O.C. Case Cited for Bill Limiting Secret Payouts

SACRAMENTO — An Orange County company for years sold an artificial heart valve that was a “walking time bomb,” but sealed lawsuit settlements hid the danger, a lawmaker said Wednesday.

Now the state Senate wants to sharply restrict the use of sealed settlements to hide defective products, financial fraud or environmental hazards that pose a public threat.

The Senate voted 21 to 16 to approve a bill that would, with few exceptions, bar courts from enforcing parts of confidential settlements dealing with those three subjects.

The bill’s sponsor, Sen. Adam Schiff, D-Burbank, said several states have passed such legislation.

The bill was prompted by a “lot of cases--defective heart values, asbestos, secondhand smoke, you name it,” Schiff said.

Sen. Joe Dunn, D-Santa Ana, said he was the lead attorney in the early 1990s in a lawsuit against Shiley Inc., a now-defunct Orange County company that made the heart valve.

Dunn said he learned there were earlier lawsuits settled in secret, hiding from federal regulators the fact that the valve malfunctioned.

“There have been hundreds of deaths due to this valve, all preventable, all hidden by confidential agreements,” he said. “This is not about trial lawyers; this is about saving people’s lives.”

Sen. Ray Haynes, R-Riverside, said the bill would discourage defendants from settling frivolous cases because of the fear that public knowledge of the settlements would trigger more lawsuits.

“What this bill says is, ‘Come sock me for more money,’ ” said Haynes.

Schiff said judges could still keep many aspects of settlements confidential, including the amount paid by defendants, as well as trade secrets and information considered private under the state Constitution.

“As long as it does not pose a threat to public health and safety it can be kept secret,” Schiff said.

The proposal now goes to the Assembly.