Zimmer Biomet loses Pa. state appeal in $16m knee implant loss

Zimmer Biomet (NYSE:ZBH) set aside nearly $16 million last year to cover its potential loss in a product liability lawsuit brought over its Gender Solutions knee replacement, after a Pennsylvania state appeals court declined to review the case.

Margo Polett’s suit claimed that she re-injured her knees while making a Zimmer promotional video, after a double knee replacement in 2006 using its Gender Solutions devices. Polett alleged that activities she engaged in for the video, including riding a bicycle and running on a treadmill, resulted in new damage to her knees.

Although the jury awarded Polett millions in damages after finding that Zimmer was 34% culpable, it also put 30% of the blame on Polett herself and 36% on the marketing firm Public Communications for its part in creating the ad.

But the Pennsylvania Superior Court ruled in October 2013 that the lower court incorrectly shifted the burden of proof onto Zimmer by asking the company to provide alternative explanations for Polett’s revisions surgeries, thus leading the jury to a potentially false conclusion, and ordered a new trial. After the high court agreed in May 2014 to reconsider three issues in the case, it reversed and remanded back to the superior court.

Last June, the superior court ordered the trial court to cut the nearly $28 million in damages levied against Zimmer, ruling that although Polett and her husband were clearly entitled to compensatory damages, the $26.6 million awarded to Polett and the $1 million awarded to her husband was “excessive – if not punitive – and ‘clearly beyond what the evidence warrants.’”

The trial court cut the verdict to $21.5 million Dec. 2 and later reduced it further based on Polett’s 30% culpability, to nearly $15.2 million for Polett and $630,000 for her husband; Zimmer Biomet promptly appealed.

In December 2017 the appeals court upheld a lower court’s award of nearly $16 million in damages against Zimmer Biomet in a knee implant lawsuit; according to a regulatory filing, Zimmer moved for an en banc rehearing Dec. 29, which was denied Feb. 12.

“While we are considering further appellate options, including appeal to the Pennsylvania Supreme Court, we have recorded a charge for the approximately $15.8 million remitted and molded verdict, plus post-judgment interest from the date of verdict in 2010,” the company said in the filing.

In January Zimmer posted huge fourth-quarter and full-year profit gains on last year’s tax reforms, but still only managed to meet Wall Street’s earnings expectations despite logging sales beats for both periods.

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