Fresenius, plaintiffs ask for more time for $250m settlement in dialysate cases

Fresenius Medical Care (NYSE:FMS) and the plaintiffs in a spate of lawsuits brought over its GranuFlo and NaturaLyte dialysis drugs yesterday asked a federal judge in Massachusetts to stay the case so they can finalize their $250 million settlement deal.

The deal, brokered with a committee of plaintiffs’ representatives, requires that 97% of all patients who brought lawsuits sign on by July. Fresenius said last month that if that bar is met, Fresenius Medical Care North America would fund the settlement in August, using $220 million from its insurers.

The company and the plaintiffs asked Judge Douglas Woodlock of the U.S. District Court for Massachusetts to stay the MDL until August 31 and postpone the trials of a the 1st pair of bellwether cases in the litigation.

“The requested stay of proceedings in this MDL and continuances of the 1st 2 bellwether trials are based upon good cause; they serve interests of judicial economy and promote litigation efficiency as the parties attempt to effectuate a settlement-in-principle as reported to the court on Feb. 17, 2016,” they wrote. “The parties are optimistic that the settlement will resolve the vast majority of the related cases. The requested stay and continuance would permit the parties to focus on resolution while also assuring a prompt resumption of the bellwether trial schedule in the event settlement fails.”

There are roughly 4,000 cases in the MDL, according to court documents. Discovery is complete in the 10 cases selected as bellwethers, according to the documents, but only the 1st 2 have been scheduled for trial. The parties asked Woodlock to schedule the 1st trial for October and December.

The GranuFlo and Naturalyte products were used to lower the acidity of patients’ blood during dialysis treatments. The lawsuits in the MDL generally allege that the dialysates’ high concentration of acetone led to abnormally high levels of bicarbonate in the blood, leading to fatal heart problems and strokes.

In 1 case, a dialysis patient in Kentucky named Linda Teague allegedly died at age 48 from cardiac arrest after a procedure there.

“Decedent received defendants’ defective product during that dialysis treatment and, on or about Jan. 14, 2011, suffered cardiac arrest and died from the injuries she sustained as a result of her exposure to defendants’ defective product,” according to the complaint. “Even though defendants knew of the risks for several years, medical providers were unaware that the high levels of bicarbonate in defendants’ products heighten the risk of cardiac injury by 6 times. As a result, thousands of patients receiving dialysis treatment were unknowingly overdosed.”

An internal Fresenius memo from November 2011 allegedly details the results of a study completed in 2010, “based on data defendants had available for many years,” according to the documents.

The FDA launched a Class I recall of FMC’s GranuFlo product in March 2012, after obtaining a copy of the memo, and and began investigating Fresenius later that year, after more than 900 patients experienced heart attacks at Fresenius dialysis centers.

Fresenius said it expects the settlement to deliver a pre-tax charge of $60 million, but stood pat on its guidance for 2015. The German dialysis giant said it expects to post sales of roughly $16.7 billion for 2015.

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