CryoLife agrees to $23 million settlement

<p>Human tissue supplier CryoLife Inc. said Thursday it has agreed to settle a shareholder lawsuit for more than $23 million that accused the company of not disclosing enough information to investors before a 2002 government tissue recall.</p><p>The settlement, which must be approved in federal court in Atlanta, is expected to be paid with a combination of insurance money and company cash and stock.</p><p>CryoLife said it continues to deny wrongdoing, but believes it was in its best interest to settle since the plaintiffs were looking for more than $150 million in damages had the lawsuit gone to trial.</p><p>The nation's largest supplier of living human tissue for implantation was ordered by the government in August 2002 to stop distributing cadaver tissue. The Food and Drug Administration said the company failed to adopt and follow safety procedures to keep fungus and bacteria from contaminating soft tissue.</p><p>The company later resumed processing and distribution of all types of tissue after an FDA inspection found that problems had been corrected.</p><p>In April 2004, the company settled a lawsuit for an undisclosed amount of money with the family of 23-year-old Brian Lykins of St. Cloud, Minn., who died in Nov. 2001, four days after receiving a soft-tissue implant from CryoLife during reconstructive knee surgery, according to the FDA.</p><p>In December 2003, the Centers for Disease Control and Prevention and the FDA began investigating CryoLife after a Colorado teenager contracted a rare strep infection just days after receiving CryoLife tissue during a knee transplant.</p><p>According to the terms of the $23.25 million shareholder settlement announced Thursday, $11.5 million is expected to be paid from insurance proceeds. The company will pay the rest with $8 million in cash and $3.75 million in stock.</p><p>The company said it expects to record a pre-tax charge of $11.75 million in the second quarter.</p><p>Shares of CryoLife fell 6 cents to $7.80 at the close of trading on the New York Stock Exchange.</p>

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