DOW CORNING UPS OFFER TO SETTLE IMPLANT CLAIMSPosted On: Aug. 31, 1997 12:00 AM CST
MIDLAND, Mich.-In its latest silicone breast implant settlement proposal, Dow Corning Corp. is offering to pay claimants $2.4 billion-$400 million more than it would have under a proposed 1994 global settlement rejected by thousands of women.
In the plan submitted to the U.S. Bankruptcy Court in Bay City, Mich., last week, Dow Corning also seeks a single causation trial in an attempt to put claims of silicone implant injuries to rest.
While the company is eager to put its implant liability behind it, the same plaintiffs and attorneys who forced the company into bankruptcy in 1995 by rejecting its offer under the global settlement aren't yet ready to let the company off the hook.
The size of the settlement offer is "basically in the same ballpark," acknowledged Stephen Cozen, a Philadelphia attorney who conducted a litigation risk analysis for Dow Corning when it was calculating its liabilities for the global settlement proposed by implant makers in 1994 (BI, Feb. 21, 1994).
The Midland, Mich.-based implant manufacturer had offered to contribute $2 billion under that deal, which also included about $2.25 billion in contributions from dozens of other implant makers. Dow Corning was then forced to pull out of the global settlement and file for bankruptcy protection when too many women opted out of the settlement to retain their individual right to sue the companies. While the other implant makers restructured their contributions under the deal, Dow Corning sought bankruptcy protection rather than raise its offer (BI, May 22, 1995).
While the money may be only slightly higher, there are other improvements in the new settlement proposal, according to Mr. Cozen, a partner with Cozen & O'Connor who no longer is connected with the case.
"They're putting up more money sooner," he explained. "The old settlement proposal called for resolving claims over time."
Dow Corning also is offering to pay some of the women with its implants nearly twice as much as that offered to women with implants manufactured by other companies.
Under the revised global settlement from the remaining major implant manufacturers-led by Baxter International Inc., Minnesota, Mining & Manufacturing Corp. and Bristol-Myers Squibb Co.-implant recipients can receive between $10,000 and $100,000 each, depending on the extent of their injuries. The global settlement, without Dow Corning's participation, totals $2.25 billion.
By comparison, under Dow Corning's new proposal, women with its implants would be eligible to receive between $1,000 and $200,000.
"Dow Corning must have decided to make it generous to put it behind them," suggested Mr. Cozen.
Twice as many claimants-some 400,000-are registered under the global settlement, compared with just 200,000 in the Dow Corning case.
"This plan is an effort to conclude the breast implant controversy and offer women settlement options while also preserving the right for both sides to vigorously argue the merits of the scientific evidence in court," explained Dow Corning President Gary E. Anderson in a statement announcing the proposal.
However, members of the Tort Claimants Committee representing women with Dow Corning implants contend the new proposal is "woefully inadequate."
"Although it is encouraging that Dow Corning is admitting its responsibility for the harm its product has caused, this proposal is inadequate and unfair," said Sybil Goldrich, an implant recipient and a member of the Tort Claimants Committee.
"It is outrageous that this plan would bail out a non-bankrupt company like Dow Chemical, without them having to contribute a dime," said Dawn Barrios, one of the attorneys who this month won a jury verdict in Louisiana clearing the way for a trial against Dow Chemical Co., one of Dow Corning's parent companies (BI, Aug. 25).
Dow Corning is owned 50-50 by Dow Chemical and Corning Inc.
But Dow Corning's proposal has nothing to do with the Dow Chemical case, a company spokesman said.
The company is simply responding to an order in July by U.S. Bankruptcy Court Judge Arthur Spector to revise its first proposal, which it submitted early this year, the spokesman said.
Under its original bankruptcy reorganization plan, submitted in 1996 (BI, Dec. 9, 1996), Dow Corning offered to pay $600 million to resolve what it considers to be valid claims, such as those filed by claimants whose implants ruptured or leaked.
The company also would have set aside $1 billion to pay commercial creditors and $1.4 billion for so-called "disease claimants" if they could prove in a single causation trial their allegations that silicone gel causes a plethora of autoimmune system disorders.
While Judge Spector said he liked the idea of a single causation trial, he rejected the way the plan estimated the value of claims, Dow Corning's spokesman explained.
"The new plan has a new way to estimate claims," the spokesman said. "This provides closure for people with implants."
Part of the reason Dow Corning couldn't give a better estimate before was that the company did not know exactly how many claims it faced.
Since the notice period established by the bankruptcy court ended Feb. 15, Dow Corning now knows it faces about 150,000 domestic implant claims and 50,000 non-U.S. claims.
In addition, the company faces 161,000 claims from other implant makers to which it supplied raw silicone gel, as well as about 18,000 claims for other medical devices or products that contain its silicone.
Women voting to accept the plan would be able to choose from among four settlement options:
An expedited payment designed for fast processing and requiring less documentation.
A medical procedure program that compensates any woman who chooses to have her Dow Corning implants removed or have additional surgical procedures that may be medically necessary.
A rupture settlement option that compensates women who already have undergone surgery to remove a ruptured Dow Corning implant.
A qualified medical condition settlement that would provide higher payments for defined medical conditions. This option requires more documentation and a detailed evaluation.
The sum available to claimants would be increased by an unspecified amount if 80% or more of the claimants vote for the plan after it receives Bankruptcy Court approval, which is expected.
For those voting against the plan, Dow Corning has once again proposed a single causation trial to first resolve whether there is sufficient scientific evidence to support claims that implants cause disease.
However, women who vote for the plan would not be affected by the causation trial outcome.
Dow Corning is confident that it would emerge victorious if a science trial is held.
"The growing body of comprehensive and respected medical studies along with numerous court decisions support the view that implants do not cause disease," Mr. Anderson said in the press release announcing the plan.
Mr. Cozen agrees.
"The one thing that we have always said was there was no scientific evidence to support a causal link between silicone and disease," he said.
Indeed, a science trial could decide once and for all whether there is a definitive link between silicone gel and disease, Dow Corning's Mr. Anderson asserted in his statement.
U.S. District Court Judge Sam C. Pointer Jr. in Birmingham convened a panel of four physicians in July to hear and assess scientific evidence on whether silicone gel breast implants cause illness or disease (BI, July 28).
No date has been set either for a hearing at which Judge Spector will review and decide whether to approve Dow Corning's reorganization, the centerpiece of which is the settlement.
Dow Corning estimates that the confirmation hearing could be conducted by next summer, enabling the company to emerge from bankruptcy by the end of 1998.
Dow Corning has reached insurance settlements totaling more than $2.6 billion, including $406 million in coverage-in-place agreements in which the insurers are honoring their original policy limits (BI, Dec. 9, 1996)