Court OKs $2.5-Billion Fund to Cover Robins’ Dalkon Shield Claims
A federal appeals court today approved A. H. Robins Co.’s bankruptcy reorganization plan, which will create a $2.5-billion fund to cover claims against its Dalkon Shield birth control device.
The plan also calls for the acquisition of Robins by American Home Products Corp. of New York in a $700-million stock-swap deal. American Home had the option of backing out of the deal if appeals in the case were not settled by next month.
“We are extremely gratified . . . that our legal position has been upheld on all accounts as far as we know,” said Dennis Dresky, a Robins attorney.
In a series of four unanimous opinions, a three-judge panel of the U.S. 4th Circuit Court of Appeals upheld the entire scope of the reorganization.
The ruling includes a one claimant-one vote plan by which women injured by the intrauterine device ratified the settlement, and a separate cash settlement by Robins’ insurance company.
“I think it’s just tremendous news for all Dalkon Shield claimants,” added Guerry Thornton, attorney for the Dalkon Shield Victims Assn. “It means the decade wait for fair treatment and vindication of their rights is almost over.”
Robins sought protection from its creditors in August, 1985, in the face of millions of dollars in lawsuits brought by women who said they suffered infections, sterility and miscarriages, and in some cases gave birth to children with birth defects caused by the Dalkon Shield.
The Richmond-based pharmaceutical manufacturer’s reorganization plan was approved in July, 1988, by U.S. District Judge Robert R. Merhige Jr. and U.S. Bankruptcy Judge Blackwell N. Shelley, who jointly presided over numerous court proceedings.
200,000 to Be Compensated
The reorganization plan created a $2.5-billion trust fund to compensate about 200,000 women with injury claims against the Dalkon Shield, which was sold by the company in the early 1970s.
An appeal argued before the 4th Circuit Court in December challenged the way the court determined that users of the intrauterine device had approved the reorganization.
More than 95% of claimants who returned ballots to the bankruptcy court voted in favor of the plan. But Alan B. Morrison, a lawyer for the Public Citizen Litigation Group in Washington, said the votes should have been weighted so that women with larger claims would have a greater voice in deciding the issue.
Merhige and Shelley tried to come up with a weighted voting plan but could find no way to estimate each claim in advance, said Robins’ attorney James C. Roberts of Richmond.
Based on expert testimony, $2.5 billion was the estimated cost of full compensation for all Dalkon Shield claimants, Roberts said. Only $100 million of the $2.5-billion compensation package to Dalkon Shield claimants has been available during the appeal.
