Shiley Settlement Ends ‘Painful Effort’ : Courts: Legal experts criticize absence of verdict but say agreement could still have effect on future heart valve cases. Payout is estimated at $27 million.

Legal observers closely following the trial of a San Diego woman who challenged the Irvine maker of a potentially fatal artificial heart valve criticized the outcome but expressed hope that it would have a bearing on future cases--even though the five-week trial was cut short before a jury could deliberate.

Ruth Barillas, 54, of La Mesa was among 256 heart valve recipients who unexpectedly settled out of court Wednesday night with onetime heart valve manufacturer Shiley Inc. and its New York parent, Pfizer Inc.

“This is the end of a long, painful effort” for Barillas, said her attorney, Edward Kellogg, moments after an Orange County Superior Court judge accepted a long-negotiated, eleventh-hour settlement.

Terms of the cash settlement remained undisclosed Thursday.

But legal experts familiar with ongoing Shiley litigation suggested that the settlement was most likely computed under a formula similar to one used to award approximately $35 million to 333 heart valve recipients last November in another Orange County Superior Court case.

That would put the value of Wednesday’s settlement at about $27 million, sources said.

Shiley spokesman Robert Fauteux said the settlement--which did not include any admission of guilt--will have “no material adverse effect on the financial condition” of Pfizer, which had 1992 sales of $7.2 billion.

“We continue to stand by our conviction that if the valve is working there is no basis for people to recover damages,” Fauteux said. “But the company wants to end the litigation and get on with business.”

The settlement marks a milestone for Shiley and Pfizer, however, because it resolves a majority of the cases that were still pending around the nation. Twenty-nine other lawsuits remain unsettled as well as a federal court appeal of a 1992 class-action settlement in Ohio, which includes all 83,000 Shiley heart valve recipients around the world.

Attorneys for a group of Pennsylvania plaintiffs argued that the Cincinnati class-action settlement was not sufficient because it only allotted up to $4,000 for each recipient whose valve had not malfunctioned, while survivors of valve fractures or the families of those killed by faulty devices could receive up to $2 million.

Mort Wapner, an attorney who filed the Pennsylvania appeal, said that Wednesday’s settlement could be used to bolster his appeal if it was proved that the recipients of normally working valves each received $100,000.

“What is very, very important to all of us,” Wapner said, “is what Shiley paid to working valve recipients like Barillas. It would certainly say that the class-action suit was fishy.”

The Barillas case was settled even though it appeared that several jurors were willing to hand over a verdict in favor of Shiley and Pfizer, which have come under fire for years for allegedly lying to the U.S. Food and Drug Administration and misleading thousands of heart surgeons around the world about the valve’s safety.

Some jurors sympathized with Barillas’ plight--she claimed she suffered from emotional distress and vivid nightmares--but they felt the company had not been guilty of wrongdoing.

“I didn’t feel Mrs. Barillas had been injured, she’d only been helped,” said juror Nancy Williams, 56, of Mission Viejo. “Everybody has problems and illnesses and you just live with it. I thought she might have been depressed, but that wasn’t Shiley’s fault. All they did was put a little valve in.”

Barillas claimed that the company was guilty of fraud because it did not properly warn her cardiologist in 1980--when he implanted a Shiley valve into the left side of her heart--that the controversial valves had a tendency to break.

Fear that her Bjork-Shiley Convexo-Concave Heart Valve would one day “explode” has caused her to suffer depression and vivid nightmares, Barillas claimed in testimony. She and her husband, Constantino, 66, had asked for $450,000 and an undetermined amount of punitive damages.

But the jury never had the chance to consider those charges.

As they filed into the courtroom Thursday morning, Superior Court Judge William F. Rylaarsdam, who had just learned details of the settlement, informed jurors that they were dismissed from the case.

“I want to thank you on behalf of the court for your time and attention,” Rylaarsdam said before inviting the jurors to lunch with him and attorneys for each side at the posh Nieuport 17 Restaurant in Tustin.

Rylaarsdam then turned his attention to Barillas and her 66-year-old husband, who sat stolidly in the courtroom as the judge and attorneys made final remarks.

Rylaarsdam asked Barillas if she understood the implications of her decision to accept the settlement instead of waiting to see if the jury rendered a verdict in her favor.

Answering with a simple “yes” to his series of questions, Barillas then sat down.

Narmin Rahim, assistant to Barillas’ San Diego attorney, Kevin Quinn, said that Barillas was in no shape to publicly discuss the settlement.

“She’s totally stressed,” she said. “She is on medication. This five-week ordeal has been too much for her.”

Her husband also became visibly emotional during the court session.

“It was very hard,” he told the jury during Thursday’s court appearance, referring to the mountains of evidence and the hours of testimony that the family has endured since the Aug. 4 opening of the trial. “But we thank God.”

News of the settlement quickly spread across the nation as Shiley critics, hopeful of a verdict in Barillas’ favor, learned that the trial had been settled.

“I can’t believe it,” said Eric Adam, of Prescott, Ariz., a U.S. Department of Veteran Affairs employee who has launched a letter-writing campaign to federal officials. He is urging that criminal charges be brought against Shiley.

“They always pay up because they know they are wrong,” he added. “They have gotten away with murder again. But one of these days it ain’t gonna happen again.”

Dr. Sidney Wolfe, co-founder of Ralph Nader’s Public Citizen, a nonprofit consumer advocacy organization in Washington, also expressed disappointment in the decision to settle, but said that he questioned whether any jury would get a chance to decide whether Shiley committed fraud by selling the valves and allegedly downplaying the rate of valve fracture.

“It will take somebody of extraordinary wealth to withstand Pfizer,” he said.

Shiley attorney Pierce O’Donnell said he was confident he had provided a solid enough case for a verdict in favor of his client.

“I feel like I’m on the one-yard line and somebody says the game is over.”

Industry analysts suggested that the settlement brings Pfizer closer to putting the Shiley valve controversy behind it.

“This is positive for Pfizer and I would like to think positive for the plaintiff,” said Neil Sweig, an analyst with Ladenburg, Thalmann & Co., a New York brokerage and investment banking firm. Sweig estimated that Pfizer could pay out as much as $800 million in settlements and other Shiley-related claims in the next several years.

“This will not be financially harmful to Pfizer, it is one of the best positioned pharmaceutical companies in the world,” Sweig said. “Hopefully this begins to put the sorrowful episode of the heart valves behind Shiley.”

Although Pfizer stock prices were up Thursday, Sweig attributed the boost to news from Washington that drug price controls would not be initially included in the Clinton Administration health care reform plan.

In New York Stock Exchange trading, Pfizer stock rose $2, closing at $64.75 per share.