Dow Corning Agrees to Pay $3.2 Billion in Breast Implant Case

Dow Corning Co. on Monday filed a plan to pay $3.2 billion to women who claim they were injured by its silicone-gel breast implants, potentially ending the legal war over what was once the nation’s most popular cosmetic surgery.

Women who filed claims against the implant maker could receive checks as early as next summer under the settlement, subject to the approval of a bankruptcy judge and the company’s creditors and other claimants.

Monday’s filing in U.S. Bankruptcy Court in Bay City, Mich., marks one of the largest public health settlements in history, behind only the massive tobacco settlements obtained by four states.

More than 170,000 women filed claims against the company alleging its implants caused immune-system illness and other health problems. Hundreds of thousands of other women who had implants manufactured by other companies using Dow Corning gel also filed claims.

Under the deal, which would permit Dow Corning to end its Chapter 11 bankruptcy protection, a claimant with an illness could receive up to $250,000 in compensation, plus $20,000 if the device ruptured and an additional $5,000 to pay for removal surgery. A woman who hasn’t reported any ill effects but who wants to settle and waive future disease claims would receive $2,000.

Women who choose not to participate in the settlement still may sue on their own. While Dow Corning would be released from liability, it would establish a trust, capped at $400 million, to pay customers who pursue litigation.

Dow Corning’s corporate lenders would be paid in full on $1.3 billion in debt, the company said. The creditors would receive 24% of the amount they are owed in cash and 76% in 10-year notes.

A confirmation hearing on the deal is set for Jan. 20. If the judge approves the plan, it will be circulated and voted on by the claimants. Creditors who are owed two-thirds of the dollar amount in claims and more than half of the individuals must decide on it.

Lawyers involved in the settlement talks and several plaintiffs predicted the deal will be passed, in part out of sheer frustration that the litigation has dragged on.

“Their thinking may be not so much, ‘OK,’ as ‘Uncle,’ ” said Sybil Goodrich, 59, a Beverly Hills cancer survivor who has had two mastectomies and four sets of implants before having them removed in 1984. “There isn’t enough money in the whole world to compensate people for the injuries they sustained. However, under the circumstances, it’s a fine settlement.”

The deal was modeled on a November 1995 settlement reached by other implant manufacturers, including Bristol-Myers Squibb Co. and Minnesota Mining & Manufacturing Co., which was approved by about 85% of the women with those devices. Payments under Dow Corning’s settlement program could be about 20% higher, company officials said.

The 1995 settlement came after the collapse of an earlier deal in which the manufacturers would have paid more than $4 billion, half of it from Dow Corning.

After three more years of bitter talks, company officials and a committee of lawyers representing the plaintiffs were able to hammer out deals covering women in the United States, Canada, Australia and New Zealand.

“Both sides have compromised so that women can finally resolve their claims,” Dow Corning President Gary Anderson said.

The company said the deal will enable settlement of claims by health insurers who paid for procedures relating to the implants.

Left unresolved in the settlement, however, is perhaps the most contentious issue in the case--the question of whether the implants cause health problems. Dow Corning officials said Monday they would eventually seek a trial to resolve the causation issue.

Announcement of the deal comes weeks before the expected release of a report by court-appointed doctors who were ordered to evaluate evidence showing if implants cause disease.

Anderson said the Midland, Mich.-based company, which is jointly owned by Dow Chemical and Corning Inc., is still “adamant” in its position that the devices don’t lead to diseases. The company cites several studies, including a review by the British minister of health, to back up that argument.

Anderson said that about 25% of the women who received implants made by the company had filed claims.

“This is by no means over,” said Josey Vanderpas of Torrance, who blames implants for her auto-immune disease. “There’s still many of us too sick to function. Even though we’ll be compensated, the diseases still go on.”