Breast implant litigation faces uncertain future.

The future of breast implant litigation is anything but certain since Dow Corning Corp., once a leading silicone gel breast implant manufacturer, filed for Chapter 11 bankruptcy protection in mid-May. (In re Dow Corning Corp., No. 95-20512 (E.D. Mich. filed May 15, 1995).)

The bankruptcy filing was announced just after plaintiffs' attorneys and representatives of Dow Corning and other breast implant manufacturers had returned to the bargaining table to renegotiate a $4.2 billion global class-action settlement of breast implant claims. In late April, U.S. District Court Judge Sam Pointer Jr., who is overseeing the settlement, ordered the parties to reopen negotiations after a study revealed that a part of the settlement fund that had been set aside to pay immediate claims was insufficient to satisfy them.

Dow Corning's chairman and chief executive, Richard Hazelton, claims the company was forced into bankruptcy by hundreds of lawsuits filed by women who opted out of the settlement. More than 1,500 individual lawsuits had been filed against the company and over 200 cases were scheduled to go to trial in the next six months, according to Dow Corning representatives. The bankruptcy filing immediately stays all pending litigation against the company.

The effect of the bankruptcy on the settlement is unclear, according to Michael Hugo of Boston, cochair of ATLA's Breast Implant Litigation Group. Some plaintiffs' attorneys have predicted that the 410,000 women who signed up to participate in the settlement could stand to gain from a reorganization. The amount of money directed to the pool of settlement registrants, which is Dow Corning's largest creditor, will now have to be approved by the bankruptcy court. It is possible that the judge could order the company to pay more than the $2 billion it had pledged to pay into the settlement if the company's finances justify this, Hugo said. The company reported losses of $6.8 million last year, but recent reports show its first-quarter profits were up 33 percent to $49.5 million. (On the Firing Line at Dow Corning, Bus. Wk., May 29, 1995, at 33.)

The bankruptcy might have "very little effect if the reorganization plan simply incorporates the settlement," according to Fredric Ellis, a Boston attorney who represents about 150 women in the Boston area who have filed individual breast implant lawsuits. However, Ellis acknowledged that even if Dow Corning is able to meet its settlement commitment, the bankruptcy is likely to delay payment of claims.

Another scenario is that the settlement may collapse if Dow Corning is not able to fund its share. This could lead to a number of different outcomes, including separate settlements with the other defendants, Ellis said. Other defendants that have agreed to put up the additional $2.2 billion in settlement funds include Bristol-Myers Squibb Co., Minnesota Mining & Manufacturing Co., and Baxter International, Inc.

Settlement Collapse

If the settlement collapses, participants would once again have the option to file individual lawsuits, joining the 11,000 women who opted out of the settlement by last summer. Although litigation against Dow Corning has been stayed, opt-out plaintiffs are free to pursue claims against the other settlement defendants and one of Dow Corning's parent companies, Dow Chemical Co., which has substantial assets.

In late April, Judge Pointer ruled that women who claim they were injured by silicone gel breast implants and who opted out of the settlement could sue Dow Chemical in federal court. Previously, the judge had dismissed Dow Chemical from federal breast implant litigation on the ground that it had had no direct involvement in implant manufacturing. But after reviewing recently discovered evidence, the judge found that "Dow Chemical performed tests on breast-implant components" and may have been aware of medical problems with silicone as early as 1973. (James P. Miller, Dow Chemical Held to Be Liable in Silicone Breast-Implants Case, Wall St. J., Apr. 26, 1995, at B8.)

Some attorneys for opt-out plaintiffs are now considering adding Dow Chemical as a defendant. But proving liability may be difficult, especially in California and New York, where claims against the company have been dismissed, noted Ellis. A Houston jury did return a verdict against the company in February, awarding $5.2 million to the plaintiff, but the verdict was later overturned. (Laas v. Dow Chemical Corp., No. 93-04266 (S.D. Tex. Feb. 15, 1995).)

Nevertheless, plaintiffs who are considering filing claims against Dow Chemical may be encouraged by the evidence considered by Judge Pointer and a recently released study of 600 women that reportedly shows that silicone breast implants cause disease. (Silicone Breast Implants Cause Autoimmune Disease, Silicone Science Hotline, May 1995, at 1.)

Breast implant defendants have consistently argued that repeated epidemiological studies have shown no link between silicone implants and autoimmune disease. (Gina Kolata, Legal System and Science Come to Differing Conclusions on Silicone, N.Y. Times, May 16, 1995, at D6.)

Judge Pointer's April ruling is significant to the global settlement plaintiffs as well. Negotiations among the parties to the settlement have continued since the bankruptcy filing, and plaintiffs' attorneys said they were hoping to bring Dow Chemical into the fund. Dow Chemical representatives claim that the company has never been involved in the design, manufacture, or sale of breast implants and therefore will not contribute to the settlement.

Whether and when the thousands of women who allege they have been injured by breast implants ultimately receive compensation for their injuries is very much up in the air. Dow Corning representatives said they hope to complete the reorganization in two years.

That prediction may be somewhat optimistic. Experts note that in previous cases similar to the Dow Corning scenario --the asbestos litigation involving Johns-Manville Corp., which filed bankruptcy in 1982, and the intrauterine birth control device litigation involving A.H. Robbins Co., which filed bankruptcy in 1985 --many claimants are still waiting to be paid.

Nevertheless, the picture may not be as grim for the breast implant plaintiffs because the settlement claim procedure was already in palce when Dow Corning filed for bankruptcy, and "a lot of work has been done on that that had to be done," Ellis said.