Advertisement

Dow Corning OKs $3.2-Billion Payout on Breast Implants

TIMES STAFF WRITER

Seeking to resolve a tortuous and costly legal battle, Dow Corning Corp. reached a tentative agreement with negotiators for women with silicone breast implants Wednesday to pay $3.2 billion to settle claims by more than 170,000 women that the implants harmed their health.

The settlement would compensate women based on the seriousness of injury they claim, providing up to $300,000 for those who have a severely debilitating illness.

Representatives for both sides would confirm only sketchy details of the deal, citing a judge’s gag order, and they cautioned that the payment figures could change as a final agreement is completed.

The deal would largely resolve a legal nightmare for Dow Corning and pave the way for the erstwhile implant maker to resolve its 3-year-old bankruptcy case.

Advertisement

For women, the settlement, if approved, would bring to a close years of uncertainty and disappointment as the massive litigation crawled through various courts.

“This would be a closing for many women on the implant issue,” said Josey Vanderpas, a Torrance woman who blames implants for her autoimmune disease.

Some women have died waiting for the case to settle, some have been financially ruined by mounting medical bills and others have been unable to afford to have their implants surgically removed, Vanderpas and other plaintiffs said.

The Dow settlement would provide up to $5,000 for the removal of implants and also $25,000 to compensate for ruptured implants, plaintiffs’ lawyers said.

Advertisement

But some women voiced skepticism about the tentative agreement Wednesday, and its approval is not a certainty. A tentative agreement reached in 1993 unraveled when not enough plaintiffs supported it, prompting Dow Corning to file for bankruptcy protection.

Women who do not want to accept Wednesday’s proposal still have the option of suing the company in court.

Dow Corning now must file a disclosure statement with the bankruptcy court outlining its reorganization plan. If bankruptcy court approves that, women claimants and other creditors will have about two months to vote on the plan.

Although the settlement would end much of the litigation, it would not settle the contentious issue at the heart of the breast implant debate: Do silicone implants cause disease?

As always, both sides were sticking to their guns on that issue Wednesday. Some women saw Dow’s agreement to pay $3.2 billion as an acknowledgment by the company that it feared unfavorable jury verdicts if implant cases went to trial.

But officials at Dow Corning, which for five years has waged an extensive public-relations battle to discredit the women’s claims, insisted again Wednesday that that was not the case.

“We made a public commitment to try to find common ground to settle this controversy,” said Michael Jackson, a Dow Corning spokesman. “There is no question that we believe, and will continue to believe because the science supports us, that there is no causation between implants and disease.”

Said Tommy Jacks, an Austin lawyer who represented plaintiffs in the negotiations: “There comes a time where you have to agree to disagree and get the job done. Paying $3 billion, I think that means something.”

Advertisement

Indeed, in recent years, more than 20 scientific studies have found no evidence to link silicone breast implants with such illnesses as lupus, scleroderma and other diseases that are blamed on implants. Plaintiffs’ lawyers have dismissed many of those studies as being inconclusive or tainted by the fact that some were funded by Dow Corning itself.

Pending federal legislation calls for more study of a possible link between autoimmune diseases and ruptured implants. That bill, introduced in the House by Rep. Gene Green (D-Texas), would mandate cooperation among the FDA, the National Institutes of Health and the Centers for Disease Control and Prevention.

Legal experts questioned what motivated Dow Corning, which is 50-50 owned by Dow Chemical and Corning Inc., to settle when the science was tilting strongly in its favor.

“Since Dow Corning’s position is that breast implants do not cause autoimmune [disease], it’s a bit awkward why it’s willing to pay this much in damages,” said Gary Schwartz, a tort law expert at UCLA. “It has been Dow’s position that the tort system is erratic and prolonged in a way that makes it advisable to buy peace.”

John C. Coffee, a Columbia University law professor who specializes in mass-tort litigation, said the settlement was “more favorable” to injured women than a failed $4-billion proposal that Dow Corning and several other implant manufacturers announced in 1993.

“This is not a case of the victims getting shortchanged,”’ Coffee said.

Many Are Taking Wait, See Attitude

Because so few details of the settlement were disclosed, and because earlier deals and deadlines have fallen through, many women are taking a wait-and-see attitude.

Advertisement

“The case just constantly looks like it’s going to be over and then it gets dragged out for years and years,” said Jean Craig, who runs a breast-implant support group in Austin. “Our support group is not big, but we had one of our members pass away last June with a very rare cancer.”

“What we don’t know yet,” Craig added, “is how much of the $3.2 billion is actually going to go to the women.” Besides the hefty fees that plaintiffs’ lawyers will likely claim, government health insurance programs and private insurers may make claims on some of the money, she said.

“It seems that women keep getting pushed to the end of the line,” she said.

But Jacks said he believes the settlement will get broad endorsement from plaintiffs, who will be allowed to vote on whether to accept the deal. “I think more women will benefit from this agreement than would have benefited” from Dow’s earlier proposal.

Last February, Dow Corning had proposed a $3-billion plan for settling implant claims over six to 12 years. A month later, plaintiffs proposed an alternative that would have required Dow to pay $3.8 billion over two to three years.

Ultimatum Was Strong Incentive

Wednesday’s settlement was announced by U.S. Bankruptcy Judge Arthur Spector in Bay City, Mich., who is presiding over Dow’s bankruptcy case.

Helping drive the two sides to an agreement was mediator Francis McGovern, a Duke University law professor appointed by Spector. McGovern has also served as a mediator in two other high-profile product liability cases involving asbestos and the Dalkon Shield birth-control device.

McGovern had given the two sides until noon Tuesday to either come to agreement or else face the prospect of having three federal judges supervising various aspects of the litigation decide the matter themselves.

The “take-it-or-leave it” deadline proved a strong incentive to negotiators for the plaintiffs, who felt that prior court rulings had mostly favored Dow Corning.

Silicone implants were introduced in 1962 as a means of augmenting breast size or for reconstruction after a cancerous breast was removed. But after reports began surfacing about implant breakage and possible heath effects in the mid-1980s, the FDA in 1992 restricted their use to breast reconstruction and augmentation.

Once the largest maker of breast implants, Dow Corning no longer makes them. Saline implants, manufactured by several companies, remain widely available.

Jacks said the agreement is quite similar to a 1995 legal settlement reached by three other implant makers, Baxter International, Bristol-Myers Squibb Co. and Minnesota Mining & Manufacturing Co. That agreement paid women an average of $26,000 with a cap of about $250,000 for women with the most disabling illnesses, he said. The Dow Corning settlement generally sets payments that are 20% higher than the Baxter-Bristol-Myers settlement.

Those familiar with the deal cautioned that many details have yet to be worked out. The bankruptcy court has set a deadline of Aug. 20 for the parties to submit a final agreement in principle. That means that plaintiffs will likely know few details of the deal until after that date.

Jacks said no decision has been made on what share of the settlement will go to the many lawyers involved in the case.

He said the deal provides for an “aggressive payment schedule” that would get money to the women more quickly than prior proposals.

Parent Firm Faces Rash of Lawsuits

Dow Corning’s Jackson said that if the settlement holds together, the company anticipates making payments to plaintiffs sometime in 1999. Under that same scenario, the company hopes to emerge from Chapter 11 bankruptcy in early 1999.

Meanwhile, parent firm Dow Chemical is also facing a rash of lawsuits over breast implants.

Today, the California Supreme Court is expected to rule in a case that could determine if the company should be liable for thousands of implant claims statewide.

Times staff writer Davan Maharaj and San Francisco bureau researcher Norma Kaufman contributed to this story.


Advertisement