Stryker suit against liability insurer stays alive

A federal judge last week denied a motion to dismiss a suit filed by Stryker (NYSE:SYK) against its liability insurer XL Insurance America over issues with coverage related to the company’s Uni-Knee implants.

In the case, Stryker is seeking to recover damages from XL related to a batch of expired artificial knee joints sold between 1997 and 1998 by subsidiary Howmedica, which was at the time a subsidiary of Pfizer, according to court documents.

Patients began to sue Stryker and Pfizer in 2000 after the implants filed, according to the documents, during which XL served as the primary liability insurer. Stryker also had coverage from TIG Insurance Company, which reportedly provided $25 million in excess coverage “under a policy that followed the form of XL’s policy.

XL reportedly refused to defend or indemnify Stryker for the Uni-Knee claims, and Stryker settled with the individual claimants for a total of $7.6 million. A final judgement in September 2010 which included pre-judgement interest came in at $27 million, according to court documents.

In April 2007, the court ruled in favor of Stryker for approximately $12 million, not including pre-judgement interest. The amount included the $7.6 million in Uni-Knee settlements, as well as Stryker’s cost for defending the Uni-Knee claims, according to court documents.

XL sought to end the suit, but US District Judge Paul Maloney refused the motion for judgement on the pleadings, saying that the Kalamazoo, Mich.-based company’s claims were viable and keeping the suit alive.

Earlier this month, Stryker released data from a pre-clinical study comparing spinal implants made form a variety of different materials exploring their bone-ingrowth and biological fixation capabilities.

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