Dalkon Claimant Payments Stalled : Appeals Put Robins Reorganization on Hold

Appeals filed in the days before A. H. Robins Co.’s bankruptcy reorganization was to take effect will delay payments to many Dalkon Shield claimants, a lawyer said Tuesday.

Three appeals to the plan had been filed as of Tuesday on behalf of several hundred Dalkon Shield claimants. The deadline for appealing is today, one month after U.S. District Judge Robert R. Merhige Jr. entered an order confirming the plan, which includes a $2.5-billion trust fund for women claiming injuries from the Dalkon Shield birth control device that Robins sold.

The reorganization plan, under which Robins is acquired by American Home Products of New York, cannot take effect until the appeals process has been exhausted. However, payments to some claimants from a $100-million cash fund set up by Robins are scheduled to begin despite the appeals. There are about 195,000 outstanding Dalkon Shield-related claims against the company.

“We appealed because we thought the judge was wrong and because we thought our clients didn’t get what they’re entitled to,” said Alan B. Morrison, an attorney for the Public Citizen Litigation Group in Washington. Morrison said he will be the lead counsel for all the groups appealing.

Morrison said his main points of appeal would be that the women were not given all the facts about how their claims would be paid when they voted on the reorganization plan and that their votes were not weighted in accordance with the size of their claims.

About 95% of the Dalkon Shield claimants voted for the reorganization plan, according to ballots tallied last month by Robins. Morrison said the women were told they would be “paid in full” and the vote would have been different if they had a better idea of what kind of payments they would receive.

The appeals are “ill-advised, misguided” and “against the interests of the vast majority of claimants,” said Guerry Thornton, an attorney for the Atlanta-based Dalkon Shield Victims Assn., which supported the plan. The 95% vote favoring the plan “by itself takes away almost every objection,” he said. “We’ve got the maximum amount that we can get as quickly as we can get it.”

Thornton said implementing the plan may be delayed by as much as two years during appeals to the 4th Circuit Court of Appeals and the U.S. Supreme Court, and suggested that interest lost on the trust fund during that time might amount to as much as $200 million.

But Morrison called those figures “totally speculative” and said it would take some time for the trustees to begin making payments even if the plan were not appealed. “I don’t think there’s going to be any significant delay,” he said.

Thornton said the appellants’ claims had already been heard and rejected by the court and said some lawyers were considering asking for penalties against the appealing lawyers for filing groundless appeals.

A fourth appeal has been filed against a settlement, approved by Merhige, of a class-action suit filed against Aetna Casualty & Surety Co., which insured Robins.

Robins sought bankruptcy protection three years ago, after paying about $530 million to settle 9,500 lawsuits stemming from its sale of the IUD in the early 1970s.