Stryker, which acquired the Duracon Uni-Knee with its $1.9 billion buyout of Howmedica from Pfizer (NYSE:PFE) in 1998, ended up paying out $7.62 million to settle liability suits after problems with the implant surfaced. After TIG refused to cover its losses, the Kalamazoo, Mich.-based orthopedics giant sued to recoup the direct settlements it paid out of its own pocket. TIG argued that the claim isn’t covered because Stryker didn’t ask for its consent before inking the settlements.
In 2014, Judge Robert Holmes Bell of the U.S. District Court for Western Michigan disagreed, ruling that Stryker didn’t need TIG’s approval to settle the suits and ordering TIG to cover them. In May 2015 Bell ordered TIG to pay Stryker a total of $8.6 million, plus another $2,000 a day until the amount was paid in full. That order included $6.2 million in principal, pre-judgment interest of $668,000 and penalty interest of $1.8 million, according to court documents.
The U.S. Court of Appeals for the 6th Circuit overturned Bell’s ruling Nov. 18, finding that the TIG policy required Stryker to obtain the insurer’s consent before agreeing to any settlements.
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