Bankruptcy threat in £2.6bn breast implant case

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The Independent Online

Crisis talks are under way in Washington to save a £2.6bn settlement between manufacturers of silicon breast implants and 400,000 women in the US. If the talks fail, Dow Corning, the product's biggest manufacturer, has threatened it could file for Chapter 11 bankruptcy protection.

Dow Corning, the lead contributor to the settlement, is not taking part in the discussions. It says it favours the settlement route, whereby the makers of breast implants have contributed to a compensation fund, but will not increase its contribution of £1.2bn. Manufacturers and lawyers for the steering committee of plaintiffs are expected to spend the next few weeks negotiating a bigger fund.

If the settlement were to collapse, the companies involved could face thousands of expensive and time-consuming individual actions from women claiming to have suffered because of faulty implants.

A lawyer representing the insurers for two of the leading companies involved said that some individual cases could possibly cost more than the total current settlement.

The forced re-think was sparked by the decision of Judge Sam Pointer in Alabamathat that £2.6bn was not enough to compensate all the women involved. By March 400,000 women had filed a claim with the claims processing centre in Texas.

The compensation structure under the settlement works on a sliding scale: the younger the woman and the more serious the health problems she has, the more cash she is likely to receive. Based on this, the most serious cases could expect $1.5bn (£940m) and the least $200,000.

The claims processing centre faces a huge logistical problem in evaluating the larger-than-expected number of claims. Until they can do this, no estimate for the real cost of a settlement can be worked out.

The call for extra cash has led Dow Corning, a joint venture between Dow Chemical and Corning, the optics group, to declare its intention to consider filing for protection under Chapter 11 of the US Bankruptcy Code.

A spokesperson for the company said that its decision to consider applying for Chapter 11 protection is related to the exorbitant demands from lawyers representing clients with breast-implants outside the settlement and the problems it was having in getting insurers to pay up. More than 100 US and non-US insurance carriers are involved with Dow alone, and the number of policies held is even higher.

Dow has already spent more than $700m on legal, administrative and research costs related to the settlement.

No register exists for the number of women with breast implants, but estimates range between 2-3 million worldwide, which include up to 50,000 in the UK.

In 1992 Dow Corning was reported as saying that 750,000 women around the world had its implants. Between 2,000 and 2,500 applicants to the current settlement name Dow Corning as the maker of the implants. It is also named by 7,000 other women not involved in the settlement.

No large scale epidemiological studies have been carried out and no scientific evidence exists to link breast implants and disease.

However, studies suggest that the health problems cited by plaintiffs are exclusively related to women and manufacturers have also admitted that 1-2 per cent of implant bags actually leak.