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Dow Corning Breast Implant Settlement
Breast Implants: Dow Corning Bankruptcy
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SUMMARY OF THE BANKRUPTCY CLAIMS RESOLUTION PROCEDURES FOR
BREAST IMPLANT AND OTHER IMPLANT CLAIMANTS
From the Office of Plaintiffs' Liaison Counsel News (4th Qtr.
1998).
This is a summary of the proposed Plan as of 1-1-99. You should
not rely on anything in this Summary until (1) the Court approves
the materials to be sent to claimants and counsel, and (2)
you obtain and review that material to see what, if any, changes
have been made. This summary is in no way intended to be a
solicitation for acceptance or rejection of the Plan.
1.Filing of Claims. Filing of Claims. Anyone who timely filed
a Proof of Claim in the bankruptcy case by the bar date is
automatically registered with the new Claims Office. Persons
who did not timely file have another opportunity to register
through Dow Chemical's (and other co-defendant's) "Rule
3005" filing. Section 2.02 of the document provides that
such persons must file a "Notice of Intent" with
the bankruptcy court anytime prior to 90 days after the Effective
Date of the Plan to assume their claim. This filing will automatically
register them with the Claims Office, allowing them the opportunity
to elect litigation or settlement (assuming their Notice of
Intent was timely filed).
2.Election Deadline.All timely registered claimants have
6 months after the Effective Date to elect either the Litigation
Facility or the Settlement Facility. (Section 3.02(c)). Claimants
who do not elect either will automatically be placed in the
Settlement Facility.
3.Settlement Options For Breast Implant Claimants. Section
6.02 provides that Breast Implant Claimants may participate
in and receive compensation from any and all of the three
following options:
A.Explantation. Claimants may receive a one-time $5,000 explantation
payment for Dow Corning breast implants removed after 12/31/90
(which is broader than the RSP date of 4/l/94) and on or before
the 10th anniversary of the Effective Date. (Section 6.02(c).)
The amount of compensation is also greater than the RSP explanation
amount ($3,000).
B.Disease. Claimants have 15 years to file a disease claim.
All claimants may select between the original global criteria
(Disease Option I) and the Long Term Benefit criteria of the
RSP (Disease Option II) (this is broader than the RSP which
only allowed current claimants to use the original global
criteria). Payment amounts for Disease Option I range from
$10,000 to $50,000 (same as the RSP without the rupture enhancement)
and Disease Option II amounts are identical to the RSP Long
Term Benefit grid ($75,000 -- $250,000). In addition, if sufficient
funds are available, Disease Claimants may receive another
payment of up to an additional 20% called a Premium Payment.
(Section 6.02(d).) As discussed below, there are also provisions
built in both disease options to allow for payments for increased
severity of disease or disability. Claimants who filed their
disease claims with the Claims Office as part of the original
global settlement or the RSP do not have to resubmit their
documentation
OR
Expedited Release. Instead of participating in the disease
option, claimants can release and forego their right to participate
in this settlement option and receive now $2,000 as an Expedited
Release payment. (Section 6.02(f).) The Expedited Release
Payment program is available for 3 years from the Effective
Date and may be extended by the Claims Administrator. Claimants
who elect the Expedited Release Payment do not waive their
right to participate in the Explanation and Rupture Payment
Options (i.e., they can accept the $2,000 and still receive
compensation from these two other settlement options).
C.Rupture. Section 6.02(e) provides that Claimants may receive
up to $25,000 ($20,000 Base Payment and $5,000 Premium Payment)
for a ruptured Dow Corning silicone gel (or ruptured lumen
surrounding the silicone in a double lumen) Breast Implant
if they are explanted and submit rupture proof on or before
two years after the Effective Date (the RSP time frame was
less than one year). The rupture proof is based on the RSP
but the dates have been changed to correlate with the bankruptcy
settlement, i.e., claimants explanted prior to the Effective
Date have less stringent proof requirements than claimants
explanted after the Effective Date (in the RSP, the applicable
date was 1/1/96). This will allow claimants to be explanted
now before the Plan is confirmed and submit their rupture
proof relying on the surgical report and if available, the
pathology report along with a statement as to whether the
implants have been preserved.
There is also a provision in the proposed Plan that is not
in the RSP that allows claimants with ruptured implants to
receive compensation if they are unable to be explanted because
of a serious medical condition (i.e., explantation is medically
contraindicated) and if their rupture is documented by MRI.
In addition, claimants may participate in an "Individual
Review Process" to have their rupture claims accepted
in certain circumstances even though they do not meet the
rupture definition (see discussion below and the provisions
at Section 6.02(e)(v)).
4.Individual Rupture Review Process. Section 6.02(e)(v) describes
a process for claimants who do not meet the rupture definition
to recover if they can meet any of the two following criteria:
A.Medical documentation, created before explantation surgery
or within a reasonable time after explantation of the Dow
Corning single or double lumen silicone gel Breast Implant,
demonstrating visual confirmation of a breach in the elastomer
envelope found upon or prior to removal of the Dow Corning
silicone gel Breast Implant, or
B.Medical documentation demonstrating migration along tissue
placed distant from the site of breast implantation of a substantial
mass of material confirmed by biopsy to be silicone from a
ruptured Dow Corning single or double lumen silicone gel Breast
Implant,
This documentation is submitted to Dow Corning, with the claimant's
identifying information redacted. Dow Corning has 60 days
to review the submission and accept or reject it. Dow Corning
may not unreasonably deny a claim submitted through this process.
If they reject the proof, the claimant may appeal to the Appeals
Judge whose decision is final and binding. This process and
the two new criteria are broader than the RSP, which did not
have anything similar.
The rupture definition also explicitly states that the Claims
Office shall take into account that physicians use different
terminology in their records and that simply because the medical
records do not use the word "rupture" is not a basis
to deny the claim. This is also broader than the RSP.
5.25% Election Penalty in the RSP. . In the RSP, all claims
were processed under the original global criteria and then,
after receiving a Notification of Status letter, current claimants
could elect between the Fixed Amount Benefit Schedule and
the Long Term Benefit Schedule. If they elected the Long Term
benefits and did not qualify, they could return to the Fixed
Amount benefits but their compensation was reduced by 25%.
This process has been changed for certain types of claims.
In the Dow Corning settlement, claimants who seek benefits
for scleroderma, lupus, polymyositis and dermatomyositis will
automatically be evaluated under both the Fixed Amount benefits
(Disease Option I) and the Long Term Benefit (Disease Option
II) criteria. (Section 6.02(d)(ii and iii)). Their Notification
of Status letter will inform them of their eligibility under
both programs and claimants may choose to recover under the
highest disease for which they are eligible. All other disease
claims (ACTD, MCTD, ANDS, etc.) will be evaluated under Disease
Option I (the global criteria) and, if they have an approved
disease or a claim with only a minor deficiency, they can
then elect to submit additional material to qualify under
Disease Option II (the Long Term Benefit Schedule). If they
fail to qualify for Disease Option II and wish to return to
Disease Option I, their compensation will be reduced by 25%.
6.Multiple Manufacturer Reduction. Section 6.02(d)(v) provides
that only claimants who have a disease claim, a Dow Corning
breast implant and acceptable proof of a silicone gel breast
implant from Bristol, Baxter or 3M will have their disease
recovery reduced by 50%. Under Section 6.02(e)(viii), a claimant's
rupture recovery may also be reduced if they fall within a
very narrow circumstance: the claimant has acceptable proof
of a rupture of a Dow Corning silicone gel breast implant,
was a current claimant in the RSP, did not opt out of the
RSP, and received a rupture enhancement payment for a Bristol,
Baxter or 3M silicone gel breast implant in the RSP. If they
meet all of these criteria, then their Dow Corning rupture
recovery will also be reduced by 50%. Only an extremely small
number of claims may fall within this narrow circumstance.
7.Increased Severity Fund. The Plan Provides for an Increased
Severity Program for claimants who qualify under Disease Option
I (the original global criteria). (Section 6.02(d)(viii)).
This fund allows claimants to receive additional benefits
if their disability level increases to the "A" level
anytime during the 15 years of the settlement program. In
the RSP, there are no additional benefits for claimants who
elected Fixed Amount benefits. The total payout of the Increased
Severity Fund is $15 million NPV. There is also, like the
RSP, a provision which allows claimants in Disease Option
II to recover for an increase in the severity of their disease
or disability. (Section 6.02(d)(ix)(b).) These payments are
treated as Premium Payments under the Plan.
8.Other Products. Although the Term Sheet and Addendum II
Provided that Dow Corning would establish the criteria for
Other Products (i.e., it would be the criteria set forth in
their Second Amended Plan of Reorganization), this criteria
has been improved in significant respects. For example, the
rupture definition and proof is identical to that for breast
implant claimants. This is a capped non-reversionary fund
of $36 million NPV.
9.Silicone Material Claimant Program. Breast Implant Claimants
who have silicone gel breast implants that were implanted
after 1/1/76 and before 1/1/92, have at least one breast implant
made by Bioplasty, CUI or Mentor and do not also have an implant
from Bristol, Baxter, 3M or Dow Corning may submit a disease
claim and receive up to 40% of the disease grid. (Section
6.04). It is a capped non-reversionary fund of $57.5 million
NPV. All disease claims under this program must be submitted
on or before two years after the Effective Date. Claimants
who do not elect or qualify for the disease option may receive
an Expedited Release Payment. Claimants who have only Bristol
or Baxter silicone breast implants may apply as well, but
they are required to "Marshal" their recoveries
(i.e., first obtain all compensation available to them from
the manufacturer of their implants). Their recovery will be
reduced on a dollar-for-dollar basis. All excess money in
the fund, after payment of disease and Expedited Release payments,
will be made on a pro rata basis to all eligible Silicone
Material Claimants. Silicone Material Claimants will not be
paid until all disease and expedited release claims under
this fund have been evaluated. Since claims may be submitted
for two years, claims from this fund will not be paid until
at least beginning the 3rd year of the Plan.
10.Foreign Claimants. The foreign claims that have not already
settled with Dow Corning will be offered the same settlement
options as domestic claimants (explanation, rupture, and disease
or expedited release) but will be paid on a "Pfizer"
grid of 60% or 35% of the value of domestic claimants, depending
on their country of citizenship. (Section 6.05). In addition,
the Claims Office is authorized to establish a separate claims
facility in Europe and one in South America to allow claims
to be processed in languages other than an English.
11.Proof of Manufacturer. . Schedule I lists the brand and
implant names acceptable for Dow Corning breast implants and
the proof required. The proof is verbatim, from the RSP with
some additional criteria specific to Dow Corning, such as
participation in the Dow Corning Breast Implant Removal Assistance
Program. The proof also lists a set of unique identifiers,
adopted largely wholesale from Dr. Middleton, which should
make it easier for claimants to have their proof accepted
by the Claims Office. Proof of manufacturer is essential to
recovering any benefits under the Plan.
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