A Diagnostics & Imaging Week

Genetic Technologies (GTG; Melbourne, Australia) reported that via a settlement agreement executed in December, the U.S. District Court for Northern California formally dismissed the lawsuit between it and Applera (Norwalk, Connecticut) on Dec. 30, 2005.

As previously disclosed, the final settlement included Applera taking a license to the GTG non-coding patents, and making payments to GTG in the form of cash, equipment, reagents and intellectual property, totaling about A$15 million.

Overall, GTG said it now has favorably resolved six lawsuits involving its non-coding patents. "There is now no party anywhere in the world challenging the GTG patents," it said.

The company reported that it has so far executed 24 commercial licenses to its non-coding patents, for a total consideration of about A$53M.

GTG develops applications for "non-coding" DNA in genetic analysis and gene mapping, it says, "across all genes in all multicellular species."

Richard Scrushy, ousted CEO of HealthSouth (Birmingham, Alabama), is expected to appeal a judge's ruling that he must repay more than $47 million in bonuses he received while running the company amid a huge fraud, despite being acquitted in the scheme last year.

Combined with as much as $265 million in refunds the company is seeking from the federal government for taxes it paid on overstated income during the fraud, the court-ordered repayment could help shore up the finances of HealthSouth.

Scrushy plans to appeal, according to his attorneys. "We believe the ruling is in error in that no state or federal court … has ever made a finding on the basis cited in this case," Scrushy attorney Kile Turner said in a statement.

The ruling by Jefferson County Circuit Judge Allwin Horn III came in 2005 in a shareholder lawsuit filed in 2002, when authorities were investigating allegations of insider trading by Scrushy, HealthSouth's founder.

Federal jurors acquitted Scrushy on all criminal charges last year, but Horn said that Scrushy still must repay the company $47.8 million in bonuses and interest he earned while running HealthSouth from 1997 to 2002 since the payments were tied to inflated accounting.

HealthSouth really lost money, Horn wrote, making Scrushy and other executives ineligible for any bonuses, and whether Scrushy knew of the fraud didn't matter, the judge said. "Scrushy was unjustly enriched by these payments to the detriment of HealthSouth and to allow Scrushy to retain the benefit of these payments would be unconscionable," he ruled.

Horn said he wouldn't make Scrushy repay $10.4 million in bonuses for 1996, because evidence showed that the company made money that year. Evidence in Scrushy's federal trial indicated that the fraud began in mid-1996.

Scrushy sued HealthSouth last month, seeking more than $70 million in compensation related to his firing in 2003, when the Securities and Exchange Commission (SEC) filed suit against Scrushy and the company, revealing the fraud.

HealthSouth has filed a countersuit asking a judge to make Scrushy repay the company unspecified damages.

Scrushy is due to enter arbitration this month in an attempt to settle the SEC suit. He has pleaded not guilty to criminal charges in a separate public bribery case in Montgomery, Alabama.

An investor filed suit against SeraCare Life Sciences (Oceanside, California) in federal court, accusing the company of fraud. Berman DeValerio of the law firm Berman DeValerio Pease Tabacco Burt & Pucillo, filed the class action in the U.S. District Court for the Southern District of California.

The complaint alleges that the defendants issued materially false and misleading statements that artificially inflated the company's stock price. The complaint seeks damages for violations of federal securities laws on behalf of all investors who purchased SeraCare common stock between Feb. 9 and Dec. 19, 2005.

According to the complaint, SeraCare's stock price fell by as much as 62% on Dec. 20, 2005, after the company revealed that its independent auditors had issued a report about allegedly deceptive accounting issues. The Nasdaq market subsequently delisted SeraCare's shares.

SeraCare makes biological products and provides services for diagnostic, therapeutic, drug discovery and research organizations.

A federal judge has granted class-action status to thousands of former employees of Abbott Laboratories (Abbott Park, Illinois) who say that their jobs were unfairly terminated during the spin-off of the company's hospital products business into a new, separate firm, Hospira (Lake Forest, Illinois).

A group of the former employees, who lost their jobs in 2003 and 2004, had sued Abbott and Hospira on behalf of a class of all affected workers under the Employee Retirement Income Security Act.

"The plaintiffs allege that Abbott designed the spin-off to cut off the employees' pension benefits and insulate itself from ever paying any of the increased pension obligations accrued by its older employees as they approached their peak salary years," the law office of Sprenger & Lang (Washington) said in a news release.

The firm said U.S. District Court Judge Robert Gettleman, in a decision rendered on Dec. 30, certified a class of plaintiffs for each of the three counts of the complaint by plaintiffs.

Abbott said in a statement that Gettleman's ruling was procedural and "has no bearing on the merits of the case." It said it was confident of prevailing in the case.

Abbott spun off Hospira in 2004 because its products were no longer a primary company focus.

"Allegations that Hospira was created for any other purpose are unfounded and without merit," Abbott said.

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