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Peter Cox
St. Paul, Minn.

Stryker faces $1.4B in payouts over faulty hip replacement devices

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A federal court settlement over defective hip replacement products could result in more than $1.4 billion in payouts from the medical device manufacturer Stryker, according to the company's financial documents.

A settlement with Stryker Corporation, of Kalamazoo, Mich., was announced Monday afternoon in U.S. District Court in St. Paul.

The company's Modular Rejuvenate and ABG II Femoral Hip Implants were defective, said Ben Gordon, one of the lead attorneys for the plaintiffs.

He said the company used two different metals in the product, which resulted in more health problems for many patients, especially when the metal wore down. Gordon described it as "fretting."

"The fretting led to rust, essentially -- oxidation and corrosion between the two unlike metals and that led to massive tissue damage," he said.

Stryker issued a voluntary recall of the product in July 2012.

Gordon said this settlement covers around 3,000 people in 39 states who had to get surgery to replace the product. Each plaintiff will receive $300,000, and some could receive more depending on the circumstances of their case, Gordon said.

In an SEC filing Monday, the company recorded charges to earnings totaling $1.425 billion, which the filing says is the "low end of the range of probable loss."