Suit Against Shiley Settled Out of Court

Heart valve manufacturer Shiley Inc., defending itself against accusations that it lied to federal regulators, struck an eleventh-hour settlement late Wednesday with 259 heart valve recipients, including the San Diego County woman who took the company to trial.

Terms of the agreement were not disclosed. The settlement with Ruth Barillas, a 54-year-old former bank clerk from La Mesa, came hours before a 12-person Orange County Superior Court jury was set to begin deliberations in the 5-week-old stress-anxiety trial.

The deal also includes 258 other clients of the Irvine law firm of Capretz & Kasden, said attorney James Capretz, who represented Barillas. Of that number, five people had separate lawsuits scheduled for trial later this year. The others will be covered under a class-action settlement.

When asked why the Barillas case was settled so late in the trial, Capretz said, “The offer that was made was felt to be in the best interest of Mrs. Barillas.”

Shiley spokesman Robert Fauteux said Wednesday night that he was not aware of the details of the settlement and declined comment.

But Capretz said that attorneys and negotiators for Irvine-based Shiley and its New York parent, Pfizer Inc., had been negotiating throughout the day in a suite at Le Meridien Hotel in Newport Beach. At the same time, other attorneys for each side of the case completed emotionally charged closing arguments in a packed courtroom.

The settlement negotiations, which Shiley attorney Pierce O’Donnell has said began weeks ago at the request of Barillas’ attorneys, reportedly were hard-fought.

“We were back and forth for most of the day,” Capretz said, adding that the Wednesday session followed all-night wranglings that began Tuesday.

At the request of Shiley negotiators, Capretz declined to state how much money was involved in the large-scale settlement.

“The defendant requested very stringent confidentiality provisions in order to make the deal,” Capretz said. “In the interest of the clients, we have to comply with that.”

Barillas, who was fitted with a Shiley heart valve in 1980 and discovered in 1991 that it was among a batch that had been recalled because of a tendency for the device to fracture, sued Shiley for emotional distress in a so-called pre-fracture case.

Such cases have been brought against the one-time medical device maker by thousands of other heart valve recipients whose valves were working properly, but feared that the devices would break suddenly, killing them.

The Shiley valve, implanted in about 83,000 heart disease patients worldwide, gained international notoriety because of its relatively high mortality rate--at least 250 and as many as 900 people have died when tiny struts that held the valves together snapped.

During the trial, Barillas’ attorneys had attempted to persuade the jury that the company had lied to the U.S. Food and Drug Administration and thousands of heart surgeons by underplaying the potential defects in the valve in order to continue selling the once-lucrative device.

The valve was approved for sale by the FDA in 1979, allegedly on data that did not include reports that 18 prototype valves had fractured during testing. Faced with a bombardment of negative publicity, the company pulled the valves off the market in 1986.

Since then, more than 50,000 heart valve patients have settled out of court with the company, creating somewhat of a cottage industry for attorneys around the country.

A class-action suit in a Pennsylvania federal court--which could cost Shiley as much as $500 million--is under appeal by an attorney who does not think the settlement was fair.

Wednesday’s settlement narrows further the chance that any case will ever be decided by a jury.

It was hoped among Shiley critics that the Barillas case, which was the first suit ever to go to trial, would set a precedent, especially if the jury had found the company guilty of fraud and if evidence that suggests the company was guilty of bad manufacturing practices had been introduced in what would have been a second phase of the Barillas trial.

Barillas’ attorneys had depositions from former Shiley employees that would have bolstered their argument that the company had forced workers to recycle badly manufactured valves, and that employees routinely drank and used drugs during working hours.

Capretz said that Superior Court Judge William Rylaarsdam was not aware of the settlement Wednesday night, but would be informed before the jury returns to the courtroom at 8 a.m. today.