Judge Declares Breast Implant Settlement Pool Too Small : Lawsuits: Negotiations continue to increase the $4-billion pool, but the decision may impel more women to pursue individual claims.

A federal judge has all but killed the largest medical product liability settlement in history, saying that a $4.23-billion pool is too small to pay women allegedly harmed by silicone breast implants.

The prospect of a settlement collapse leaves breast-implant manufacturers and plaintiffs’ attorneys to work out a new settlement, or manufacturers may face a deluge of new lawsuits that could draw out the disputes for years. Manufacturers and plaintiffs’ attorneys say they are continuing to negotiate, but hopes of reaching a richer settlement have dimmed.

In a recorded telephone announcement that played Friday on a court-operated breast-implant settlement hot line, U.S. District Judge Sam C. Pointer Jr. in Birmingham, Ala., announced that he will allow hundreds of thousands of women to opt out of the settlement by the end of September, barring any “extraordinary developments” that would make up for the staggering shortfall in the settlement fund. Several thousand women have already opted out to pursue individual claims.

Under an agreement reached in April, 1994, a group of companies--including Dow Corning Inc., Bristol-Myers Squibb, 3M Co. and Baxter International--agreed to fund the $4.23-billion settlement. Dow Corning filed for Bankruptcy Court protection in May.

The companies have denied that their implants caused women to suffer such ailments as autoimmune disease, swelling and fatigue, as the women have alleged.

More than 400,000 women registered to participate in the settlement, and a recent preliminary examination of claims found that as many as 70,000 might qualify to receive immediate benefits. Paying all those women the minimum benefit proposed under the existing agreement would cost at least $7.3 billion unless the judge drastically reduced the payments to claimants.

“The court believes that the extreme reduction in benefit amounts would result in so many class members opting out that the settling manufacturers would in turn withdraw from the settlement,” the recording said. “In light of this, as well as the complications presented by the Dow Corning bankruptcy proceeding, Judge Pointer has preliminarily concluded that there is no justification for keeping the current settlement in place.”

By the end of September, Pointer plans to announce a date after which women can choose to opt out of the settlement and file individual lawsuits against implant manufacturers, the recording said.

Sybil Goodrich, co-founder of Command Trust Network, the largest implant advocacy group, said the settlement is not dead, “but it’s in intensive care and the only one who can bring it out of intensive care is a very good plastic surgeon who can do some work on that grid [payment scheme for claimants]--a very different kind of surgeon than did most of the implant operations.”

Baxter International spokeswoman Mary Thomas said the Deerfield, Ill., company still believes that resolving most of the claims through a single “forum” like the global settlement fund is the best solution, but she added that “quite honestly, we’re not as optimistic as we were three months ago” of being able to reach such a settlement.

Lawyers involved in the negotiations said that Bristol-Myers Squibb and Baxter have offered to add money to the fund.

“Bristol-Myers has doubled their money, and Baxter has offered subsantially more. But it’s still not enough,” said a source close to the negotiations.

In recent days, Pointer told the parties that the only kind of settlement he would accept is one that would give all class members a guaranteed amount rather than the original plan of dividing up a lump sum.

Houston lawyer Michael Gallagher, who is a member of the plaintiffs’ steering committee in the breast-implant class litigation, said he doubts the manufacturers would be interested in that approach because they would be likely to feel that it would leave them “vulnerable on the up side.”

Cincinnati lawyer Stanley Chesley, who is also on the plaintiffs steering commmitee, said he remains cautiously optimistic.

“It’s a significant development and a very important development, but I’ve seen deals done at the 11th hour,” Chesley said.