Judge OKs A. H. Robins Reorganization Plan

A federal judge confirmed a reorganization plan for the A. H. Robins Co. on Tuesday, nearly three years after the pharmaceutical concern filed for bankruptcy in the face of thousands of lawsuits from women claiming they were injured by the Dalkon Shield birth control device.

The plan, which was endorsed by lawyers for both the claimants and the company after years of often bitter wrangling, includes a $2.475-billion trust fund to compensate Dalkon Shield victims.

“It is not perfect,” said Stanley K. Joynes III, a lawyer for future Dalkon claimants. “But there just had to be an end so that the women could get paid.”

Appeals Expected

Guerry Thornton Jr., an attorney for the Atlanta-based Dalkon Shield Victims Assn., called the plan’s confirmation a “phenomenal success story” and said it sets an important historical precedent by not allowing Robins to escape liability by filing for bankruptcy.

The confirmation order by U.S. District Judge Robert R. Merhige will become final Aug. 25 if no appeals are filed. Those involved in the case have said they expect appeals. The plan, however, provides for payments of some smaller Dalkon Shield claims if appeals delay a final settlement.

Merhige also approved a settlement of a class-action suit against Aetna Casualty and Surety Co., Robins’ insurer. Aetna will contribute $425 million to the trust fund in return for immunity from further liability in the case.

To Be Acquired

“We are extremely pleased the court has confirmed the plan,” Roscoe E. Puckett Jr., a spokesman for Robins, said. “This represents a giant step toward a successful conclusion of this case.” Puckett said the next step is for the company to wait and see if any appeals are filed.

Lawyers representing claimants who are opposed to the plan will meet Monday in Kansas City to decide whether to appeal the plan, according to Ralph Pittle, an attorney for the International Dalkon Shield Victims Education Assn. in Seattle.

Robins filed for protection from creditors under Chapter 11 of the federal bankruptcy law in August, 1985 as lawsuits mounted against the birth control device, which the company sold in the early 1970s.

The reorganization plan calls for Robins to be acquired by American Home Products Corp. of New York in exchange for approximately $700 million worth of stock.

Robins attorneys announced at a confirmation hearing last week that more than 94% of the Dalkon Shield claimants who voted on the plan were in favor of it. About 72% of the 195,000 claimants returned ballots.

Some Opposition

More than 99% of Robins stockholders approved the reorganization plan. Lawyers opposing the plan have protested that Robins investors will be paid in full, while a finite amount of money is set aside for the settlement of unresolved Dalkon Shield claims. Pittle said his organization feels strongly that the plan is “inadequate, unfair, and contrary to the law.”

If any appeals are filed to the reorganization plan, payment of larger claims for Dalkon Shield injuries would be delayed. Appeals to the Aetna settlement would not stop the plan from taking effect, Thornton said.

Ronald Nordmann, an analyst at Paine Webber Inc. of New York, said he did not expect a significant financial impact from the judge’s confirmation of the plan until the deadline for appeals is passed. Paine Webber has already raised its 1989 earnings estimate for American Home on the assumption that the merger will eventually be completed, Nordmann said.