U.S. District Court Judge Robert R. Merhige Jr. set a $2.475 billion payout to Dalkon Shield claimants, $725 million more than the maximum proposed by A.H. Robins Co. in its bankruptcy reorganization plan. The range of payouts proposed by Aetna Life & Casualty Co. is $2. 2 billion to $2.3 billion. Because of an editing error, these figures were misstated in yesterday's article. (Published 12/13/87)

RICHMOND, DEC. 11 -- U.S. District Judge Robert R. Merhige Jr. today set $2.5 billion as the cost of settling claims resulting from the Dalkon Shield manufactured by A.H. Robins Co.

The sum is about $700,000 more than the $1.75 billion that would be set aside for claims under a merger plan proposed by Robins and Rorer Group Inc., and far below the $7.2 billion estimated by a committee representing the claimants. Nonetheless, initial reactions were guardedly optimistic.

Merhige, who is overseeing Robins' bankruptcy case and must approve any final reorganization plan, said the money set aside should be paid out over a reasonable, but unspecified, period of time. He did not estimate the number of claimants in his brief ruling here this morning.

The chief executives of the two companies, E. Claiborne Robins Jr. and Robert E. Cawthorn, said that they "will work to revise A.H. Robins' plan of reorganization. We are hopeful we can satisfy the court within the time period that will be satisfactory."

"I think we will be able to manage to fund the plan," said Robert Miller, a lawyer for Robins' stockholders.

Whether the creditors -- mainly shield victims -- will ultimately accept the plan may hinge on the advice of claimants' committee lawyers. One, Murray Drabkin, said the judge's action "means the Robins reorganization plan goes back to the drawing boards." Another, Mark C. Ellenberg, said the announcement "indicates that the pending plan is inadequate and must be substantially improved."

A.H. Robins Co., which sold millions of the defective intrauterine contraceptive devices worldwide in the first half of the 1970s, was flooded by product-liability lawsuits, and filed for bankruptcy protection nearly 28 months ago.

Robins' plan to emerge from bankruptcy called for two trusts for shield-related claims with a combined maximum of $1.75 billion, thus capping the liability of Rorer, which intends to acquire Robins in a $2.65 billion acquisition. Robins argued at a court estimation hearing last month, however, that the sum actually needed for full compensation will be $1.215 billion -- about half of Merhige's figure.

Currently, about 200,000 women have shield claims pending.

A crucial issue is how Merhige defines a "reasonable" time span for payment of the $2.5 billion. The company calls seven years a "reasonable" period in which monies would be paid in installments into the trusts, and in which the trusts would pay shield claimants. The claimants' committee views seven years as excessive and as grossly unfair to victims.

A related key question is: If the company pays into the trusts on an installment plan, as it proposes, would shield victims be entitled to interest -- which could amount to hundreds of millions of dollars -- on the installment payments?

Merhige's figure is closest to the range of $2.2 billion to $2.5 billion proposed by Aetna Life & Casualty Co., which paid out hundreds of millions of dollars to resolve shield product-liability claims before Robins filed for bankruptcy protection.

In his ruling Merhige alluded without elaboration to "developments" in the last two weeks relating to the possibility of a "definitive" resolution of the case. Rorer is reportedly willing to consider raising the limit for shield claimants within the overall $2.6 billion, and Aetna reportedly has considered creation of a special insurance policy of several hundred million dollars as a way to guarantee more money for shield claimants. Aetna is both a target of product-liability litigation and a claimant for $57.4 million from the Robins estate.

On the New York Stock Exchange, Robins closed at $14.25 today, down $1.50, and Rorer at $35.13, down $1.