Judge Sides with Stryker in Insurance Case

October 31, 2014

A federal judge in Michigan ruled Thursday that an insurance company must pay on claims for defective knee prostheses marketed by Stryker.

TIG Insurance provided backup liability coverage to Stryker in the year 2000, when claims were filed against the orthopedics company for defective Uni-Knees that were manufactured by Pfizer. The primary insurer, XL, paid out to its policy limits in 2009; however, TIG maintained it was not responsible for the remaining claims because it had not consented to the 2009 settlement agreement. 

But excess insurance carriers don’t normally need to consent to settlements, Stryker told the court. TIG’s written contract was ambiguous on the issue.

In finding for Stryker, Judge Robert Holmes Bell, of the U.S. District Court for the Western District of Michigan, said “it is better to place the risk of this unanticipated development on TIG rather than on Stryker” because state law had consistently found against the insurer in similar cases and TIG had never identified any reason it would not consent to the settlements. Moreover, the judge said TIG’s claim that it had not been told about the Pfizer settlement in a timely manner was late, irrelevant, and had not changed the verdict.

TIG is now on the hook for around $8 million, its share of the $25 million verdict reached against TIG and XL in 2010. — Elizabeth Orr

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