Adding insult to injury: the breast-implant settlement falls short.

When he Dow Corning Corporation suddenly unveiled a $4 billion plan late last year to settle thousands of silicone breast-implant lawsuits, it seemed a surprisingly happy ending to a rancorous medical tale. Negotiators promised that the tentative agreement--the largest mass-injury deal ever--would pay individual women between $200,000 and $2 million each. Negotiators also claimed that the right of a plaintiff to drop out of the settlement and pursue her own litigation would be completely preserved. The plan is "like a health-insurance policy for women with implants," Dow Corning proclaimed.

But the proposal, which will be considered in August by a Federal judge for possible final approval, is hardly the simple and generous solution described. In reality, the payout to each woman would depend on the total number of claims filed and could decrease dramatically as the number of plaintiffs climbs. And the rights of women to drop out of the plan and seek their own settlements would actually be sharply curtailed. What's worse, thousands of sick women could lose their legal access to any compensation altogether.

"This is not insurance," says Norman D. Anderson, a Johns Hopkins University medical professor, who has treated hundreds of patients with problems related to silicone implants. "This is pennies-on-the-dollar reimbursement."

The agreement is scheduled to be considered soon by U.S. District Judge Sam C. Pointer Jr. of Birmingham, Alabama, who supervises implant litigation. The judge may accept, reject, or alter the plan after holding hearings in August to evaluate its fairness. The companies expected to be part of the deal are the Dow Corning Corporation, the Bristol-Myers Squibb Company, Baxter International, Inc., the Union Carbide Corporation, the Minnesota Mining and Manufacturing Company, and a number of smaller concerns.

A close look at the settlement plan illustrates the high stakes involved for women with implants. The million or so US. women with silicone implants, and the hundreds of thousands of women abroad who have them, will have to make a series of decisions beginning this summer that will determine their legal rights forever on this issue. If they make the wrong decision, or fail to act, they may lose out entirely.

The agreement sets out slightly more than $4 billion to compensate, over thirty years, all implant recipients with certain symptoms and disabilities. Of that amount, $1.2 billion would compensate women who are currently ill; an additional $520 million in initial funds would be set aside for specific purposes including surgical removal of implants, diagnosis of illness, and compensating women with ruptured implants. The settlement likely will greatly reduce court-clogging litigation. It also has an innovative feature that would compensate a woman more than once if her illness worsens over time.

But the plan is at once extravagantly generous to some women and exceedingly stingy to many others.

For instance, even women who got sick before receiving implants could collect money if their symptoms later worsened. One plaintiff s lawyer who asked not to be identified said she had a client with a "case that sucketh mightily"--the lawyer didn't bother even to file it in court. But under the settlement, the client could potentially collect $1 million. Such cases could deplete the fund at the expense of those women who are far more seriously ill.

Though the size of the $4 billion fund seems enormous, the potential number of victims is very high. Some 12,000 Federal and state cases have been filed so far, and a defense lawyer estimates privately that 70,000 claims would be on the low end. Many women may not have fallen ill yet, much less contemplated filing a claim.

"Women with implants who've gotten sick did so an average of five years after getting them," says Frank B. Vasey, a medical professor at the University of South Florida in Tampa, who has treated hundreds of women with implant problems. There wouldn't be that much money if 200,000 women get sick."

Under the settlement, if claims exceed the money available in any year, compensation will get "ratcheted down"--meaning each claimant would get a smaller settlement. There's no limit to how far the compensation could fall. Plaintiffs' negotiator Ralph I. Knowles Jr. agrees: "There may not be enough money." Attorneys' fees and costs already have reduced projected compensation by about one-third.

For serious victims, this could be disastrous. Take Cynthia B. Hayes, forty-one, of Lexington, South Carolina, who got implants in 1986 following the disfiguring removal of breast tumors. She has suffered chronic pain that has progressively worsened since. She has undergone eleven operations related to the implants, and now she is often sedated, bedridden, and in constant pain. Once an avid golfer and tennis player, she now lacks the strength even to pick up a quart of milk. Her husband, Donald R. Hayes, says medical bills were $80,000 for last year alone. He says the family sold a car, his college ring, and her diamond wedding ring to help pay her medical bills.

Manufacturers continue to deny a link between such illnesses of the human immune system and breast implants, but various doctors have concluded that such causation exists. Another woman with implants illustrates precisely how debilitating some of these illnesses can be.

Kali Korn, now in her early forties, was a Los Angeles-based costume designer for the entertainment industry, including performers like Linda Ronstadt and the rock group Chicago. She now is severely ill with scleroderma, in which the skin and internal organs become hardened, and she hasn't been able to work in years. Her skin is hard and tight. Her hands are permanently curled up and her arms withered. Her weight has fallen to under 100 pounds from about 120. She can't dress herself and needs attendant care. Her lawyer, Salvador A. Liccardo of San Jose, California, says medical costs alone so far are $100,000 or more. In the most severe scleroderma cases, patients can resemble concentration camp victims, as their lungs and other internal organs deteriorate.

Liccardo says he plans to pursue separate litigation--or a separate settlement--for Kali Korn because she needs money long before the global settlement fund would likely compensate her. "If she were to go into the plan, it would be a year or two before she'd see any money," Liccardo says. "She'd be dead by having starved to death."

Aside from the problem of the shrinking pot, the real catch in the agreement is the onus it places on women to register early with the court or lose out completely--even if they're not yet sick. The plan would automatically cover all women with implant problems unless they deliberately opted to drop out and pursue independent legal action. Any woman who fails to file a notice with the Birmingham court announcing her intent to "opt out" is automatically included and loses her right to sue individually. Thus, thousands of women almost certainly would be swept into the settlement because they never heard about it or didn't understand its provisions.

But that's just the half of it. Women who are automatically included must clear an additional obstacle: The settlement calls for them to register with the court in a "timely" fashion--at the beginning of the plan, according to negotiators--unless they can show "good cause" for not having done so. If they fail to clear this hurdle, they will lose all legal remedies: They will be unable to collect under the plan or to sue individually, according to lawyers involved in negotiating the deal. This even includes women who are healthy now and have no reason even to ponder the issue, but who could get sick years from now.

"You're talking about literally hundreds of thousands of women who could fall into that category," says Bruce Finzen, a leading products-liability lawyer with Robins Kaplan Miller & Ciresi in Minneapolis. The likely effects of this provision "would be awful," Finzen says, adding that he plans to recommend that most of his clients immediately drop out of the deal.

Even Knowles, who negotiated the deal for the plaintiffs, calls this "a harsh provision that defendants insisted on. I don't like it, and it would not upset me if the judge rejected the provision."

There are other drawbacks to the plan: First, some conditions aren't covered by the settlement plan at all. For instance, women with advanced breast cancer that went undetected because the silicone implants impeded mammograms wouldn't get any compensation. The American College of Radiology says tumor detection "may be less effective" because of silicone implants. And Johns Hopkins's Dr. Anderson says implants have contributed to undetected advanced breast cancer. Plaintiff negotiator Knowles says women who plan to make cancer claims "had best opt out." The trouble is, those women obviously wouldn't know in advance that they will contract cancer.

Second, the money set aside for diagnostic purposes may be woefully inadequate. Women with silicone implants, says Dr. Anderson, need annual check-ups to detect ruptured implants. He estimates it will cost more than $50 billion over thirty years just for the annual exams for more than a million American women, along with the surgery to remove implants when necessary. Knowles says, "Anybody who thinks the industry would pay those sums" is "crazy." Dr. Anderson says, "These were lawyers making a deal, not public-health experts defining the scope of the problem."

Third, foreign women with implants would get only 3 per cent of the total, on the theory that tort systems in many countries wouldn't impose big damage awards. However, that isn't true in all foreign countries, and in any event, a woman's illness and disabilities don't vary with her citizenship.

Finally, the agreement penalizes many of the women who want out of the program, while letting companies split scot-free. A woman who signs up for the program but in a later year feels there is not enough money in the fund to compensate her adequately can drop out of the settlement and file an individual lawsuit. However, she will lose the right to claim punitive damages--a provision that has been attacked by many lawyers representing women with implants. On the other hand, any manufacturer can withdraw without penalty in the first several months of the program and not fund its portion of the entire deal if company officials conclude too many women have opted out. This could shrink the pot in a hurry.

Knowles says advantages of the settlement include an efficient claims-paying process and coverage for women who bought implants from firms without deep pockets. "Women who got implants from smaller companies would get nothing" were it not for the agreement, he says.

Of the three companies that primarily negotiated the deal, Baxter and Bristol-Myers declined comment on the plan's specifics. Dow Corning praised the settlement as offering speedy compensation without the public spectacle of a trial. Dow Corning executive vice president Gary E. Anderson also said the removal of punitive damages "gives us financial certainty to keep Dow Corning going. You can't do that with the ambiguity of future punitive damages." Anderson added the company will consider removing the harsh provision that women would have to register with the court in the first few months--or lose all right to compensation.

"The perfect is the enemy of the good," said Kenneth R. Feinberg, a settlement attorney for Dow Corning. He said all global settlements have shortcomings but "the best you can hope for is a good deal, and if you look for perfection, it just won't work. The question you have to ask is, what is the alternative?"

The alternative might have been better if the negotiating process for the agreement had been more open.

The road to the settlement deal started in November 1992, when Dow Corning, a Midland, Michigan, joint venture of the Dow Chemical Company and Corning, Inc., hired attorney Feinberg. Baxter, which inherited breast-implant liability in a 1985 merger, hired another Washington-based negotiation expert, David I. Shapiro.

By the fall of 1992, several breast-implant cases had ended in large jury awards, including a $25 million verdict against Bristol-Myers which has since been settled. From the outset, the manufacturers' paramount goal has been what one defense attorney calls "total global peace"--in other words, a ceiling on potentially huge future liability.

Shapiro and Feinberg promptly contacted plaintiffs' attorney Stanley M. Chesley in Cincinnati. Judge Pointer had appointed Chesley co-chairman of the "plaintiffs' steering committee," a group of seventeen lawyers from around the country who were to conduct fact-finding depositions in the litigation. Chesley, a classaction lawyer, had previously negotiated settlements with Feinberg and Shapiro over Agent Orange. Judge Pointer also appointed Knowles, an Atlanta plaintiffs' lawyer, as co-chairman.

Chesley and Knowles conducted months of talks with Shapiro and Feinberg, but the two plaintiffs' negotiators did not notify colleagues on the steering committee that discussions were under way. By April 1993, word of the then-five-month-long bargaining leaked out. Other steering-committee members were irate and berated Knowles and Chesley as traitors. The steering-committee members insisted on adding other colleagues to the plaintiffs' negotiating team.

But even in the six months of negotiations that followed, the corporate defendants insisted the talks continue to be under wraps. Again, the committee wasn't privy to details of what was evolving.

Knowles says the implant manufacturers insisted on secrecy, and that he and other negotiators were concerned about leaks if the entire committee got involved. Only after the plan was already negotiated--and just a few hours before the judge was told of the tentative settlement--did the members of the plaintiffs' committee become aware of the details.

The committee members were notified on the Friday afternoon before Labor Day that there would be a meeting in Atlanta at 9 A.M. the following Tuesday. Several members were unable to attend the meeting. Some tried to join by telephone but the speaker phone didn't work.

"That meeting just shows the circus-like essence of this whole process," says committee member Liccardo.

And now, thousands of women with breast implants may suffer as a result of this process.