RICHMOND, NOV. 5 -- The court hearing that may herald the end of the 26-month-old A.H. Robins Co. bankruptcy opened today with wildly conflicting estimates of how many Dalkon Shield victims should be compensated, and how much money they should get.
All parties to the case agreed that the women harmed by the defective intrauterine contraceptive device must be paid in "full" -- but were billions of dollars apart on what that means.
That determination will be provided by U.S. District Judge Robert R. Merhige Jr. after the hearing ends, probably next week.
Attorney James C. Roberts, representing Robins, put the number of "potentially valid and compensable claims" at 30,500 and the payout at no more than $1 billion. Robins would also pay $300 each to 112,000 women whose claims it challenges, and an average of $2,200 to other claimants.
At most, Roberts said, the maximum payout would be $1.15 billion, plus $100 million for operating expenses. The total, $1.2 billion is well under the $1.7 billion cap proposed by the company in its pending reorganization plan, which includes its agreement to be acquired by Rorer Group Inc.
But the lawyer for the Dalkon Shield Claimants' Committee, John J. Walsh, said it would take $4 billion to $7 billion to compensate shield victims. He didn't estimate their number, while calling today "the most important day, in all probability, in the lives of some 200,000 women." That's about the number of potential claimants worldwide who have passed initial screening.
One of the day's surprises came from Aetna Casualty & Surety Co., which provided product-liability insurance for the IUD from its market debut in 1971 until 1978, four years after Robins halted U.S. sales, and which has paid out hundreds of millions of dollars to dispose of claims. Aetna has a $56 million claim against Robins.
Aetna attorney John F. Harkins Jr. said that more than 90,000 victims -- triple the Robins' estimate -- are "entitled to more than a minimal amount," and that the aggregate payment should be $2.2 billion to $2.3 billion.
The committees representing the outside stockholders, who control about 60 percent of Robins' outstanding common shares, and the trade creditors both estimate the total of compensable victims at 50,000. But while stockholders' lawyer Robert M. Miller argued for a $1 billion payment, creditors' counsel Harold S. Novikoff urged $1.63 billion.
A lawyer representing possible future claimants, Stanley K. Joynes III, estimated that from January 1986 to the year 2000, 10,200 women who wore the Robins' IUD would be found to have been injured by pelvic inflammatory disease and that 3,600 others would be infertile. By contrast, Robins said only 99 future claimants would be fully compensable.
Despite the vast gulfs between the lawyers, each said he wanted to be fair and had relied on highly credentialed experts who in every case had taken a "conservative" approach.
B. Thomas Florence, who wrote the report on which Robins based its estimates, was sharply questioned by Mark C. Ellenberg, representing the claimants' committee, and, at times, the judge.
Ellenberg cited as an example a woman who had received a $710,000 settlement before the bankruptcy filing, and said she would get about $5,000 under Robins' proposal. Another woman who had rejected a $150,000 settlement as too low would get $300.
Florence, senior vice president of Resource Planning Corp., said in his report that "medical researchers have indicated that IUD wearers may inaccurately identify their IUDs as Dalkon Shields," citing a 1983 article as his source. Ellenberg quoted from the article: "Women reporting Dalkon Shield use were most accurate -- 100 percent."
The judge was troubled by Florence's assignment of 43,529 claimants to the $300 category. Those claimants are women who couldn't confirm that the IUD they had worn was a Dalkon Shield, but who had sworn in a questionnaire that their IUDs were shields. The assumption that the women aren't "telling the truth ... that disturbs me," Merhige said.
Shortly before the hearing began, women from the Dalkon Shield Information Network, a small victims' organization, marched in front of the courthouse carrying signs of protest against Robins. The group also circulated petitions calling for inquiries into Robins' performance by Congress and the Justice Department, and for a World Health Organization recall.