Dow Corning Offers $2.4 Billion to Settle Implant Cases

Dow Corning Corp. on Monday offered to pay about $2.4 billion to settle all its product liability claims over leaking silicone breast implants as part of a $3.7-billion bankruptcy reorganization plan.

In making the offer, Midland, Mich.-based Dow Corning did not concede that breast implants cause disease. Company officials said they made the offer to “agree to disagree” with the nearly 200,000 plaintiffs worldwide who claimed they suffered from autoimmune and other disorders due to the implants.

“We still believe very strongly that the scientific evidence shows there’s no connection between breast implants and medical conditions, although we do know there are local complications and that implants can occasionally rupture,” Dow Corning Chief Executive Richard Hazleton said.

The $2.4-billion plan, in addition to $1.3 billion for commercial claims against the company, requires the approval of Bankruptcy Court and a two-thirds majority of women suing the company.

The plan marks an increase from the company’s $2-billion share of the original $4.2-billion global settlement. That plan fell apart because an unexpectedly high number of claimants--440,000 women--sought payments. The offer comes days after Dow Corning’s half-owner, Dow Chemical, lost a key negligence case in Louisiana involving implants. Dow Corning’s other owner is Corning Inc.

“We’re hopeful most women will opt for the settlement. If the court accepts the settlement plan, all future lawsuits against any of the three companies would be settled out of the fund,” said John Musser, a spokesman for Dow Chemical.

Monday’s plan would create separate settlement and litigation trusts. It would allot more money for individual settlements as more women voted to accept it, because less money would then be required for litigation with women who chose to sue rather than accept the settlement.

Lawyers for women who claim they were injured by defective implants criticized the offer, saying the figure is too low and the claims procedure too burdensome. They stopped short of advising women to reject the settlement, however.

“It’s woefully inadequate,” said Stanley Chesley, a lawyer for the Tort Claimants Committee, representing women with breast implants who are suing the company. “It’s less money than the original plan.”

Shares in Dow Chemical fell 50 cents to close at $89.31 on the New York Stock Exchange. Corning shares fell $1.94 to close at $56.19, also on the NYSE.

The settlement was met with criticism by patients groups, who said it has several shortcomings.

The plan would operate under a multilevel system whereby payment size would be dependent on the severity of a woman’s symptoms, the company said. Women would be categorized in one of five symptom classes on the basis of the medical information they filed with their lawsuits, and trustees of the fund would ensure the validity of the health claims.

“It appears very onerous for women to make claims, especially those who have had very severe medical problems,” Chesley said.

Lawyers for Dow Corning’s commercial creditors said they were generally happy with the treatment of their claims. More important, the proposal could stimulate further negotiations between the company and lawyers representing women with breast implants, said Donald Bernstein, a lawyer with Davis, Polk & Wardwell in New York, which represents Dow Corning’s commercial creditors.

The settlement plan comes a week after a Louisiana state jury found that Dow Chemical was negligent in testing silicone for breast implants, that it lied about the possible risks and that it plotted with Dow Corning to hide potential health dangers.

As Dow Corning and Dow Chemical sorted out their liability and the bankruptcy case, other manufacturers--Bristol-Myers Squibb Co., 3M Corp. and Baxter International--offered women fixed settlements ranging from $5,000 for those who claim the least harm to $100,000 for women whose implants ruptured and leaked silicone throughout their bodies. So far, nearly 100,000 women have accepted those settlement offers.