Originally created 07/09/98

Dow Corning agrees to pay $3.2 billion to settle breast implant claims



DETROIT -- A federal bankruptcy judge today accepted a plan in which Dow Corning Corp. would pay $3.2 billion to settle claims by at least 170,000 women with silicone breast implants.

The settlement -- announced today by U.S. Bankruptcy Judge Arthur Spector in Bay City -- amounts to $200 million more than Dow Corning offered but $600 million less than plaintiffs sought.

The deal opens the way for women to be compensated for immune system illnesses allegedly caused by their silicone implants and to receive payments for ruptured implants.

Dow Corning attorney Barbara Houser said she could not immediately specify the amount of payouts to plaintiffs, or when such compensation might come, calling that "virtually impossible to predict."

"But both sides are committed to moving this along as quickly as possible to expedite the payments," she said.

The settlement is one offered up last week by mediator Francis McGovern as what he called a "take-it-or-leave-it proposal," Houser said.

McGovern -- a Duke University law professor -- had given both sides until noon Tuesday to accept or reject his plan, though Houser said negotiators had found it agreeable well before then.

"You reach a time in any complex controversy when it's in everyone's best interest to agree or disagree with legal claims and find a resolution," she said.

"Certainly, I believe everyone should be genuinely pleased that we've reached a point where a middle ground has been crafted. There still remains an enormous amount of work to make this agreement in principle a reality, but this was a major first step."

Plaintiffs and other creditors were to vote on whether to accept or reject the settlement, though Spector's ruling did not immediately specify when such balloting would take place.

Women who prefer to litigate rather than accept the payments may do so, Spector's written ruling said.

Nevertheless, Spector wrote that "breast implant claimants may also be able to qualify for more than one settlement option."

For example, Spector said, a claimant could qualify for compensation to cover removal of the implants, "in addition to payments for implant rupture and for specified medical conditions."

Under the weight of implant-liability lawsuits, Dow Corning filed for Chapter 11 bankruptcy protection from creditors in mid-1995. Before then, the company initially planned to pay about $2 billion to settle implants claims.

Before Wednesday's settlement, the company's $4.4 billion plan to pay its debts and emerge from bankruptcy had included a $3 billion payment to the implant plaintiffs over 16 years. The women wanted $3.8 billion, paid out over three years.

Once the largest maker of breast implants, Dow Corning no longer makes the now-restricted form of breast reconstruction and augmentation.

Hundreds of thousands of women who have silicone breast implants have claimed leaks have caused serious diseases of the immune system such as lupus, which can lead to infections, depression, kidney disease and serious joint damage.

The company long has maintained that there's no scientific proof that silicone causes immune-system ailments that implant recipients attribute to the devices. But local complications, including hardening of the breast, are well-known when implants leak.

The U.S. Supreme Court last November upheld a federal appeals court ruling that consolidated all implant-related litigation in Michigan. Dow Corning sought that merging, saying it would ensure that complaints would be handled in orderly fashion.

Silicone implants first 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, the FDA in the early 1990s restricted their use.

Saline implants remain widely available.

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 between the FDA, the National Institutes of Health and the Centers for Disease Control and Prevention.