Milpitas-based Lifescan on Monday agreed to pay $45 million to hundreds of thousands of diabetics who alleged that they bought dangerously defective home-testing devices from the company, avoiding a trial that was set to begin this week.

The settlement, announced in San Jose federal court, resolved a nationwide class-action lawsuit filed on behalf of consumers who purchased Lifescan's Surestep blood glucose meter, a device diabetics rely on to monitor their critical blood sugar levels. The pact was reached as the two sides prepared for an eight-week trial that was expected to begin Monday with jury selection.

Lifescan, a subsidiary of Johnson & Johnson, has now spent more than $100 million to end a series of legal troubles that stem from its Surestep product. Last year, the company pleaded guilty to misdemeanor charges involving defects in the Surestep meter that it allegedly knew about but failed to disclose to consumers or to the U.S. Food and Drug Administration. A federal judge imposed $30 million in fines and penalties in the criminal case.

At the same time, Lifescan settled a lawsuit brought on behalf of the federal government by a former Lifescan researcher turned whistleblower; that case cost the company an additional $30 million.

U.S. District Judge Jeremy Fogel still must approve the $45 million settlement with consumers, but said in court Monday that there is a ``very strong presumption this is an arm's length agreement and one entitled to great deference.''

Lifescan did not admit wrongdoing under the terms of the settlement, which applies to diabetics who purchased Surestep meters before August 1997, when the company fixed a software glitch in the product.

Melissa Morris, a Pacifica woman who was the lead plaintiff in the case, attended the hearing and praised the settlement. ``I think it's going to help a lot of people,'' said Morris, who purchased one of the meters in 1996. ``It will let people know there was a problem with the unit.''

Lawyers for the consumers and for Lifescan declined to discuss the settlement, which was brokered last week by well-known San Jose lawyer Allen Ruby.

In the past, Lifescan, while conceding that it made mistakes, has strongly denied intentionally marketing a defective product and causing any harm to diabetics who used the Surestep device, which has been upgraded and remains on the market. In court papers, Lifescan indicated that it would have defended itself at trial by asserting that Surestep has been the most reliable blood glucose meter and that customers were not damaged by any problems with the product.

But attorneys for Lifescan's customers alleged that the company marketed the Surestep device for years despite knowing that it contained defects, such as misidentifying when blood glucose levels hit a danger point. Plaintiffs' lawyers alleged that the product failures led to critical illnesses and in some cases deaths, which the company strongly denies.

Mercury News

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