McKesson CEO pay: $130 Million for 2011 and $159 Million Pension

Show me the money!!!

The Wall Street Journal is reporting that McKesson CEO John Hammergren was paid $130 million in 2011 and has a guaranteed pension of $159 million.   Over the last 7 years, he has made $355 million in cash and stock.   This, at a time when most companies, including McKesson have done away with corporate pensions.

McKesson distributes medical supplies, equipment, and pharmaceutical products.  In other words, they live off the government----and we wonder why medical costs continue to skyrocket.

We all love the free market, but this just seems like one more example of a Chairman and CEO who appoints his buddies to the board who then turn around and allow him to loot the company.

Depuy vs. Stryker: Will Stryker Employ The Same Litigation, Settlement, and Trial Strategies (Part 2)

My previous post started out as an analysis of Stryker and ended up being about Depuy, but I think it was important in order to put into context.

Here is some additional information needed to continue this discussion.  Johnson & Johnson is 10 times the size by market capitalization as Stryker.  The global universe of recalled Stryker Rejuvenate  is roughly 2/3rds the size of Johnson & Johnson's Depuy ASR.

Johnson & Johnson's market capitalization is roughly $250 billion.  They have set aside billions to fund the litigation and pay claims related to the Depuy ASR.  Stryker has roughly a $25 billion dollar market capitalization.

So, what strategy does Stryker employ?  We already know that Stryker has hired Broadspire, just like Depuy.  We also know that Depuy talked settlement to anyone who would listen, but never offered any money.  I would argue that Stryker cannot go down that road, for the following reasons:

1.  They are too small and to employ a strategy will cause them to hemorrhage money.  Lawyers alone are going to cost them a fortune.

2.  The lawyers representing plaintiffs have already built up their knowledge base litigating Depuy ASR, Depuy Pinnacle, Wright Conserve, Biomet, etc.

3.  Unlike Depuy, where most lawyers opted for the MDL (and got stuck for 3 years), lawyers with Stryker cases are going to employ strategies which may have Stryker defending themselves in state court jurisdictions from California to New Jersey to Florida to Massachusetts.

That takes us back to Stryker's options:

Option 1:  Set a value on claims and publicize it.  In certain litigation, defendants will basically tell lawyers what they are going to pay for uncomplicated claims---simple revision claims (if there is such a thing).  If you want it, come get it, but we will not pay a penny more.  This strategy comes with the requirement that a company keep to its word when a lone ranger lawyer or disruptive claimant comes in and wants more just so they can tell everyone else they got more.  As for complicated claims, in this case people who cannot be revised but have serious problems, or people who are totally disabled, those are handled on an individual basis.

Option 2:  I call this the "find the weak link" option.  Find lawyers or claimants who are willing to settle at a value that the majority of lawyers would think was less than the value than the case, settle with those people as quickly as possible, and let the word get out that you are open for business.  Not a bad strategy, if you pull it off and get enough people to bite.  The downside is that those who want full value will stay in the litigation and continue to fight, and all the while you are still hemorrhaging attorneys fees.

Option 3:  I call this the "pick off the big fish strategy" option.  Locate respected lawyers or groups of lawyers who have inventories of cases and immediately engage them in settlement discussions.  If those lawyers are reasonable (many should at this time in light of the fatigue of Depuy ASR) and start settling claims.  Once clients of other lawyers know that claims are being settled, and the values are fair and reasonable, clients of the outlier lawyers will begin to pressure them to settle their claims.  Of course, if you don't do this in conjunction with option 1, every lawyer will claim he got more money than every other lawyer or that the settling lawyers are sell out lawyers.  However, in the end, a fair and equitable settlement is just that.  I would argue this is the best strategy for Stryker.

Option 4:  MDL Strategy:  This option can incorporate parts of Options 1, 2, or 3.  The MDL strategy uses the MDL as a mechanism to either settle cases or delay cases.  As we have seen with Depuy, the MDL can be used to delay.  It can also be utilized by a defendant to evaluate their liability until they can determine what strategy to deploy.  It can also be utilized to try and force all claims to one venue and force a global settlement.  The problem with this strategy is that it is not quick.  It gets everyone in one place, but once they are there, it is like herding cats---virtually impossible.  Also, lawyers in leadership have a vested interest in common benefit work, which is ultimately paid out of any settlement of any case that touches the MDL, and is over and above the contingency fee they receive on their own cases.

What Stryker chooses to do remains to be seen.  I would suspect that they will deploy one or more of these options.  Time will tell.

Depuy vs. Stryker: Will Stryker Employ The Same Litigation, Settlement, and Trial Strategies (Part 1)

Now that the claims against Stryker have been centralized in Minnesota, speculation has begun as to what litigation strategy Stryker will employ.

Lets start with what we know.  First, Stryker has employed Broadspire as an administrator to handle claims.  Broadspire first showed up in the Depuy ASR litigation.  In the ASR litigation, Broadspire has handled the payment of co-pays, deductibles, and in some cases, lost wages for individuals claiming injuries as a result of catastrophic failure of the recalled ASR hip system.  At one time it was thought that Broadspire would engage in the wholesale settlement of claims but, to date, that has not occurred (more about that later).  At issue in the Depuy ASR litigation is whether Depuy will be allowed to introduce at trial the services performed, and the funds paid out by Depuy via Broadspire.  Depuy wants to use this evidence at trial in an attempt to show that they are a good corporate citizen and they did they right thing when they recalled the product.  Depuy needs this evidence to offset the horrible evidence showing they knew of the problems with their ASR hip system and placed profits over safety until the evidence of failures overwhelmed them.

Back to Stryker.  No, let go back to Depuy for a minute because I think it will be important for context.

From the moment the Depuy ASR MDL (multi-district litigation) kicked off, lawyers for Depuy have taken every opportunity to state time and time again that Depuy wanted to settle with claimants.  That was three years ago.  Depuy has not made any real efforts, it appears, to engage in the settlement of claims.  You just don't go three years trying to settle with any of the ten or so thousand of claimants and thousand or so of lawyers, and not get any takers.

In the meantime, Depuy has vigorously defended the cases and developed their strategy.  They have tried two cases.  One win, one loss.  They lost the first one, then re-tooled and won the second case in state court.   Claimants are dying without the opportunity to settle their claims, others are in financial distress, and others want to move on with their lives.  They want to be compensated for what they have been through and they are pressing their lawyers.

Advantage Depuy.

Depuy now sits at a crossroads.  Despite the disaster now known as the ASR, Depuy has drawn even at trial.  The second trial proved Depuy can use their massive resources to convince juries that individual issues, despite how off base or misguided, caused the failure of that specific device and not a RECALLED PRODUCT THAT ULTIMATELY RESULTED IN THE END OF METAL ON METAL HIPS.  This should be considered a huge win for Depuy. Many thought that the losses would continue to mount and that Depuy would be forced to settle claims on unfavorable terms.

What will Depuy do at this time?  I would argue they have ultimate bargaining power.  They have proved that they have the lawyers and the resources to pull of an upset win.  They have drug out this litigation out for three years telling anyone who would listen that they want to settle, while making no real apparent attempts to settle.

What happens from here?

There has yet to be an MDL bellwether trial.  That is coming up.  I would argue that the result is immaterial to either side.  The die has been cast.   There are ten thousand cases out there to be tried.  Shortly, the judge presiding over the MDL will be forced to send them back to the jurisdictions they came from for trial.  Depuy will be trying cases every month and the war of attrition will continue, but this time the advantage will be against Depuy as thousands of lawyers get their chance to become famous by taking down the $1000 per hour lawyers and unlimited resources of Depuy in places like Alabama, Florida, California, New York, Texas, South Carolina..................

Back to Stryker in part 2.

BBC Interview with British Health Regulatory Agency Director

Surgeons in the United Kingdom fear metal debris from the failed metal hip joints have possible long term damage. The metal in the joint has been shown to wear down and these "hip replacements may be leaking metal fragments". The UK health regulator, the MHRA, announced that 49,00 patients with metal on metal hip replacements will to be required to have annual checks up due to medical fears. Engineer Tom Joyce of Newcastle University, in his analysis of the wearing metal joint, claims that "these metal on metal hips are failing at rates we just wouldn't expect". Professor Sir Kent Woods, who is a medicine and health product regulator in the UK, admits there were "no clinical trials" were conducted prior to administering these metal on metal hips.



http://www.bbc.co.uk/news/health-17192520 

Stryker Timeline of Events

TIMELINE OF EVENTS

June 3, 2008:  FDA approved the Stryker Rejuvenate modular-neck stem. According to Stryker, the Rejuvenate hip stem was designed to re-create the anatomy and the biomechanics of individual patients. Stryker claimed the Rejuvenate hip stem provided enhanced stability, proven modularity and intra-operative flexibility.

February 2009:  Stryker began marketing the Rejuvenate Modular Primary Hip System.

November 4, 2009:  FDA approved the Stryker ABG-II modular-neck stem. Stryker marketed these two products as the new generation of stems and targeted a younger demographic. Stryker touted them as “high performance” in terms of corrosion resistance and improved fatigue strength.

February 2010:  Stryker issued an “Urgent Field Safety Notice” to surgeons – reiterating technique for implantation and identifying less than 1% failure rate due to metallosis between the neck and stem morse taper junction. Stryker failed to notify consumers of any problems.

April 2012:  Stryker issued another “Urgent Field Safety Notice” to surgeons and hospitals in the United States for the two hip replacement systems. The alert listed the potential hazards in these devices, including: “Excessive metal debris and/or ion generation,” caused by: “Fretting and/or corrosion at or about the modular neck junction,” which “may lead to increased metal ion generation in the surrounding joint space.”

May 2012:  Stryker publishes report stating mechanical problems with the modular-neck stems. Stryker says these stems have the potential to cause similar metal toxicity problems that some patients with metal-on-metal hip implants have experienced.

May 28, 2012:  The Canadian equivalent of the FDA announced that the Stryker Rejuvenate was being recalled.

July 6, 2012:  Stryker voluntarily recalled its Rejuvenate and ABG-II modular neck system from the United States market. Stryker also ceased global production and sale of these devices. By this time, the FDA received more than 45 adverse event reports of metal toxicity requiring revision surgery.

August 2012:  Stryker urges surgeons to send letters to clients notifying of these recalls and encouraging patients to contact Stryker.

Stryker Hip MDL Goes to Minnesota

The Judicial Panel on Multi-District Litigation entered an order centralizing the Stryker Rejuvenate Hip Litigation, MDL 2441 to the District of Minnesota before Judge Donovan W. Frank.  The MDL panel made clear that the judge presiding over the litigation was the most important factor in selection, [s]uccessful coordination....hinges on the efforts of the involved judges.

It will be interesting to see if claimants feel comfortable with the District of Minnesota or opt to file claims in other available venues.

Where will the MDL Panel send? MDL No. 2441 - IN RE: STRYKER REJUVENATE AND ABG II HIP IMPLANT PRODUCTS LIABILITY LITIGATION

All eyes are on the MDL panel to see what judge and jurisdiction MDL No. 2441 - IN RE: STRYKER REJUVENATE AND ABG II HIP IMPLANT PRODUCTS LIABILITY LITIGATION will be sent. The general consensus is New Jersey, with Illinois and Arkansas as long shots. The choice of venues is extremely important. Depending on the selection, attorneys for claimants could decide to file into the MDL, or seek to file in various state court jurisdictions.

Depuy ASR Hip Verdict Affirmed by Trial Judge

A California Superior Court judge has denied DePuy Orthopaedics’ motions for new trial or judgment notwithstanding the verdict, upholding the $8.3 million judgment that resulted from the state’s first trial of a DePuy ASR hip implant case. The case is Kransky v. DePuy, BC456086, California Superior Court, Los Angeles County.

In March, the jury hearing the DePuy ASR recall lawsuit in California found the ASR hip was defectively designed, and awarded more than $8.3 million to the Plaintiff, Loren Kransky. Mr. Kransky sued the company under the theory that the ASR was defectively designed as well as DePuy's failure to warn his doctors that its product was dangerous. He claimed that the ASR hip caused him to suffer severe side effects, including metal poisoning. The jury found in favor of Mr. Kransky on the design defect claim and in favor of DePuy on the failure-to-warn claim.

During that trial, evidence was introduced which indicated Johnson & Johnson and its subsidiary, DePuy Orthopaedics, had knowledge that the ASR hip product was defective years before the recall was announced. The recall occurred in August 2010. However, that information was not shared with the public at large or the medical community. According to a New York Times report published on April 16th, much of the same evidence was introduced in a second trial that concluded last month in Illinois state court. However, the jury hearing that case found for Johnson & Johnson.

Los Angeles Superior Court Judge J. Stephen Czuleger issued his decision from the bench following a hearing May 24 and has scheduled a hearing in June on the plaintiff’s attorneys’ request for approximately $1.2 million in costs. DePuy submitted its motion for JNOV April 17^th in the corporation’s bid to persuade Judge Czuleger to throw out the verdict. In their motion, Depuy argued that the jury had erred and its verdict was inconsistent.Thus far, there has been no written order.

Judge Czuleger ruled that although there was a "legitimate conflict" in the evidence at trial as to when DePuy knew that its ASR hip implants were dangerous, this did not bar Mr. Kransky's ability to hold DePuy liable for a defectively designed product. The judge also rejected DePuy's claim that the overall body of evidence was insufficient to support Mr. Kransky's verdict, noting that there was "strong evidence" in support of his claim.

Court records indicate that there are more than 11,000 DePuy ASR hip lawsuits currently pending throughout the United States, most of which have been filed in a multidistrict litigation underway in U.S. District Court, Northern District of Ohio. The first trials in the MDL are expected to begin in September 2013. That date is subject to change as the first bellwether case has been continued already this year. The ASR MDL is titled In re: DePuy Orthopaedics, Inc. ASR Hip Implant Products Liability Litigation – MDL 2197.


Our firm is currently investigating claims for those people who have been implanted with the DePuy hip replacement devices, both ASR and Pinnacles. If you would like a free case evaluation, please contact Chris Hellums at toll free 1-866-515-8880 or at chrish@pittmandutton.com.