true scope of the financial toll will not be realized until more patients come forward as a result of the recall or to sue for damages.
Rehabilitation and Long Term Care
The damage caused by metal fragments produced at the point where metal parts touch other metal parts can be life changing and require a lifetime of care to treat. After causing severe tissue damage that will require painful surgery to correct, patients will need to submit to regular testing in order to ensure that the metals used in the defective hip replacements don’t reach toxic levels in their blood. In some instances, patients may be at an increased risk of developing cancer later in life due to the types of metal that the hip replacements were comprised of and the damage suffered from the fragments.
When determining damages in a lawsuit, the cost of any long term care that will result from the defective hip replacement must be considered. Many of these costs are hard to estimate and may increase significantly if a patient encounters complication during their corrective surgery. However, if lawsuits against Stryker proceed as expected, the medical device company may find its financial obligations to patients with the company’s defective hip replacements will be greater than current estimates suggest. Stryker has currently only projected costs for 20,000 hip replacements in this assessment as well and if more patients bring claims, costs will increase at an exponential rate.
Hip Replacement Lawsuits Could Break the Bank
Based on the current assessment of costs related to its defective hip replacement recalls, Stryker may not be prepared financially for what the next few years have in store. The ruling in the first lawsuits against Johnson and Johnson may determine Stryker’s fate through precedent alone. If punitive damages are awarded or the courts in Maryland and Ohio— where cases are currently being consolidated to be heard at one time— award significant damages in consideration of pain and suffering and long term care, it will be much easier for subsequent cases to go against both Stryker and Johnson and Johnson in the future for large sums of money.