A Medical Device Daily

Tenet Healthcare (Dallas) reported that it has reached agreements to pay $215 million to settle federal securities class action lawsuits brought against it on behalf of certain purchasers of its securities as well as shareholder derivative litigation brought by certain Tenet stockholders for the benefit of the company.

Tenet said it expects that insurance for directors and officers will contribute about $75 million toward the settlements, with its cost to be about $140 million, recorded as a 4Q charge.

Tenet will make the $215 million payment in cash, put into an escrow account within 10 days after the federal and state courts grant preliminary approval.

If court-approved, the agreements will settle litigation pending in the U.S. District Court in Los Angeles and California Superior Court in Santa Barbara.

Tenet said two former senior company executives will contribute an additional $1.5 million of their personal funds to the settlement; Jeffrey Barbakow, former chairman and CEO, will contribute $1 million, and Thomas Mackey, former chief operating officer, will contribute $500,000.

Tenet said the settlement covers all the former directors and officers named in the litigation, but not its outside auditors, who are also defendants.

It expects federal derivative litigation pending in U.S. District Court in Los Angeles to be dismissed if the state court in Santa Barbara approves the settlement of the state derivative litigation.

"These settlement agreements represent an equitable conclusion to one of the significant private civil litigation issues arising from actions and events that took place at the company prior to 2003," said Peter Urbanowicz, Tenet's general counsel. He noted improvements in company management and that the new settlement is "another significant step forward in our turnaround."

The settlement covers a series of securities class-action lawsuits that were filed against the company beginning in late 2002 for purchasers of Tenet securities between Jan. 11, 2000 and Nov. 7, 2002. These actions were consolidated in January 2003 in the U.S. District Court in Los Angeles. The cases alleged that Tenet and a number of its former officers and directors made or were responsible for false and misleading statements concerning the company's receipt of Medicare outlier payments and other issues.

In other legalities:

The legal war between Align Technology (Santa Clara, California) and OrthoClear (San Francisco) in the teeth straightening sector continues. Align reported filing a complaint with the U.S. International Trade Commission (ITC) vs. and its subsidiaries in San Francisco and Lahore, Pakistan, seeking to halt the import of aligners made by OrthoClear, charging use of Align's trade secrets and infringement of 12 Align patents, by OrthoClear aligners made in Lahore.

Align also said it filed a parallel federal court patent infringement action in the Western District of Wisconsin, seeking damages and an injunction to augment relief available from the ITC.

Roger George, Align's vice president, legal affairs and general counsel, said a recent patent office ruling regarding Align's '880 patent "validates the strength of our patent portfolio ... A determination of infringement by OrthoClear of even one claim is sufficient to receive an exclusionary order against OrthoClear products."

• BioTech Medics (Dallas) reported being served with a civil defamation action by Adam Barnett, a Florida resident. BioTech said it has denied the allegations and filed a counterclaim against Barnett, and also a third-party petition against William Seminario, a Florida resident, and Hamilton Holdings, a Pennsylvania corporation.

BioTech's counterclaim and petition alleges that Barnett, Seminario and Hamilton deprived BioTech of more than 12 million shares of its stock and manipulated the value of its stock. And it alleges that Barnett, using a series of aliases, published defamatory statements on the Internet against BioTech and its management.

Keith Houser, CEO of BioTech, said, "We have also been in contact with the Securities and Exchange Commission-Enforcement Division ... and intend to continue to assist the SEC in their investigation in any way we can."

BioTech Medics develops laser systems designed to reduce muscular, skeletal and arthritic pain.