Settlement OKd in Shiley Heart Valve Lawsuit

About 51,000 recipients of a potentially defective heart valve that has been blamed for killing 300 people would receive up to $4,000 in cash each and other benefits for their emotional distress as part of a court settlement approved Wednesday.

A federal judge in Cincinnati approved the $215-million settlement offer by Shiley Inc., a medical products company in Irvine, and its parent company, New York-based Pfizer Inc. The offer was announced last month.

The agreement, however, does not prohibit patients or their heirs from filing legal claims against Shiley should their mechanical valves fracture in the future.

The class-action lawsuit in Cincinnati alleged that the companies knew that the heart valves, sold from 1979 to 1986, could fracture and possibly kill the recipient.

William C. Steere Jr., Pfizer chairman and chief executive, said the company still believes that complaints about the valve lack merit, but he accepted the settlement to end the court battle.

The settlement provides $90 million to $140 million to recipients for medical or psychological consultations, as well as compensation to their spouses. That works out to between $2,500 and $4,000 per patient. The amount depends on how many patients decide to take the settlement and how many never file a claim, which would increase the amount paid to others.

The agreement also sets aside $75 million for valve-related research, in areas including techniques to identify recipients at great risk of fracture.

Pfizer said it will fund the settlement with the proceeds from its $230-million sale earlier this year of most of Shiley’s assets and with insurance reimbursements.

Terms of the settlement also allow about 1,000 heart valve patients who previously decided not to join the litigation to decide by Sept. 28 whether they want to join the settlement. Lawyers for about 650 patients who filed lawsuits in Orange County Superior Court, however, said they expect most of their clients to reject the settlement offer and continue to pursue emotional distress claims in separate court actions.

“I can’t believe the judge OKd that settlement,” said William Wallace, 40, a Chino resident who has been living with a Shiley valve since 1985. Wallace, who said he has nightmares in which he dreams his valve stops ticking, decided not to take part in the settlement proceeds because the money offered “was not a fair amount.”

Approval of the Shiley-Pfizer offer by U.S. District Judge S. Arthur Spiegel is “a great positive for the company,” said Sharon Dorsey Wagoner, an analyst with Argus Research in New York. “Obviously, the fewer people who proceed with the cases, the better for Shiley.”

Plagued by the heart valve failures and doggedly chased through court, Shiley stopped making the valves six years ago. Though it sold its valve-manufacturing operations in February to Sorin Biomedical in Irvine, it still operates a valve research center in Irvine.

“This settlement will go far toward putting this complex and time-consuming litigation behind us and help to eliminate the disruptions and uncertainties involved in such litigation,” Steere said in a statement.

Even attorneys representing some of the plaintiffs said the court’s approval should be a relief to Pfizer executives.

“They’re jumping up and down, like in the Toyota ad, clicking their heels,” said James Capretz of Irvine, who represents about 310 valve recipients. Pfizer and Shiley “are now better able to predict what their losses are (from the claims) and how long adverse publicity will continue.”

An independent panel of experts will determine, on a case-by-case basis, whether surviving patients need operations to replace their heart valves. Shiley will pay for any needed operations.

Separately, the settlement terms require the company to provide up to $300 million for patient or survivor claims in the event of valve fractures, though that amount is not considered part of the total funds now available.

Under the special amount set aside, the company will pay $500,000 to $2 million for each claim, provided the survivors or heirs don’t file a lawsuit. The wide range depends on such factors as the age and overall health of the patient.

In his decision, Spiegel suggested that the settlement terms were good for the plaintiffs. Pursuing emotional distress claims, he wrote, would be “extremely speculative” because more than two dozen courts already have ruled against plaintiffs with functioning heart valves. He will hear arguments Sept. 9 on how to implement the settlement.

Opponents of the settlement have argued that many recipients don’t know about the offer and that some do not even know that they have potentially defective valves. Shiley officials said a database of valve recipients worldwide will continue to be developed to inform heart valve patients of the offer.

Elaine Levenson, who started a Pittsburgh support group for valve recipients, said she expected that most of the 100 active members would proceed with their litigation. She said that health costs can be much greater than the $2,500 to $4,000 individual benefits in the offer.

“There’s really nothing to our advantage,” said Levenson, who had her valve implanted in 1981. “There’s a whole group of people who cannot get insurance. (The settlement) is nothing when you can’t get insurance.”

Levenson also said she has had difficulty finding a doctor to perform valve replacement surgery. Shiley officials have said the risks of having the valves replaced are much greater than the chance that they will fracture.

“Unless they have a justifiable reason, they won’t do it,” she said. “There are too many risks involved.”

Another member of the support group, June Ross of White Oak, Pa., said her doctor told her that replacement surgery would be too risky. She said she hasn’t made a final decision on whether to join the offer and first wants to see the terms in writing.

For now, she said she has been trying to live “one day at a time.”

The $2,500 to $4,000 offer “is a drop in the bucket,” said Ross, 68, who received her valve in 1982. “You never know what is going to happen. You try to make the best of it, but you are always living in fear. I feel so violated to think that they could put something in my chest that wasn’t perfect.”