Women could get as little as 5% of the sums they were promised in a proposed $4.2-billion settlement of silicone breast implant lawsuits, the fund's claims administrator disclosed Thursday.
Indeed, the settlement is so oversubscribed that unless manufacturers agree to massively increase their contributions, the pact will collapse, according to knowledgeable sources.
About 20,000 women have filed claims that would probably be approved without further documentation, and another 50,000 claims have only "minor deficiencies," said Anne Cochran, the former Houston trial judge who is supervising the settlement process.
That is far greater than the number of claims anticipated when implant manufacturers--including Dow Corning Corp., Baxter International Inc., Bristol-Myers Squibb Co. and 3M Co.--agreed to the massive settlement last year.
The settlement's payment schedule provides that women who already have injuries from implants will get $140,000 to $1.2 million each. But unless the corporations ante up more money, those sums would be reduced to a mere fraction of the promised amounts, Cochran said in a tape-recorded message on a phone hot line for implant recipients. Her estimates were based on a sampling of 3,000 claims.
Several knowledgeable sources said the companies have already agreed to double the pot, which was originally set at $1.2 billion, for claimants with existing injuries. But those sources said it will take even more money for the deal to fly.
Formal negotiations are scheduled to resume Sunday in Dallas.
"The defendants are willing to put in substantially more money," said Houston attorney Michael Gallagher, a member of the plaintiffs' steering committee in the settlement talks, though he declined to discuss specific sums. "The question is whether the companies can put in enough money so we can present the settlement to breast implant recipients.
"I think settlement funding will be increased, but I don't think the settlement will be funded 100%," he said. "If it is not funded substantially, I will not recommend it to breast implant victims."
Two months ago, an Alabama federal judge presiding over thousands of implant cases determined that the settlement was underfunded and directed the manufacturers to resume negotiations with lawyers for implant recipients. But until Thursday, it had not been publicly known how great the cash shortfall is.
"That taped message is really chilling," said Sybil Goldrich, co-founder of the Command Trust Network, the nation's largest support network for implant recipients. "I think it will take $8 billion to salvage the deal."
"I'm outraged," added Debbie Wilfert of Buena Park, an implant recipient who has long been skeptical about the merits of the settlement.
"That taped message says that if all 50,000 women take care of minor documentation problems, payments could drop to less than 5% of what has been promised. Given all the time women have spent seeing doctors about problems from their implants, I have no doubt that those women will get their documents in, meaning that the women will get less than 5% of what was promised," Wilfert said.
"I knew those settlement numbers were wrong from the beginning and [that] no woman would get more than $10,000."
The settlement discussions have been complicated by the fact that Dow Corning, the largest contributor to the settlement fund, filed for Chapter 11 bankruptcy last month. That froze thousands of lawsuits against Dow Corning filed by implant recipients who had opted out of the settlement because they felt their prospects were better in court.
Dow Corning officials said the prospect of continuing litigation, on top of its $2-billion share of the settlement, was too much for the Midland, Mich.-based firm to bear.
The other manufacturers are attempting to transfer hundreds of lawsuits involving implants with Dow Corning silicone gel to the bankruptcy court in Bay City, Mich., on the theory that the suits ultimately will become a part of Dow Corning's bankruptcy reorganization.
Plaintiffs' attorneys have vigorously opposed that move. "This is a tactic to obtain delays and create confusion," said San Francisco attorney Elizabeth J. Cabraser, another member of the plaintiffs' steering committee.
She acknowledged that Cochran's announcement is "bad news" for implant recipients.
"It's a worst-case scenario," Cabraser said. "Rather than sugarcoat it or keep the information secret, it was decided that the information should be released. . . . I'm cautiously optimistic we will have a refined settlement that will cope at least with the volume of claims we have," she added.
Dow Corning spokesman Michael Jackson said he thought Thursday's announcement was irrelevant, because U.S. District Judge Samuel Pointer already had said the settlement was inadequately funded.
"To put out anything having to do with the former agreement doesn't seem too meaningful," Jackson said. He also expressed skepticism about an analysis based on a review of papers submitted by just 3,000 claimants.
University of San Diego law professor Thomas A. Smith, an expert on the impact of bankruptcies on mass tort settlements, said Thursday's announcement was quite significant. "It certainly explains why the defendants would be so anxious to get into a settlement: It's easier to pay five cents or even 15 cents on the dollar" than to go to court on all these cases, Smith said.
When the settlement was forged, neither side knew how many women would file claims, Smith noted--a potentially fatal omission.
"These kinds of structured settlements based on woefully inaccurate information are doomed to this kind of problem from the outset," Smith said.