/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010509.MBX C L A S S A C T I O N R E P O R T E R Wednesday, May 9, 2001, Vol. 3, No. 91 Headlines BREAST IMPLANT: Minnesota Mining Faces 847 Suits; Assesses Liabilities BRIDGEPORT MACHINES: 7th Cir Says Nationwide Class of Buyers Unnecessary CALICO COMMERCE: Levy and Levy Announces Securities Suit Filed in N.Y. CALIFORNIA: Activisits Wage Suit over Blackouts, Urge for Safety Net COMPUTER ASSOCIATES: Market Punishes CA After Earnings 'Typo' ECONOMY SYNDROME: AAP Newsfeed Says British Victims to Sue for STG 7 Mil FEN-PHEN: Court Denies Fed's Request to Delay Paying Claimants HIP IMPLANTS: Sulzer Opposes Consolidation, Could Live with C.D. Cal. HMOs: Fd Judge Hears Arguments on Cert. of Racketeering Suit in Miami Ct HMOs: Plaintiffs Say Claims against Insurers Would Unravel Without Cert. HOLOCAUST VICTIMS: Lawsuit Cites Army Brass In Vanished Hungarian Loot MANORCARE INC: Hagens Berman Announces Suit over Systemic Negligence PENN TREATY: Decries Merit of Securities Suits; Capital Raising to Go on PRUDENTIAL DISCOVERY: Reports to SEC on Lawsuits over Sales Practices TAISHUN TUNNEL: Farmers in China Sue for Damages in Lung Disease TOBACCO LITIGATION: Cigarette Makers Agree to Pay FL Smokers $710 Mil TOBACCO LITIGATION: FL Ruling Delays Payments To Smokers Pending Appeals TOBACCO LITIGATION: Tobacco Groups Post $ 2 Bil Bond U.K. HOSPITALS: Parents to Sue over Removal of Kids' Organs after Death ********* BREAST IMPLANT: Minnesota Mining Faces 847 Suits; Assesses Liabilities ---------------------------------------------------------------------- Minnesota Mining & Manufacturing Co and certain other companies have been named as defendants in a number of claims and lawsuits alleging damages for personal injuries of various types resulting from breast implants formerly manufactured by the company or a related company. The company entered the business of manufacturing breast implants in 1977 by purchasing McGhan Medical Corporation. In 1984, the company sold the business to a corporation that also was named McGhan Medical Corporation. As of March 31, 2001, the company is currently named as a defendant, often with multiple co-defendants, in 847 lawsuits and 27 claims in various courts, all seeking damages for personal injuries from allegedly defective breast implants. These lawsuits and claims purport to represent 2,228 individual claimants. 3M has confirmed that 35 of the 2,228 claimants have opted out of the Revised Settlement Program (discussed below) and have 3M implants. Most of the claimants in these confirmed cases have alleged an unspecified amount of damages above the jurisdictional limit of the courts in which the cases were filed. The company believes that most of the remaining 2,228 claimants will be dismissed either because the claimants did not have 3M implants or the claimants accepted benefits under the Revised Settlement Program. Most of these claimants have filed lawsuits that either do not allege a specific amount of damages or allege an unspecified amount of damages above the jurisdictional limit of the court. The rest of these claimants allege damages, including both actual and punitive damages, aggregating approximately $100 million in their lawsuits. Approximately 150 claimants have filed lawsuits in state and federal courts in New York alleging damages in excess of $20 million each. 3M expects that virtually all of these New York cases will be dismissed without payment for the reasons stated above. The company continues to work to clarify the status of these lawsuits and claims. Based on 3M's experience in resolving thousands of these lawsuits, 3M believes that the amount of damages alleged in complaints is not a reliable or meaningful measure of the potential liability that 3M may incur in the breast implant litigation. Investors should place no reliance on the amount of damages alleged in breast implant lawsuits against 3M. On December 22, 1995, the United States District Court for the Northern District of Alabama approved a revised class action settlement program for resolution of claims seeking damages for personal injuries from allegedly defective breast implants (the "Revised Settlement Program"). The Court ordered that, beginning after November 30, 1995, members of the plaintiff class may choose to participate in the Revised Settlement Program or opt out, which would then allow them to proceed with separate product liability actions. The company believes that approximately 90 percent of the registrants, including those claimants who filed current claims, have elected to participate in the Revised Settlement Program. It is still unknown as to what disease criteria all claimants have satisfied, and what options they have chosen. As a result, the total amount and timing of the company's prospective payments under the Revised Settlement Program cannot be determined with precision at this time. As of March 31, 2001, the company had paid $302 million into the court-administered fund as a reserve against costs of claims payable by the company under the Revised Settlement Program (including a $5 million administrative assessment). Additional payments will be made as necessary. Payments to date have been consistent with the company's estimates of the total liability for claims under the Revised Settlement Program. Under the Revised Settlement Program, additional opt outs are expected to be minimal since the opt-out deadline has passed for virtually all U.S. class members. The company's remaining obligations under the Revised Settlement Program are limited since (i) most payments to current claimants have already been made, (ii) no additional current claims may be filed without court approval, and (iii) late registrants are limited by the terms of the Revised Settlement Program. The company's current best estimate of the amount to cover the cost and expense of the Revised Settlement Program and the cost and expense of resolving opt-out claims and recovering insurance proceeds (from inception of the litigation through March 31, 2001) is $1.2 billion. After subtracting cumulative payments of $1.187 billion as of March 31, 2001, for defense and other costs and settlements with litigants and claimants, the company had remaining liabilities for the breast implant litigation of $13 million. The company's insurers initiated a declaratory judgment action in Ramsey County Minnesota against the company seeking adjudication of certain coverage and allocation issues. The jury trial phase of this action finished on February 24, 2000. The jury returned a verdict favorable to the company by rejecting all of the insurers' remaining defenses to coverage for breast implant liabilities and costs. The court has considered additional remedies requested by the company and the insurers including eliminating, limiting or extending allocation among the insurers providing occurrence-based coverage (before 1986), pre- and post-judgment interest, attorneys' fees and further equitable relief. The court's rulings in post verdict motions are considered to be generally favorable to the company. The court awarded the company prejudgment interest on amounts owing by insurers including reasonable attorney fees. However, the court has yet to determine the amount of attorneys' fees recoverable by the company. The court has indicated a formula to be used for this calculation that would result in the company being reimbursed for less than all of its fees. Exact amounts cannot yet be determined. The court filed the judgment on April 16, 2001 and the company expects entry of that judgment to occur during the second quarter of 2001. As of March 31, 2001, the company had receivables for insurance recoveries of $502 million, representing settled but yet to be received amounts as well as amounts contested by the insurance carriers. During the first quarter of 2001, the company received payments from its occurrence carriers. Various factors could affect the timing and amount of proceeds to be received under the company's various insurance policies, including (i) the timing of payments made in settlement of claims; (ii) the outcome of occurrence insurance litigation in the courts of Minnesota (as discussed above) and Texas; (iii) potential arbitration with claims-made insurers; (iv) delays in payment by insurers; and (v) the extent to which insurers may become insolvent in the future. There can be no absolute assurance that the company will collect all amounts recorded as being probable of recovery from its insurers. While the company currently believes that the ultimate outcome of these proceedings and claims, individually and in the aggregate, will not have a material adverse effect on the consolidated financial position, results of operations, or cash flows of the company, there can be no absolute certainty that the company may not ultimately incur charges for breast implant claims in excess of presently recorded liabilities. While the company currently believes that a material adverse impact on its consolidated financial position, results of operations, or cash flows from any such future charges is remote, due to the inherent uncertainty of litigation, there exists the remote possibility that a future adverse ruling could result in future charges that could have a material adverse impact on the company. The current estimate of the potential impact on the company's consolidated financial position for breast implant litigation could change in the future. BRIDGEPORT MACHINES: 7th Cir Says Nationwide Class of Buyers Unnecessary ------------------------------------------------------------------------ 7th Circuit short-circuits class action v. manufacturer An Indiana man's bid to pursue his lawsuit against a manufacturer as a nationwide class action appears to be doomed. His chance of obtaining the certification of a smaller class doesn't look too good either. Citing "issues of choice of law, commonality and manageability," the 7th U.S. Circuit Court of Appeals concluded Friday that it was unnecessary for the judge presiding over the man's suit to certify a class of all people in the United States who over the past five years bought machine tools equipped with a DX-32 Control Unit. The unit, manufactured by Bridgeport Machines Inc. of Connecticut, uses computer hardware and software to direct machine tools in performing complex tasks. The 7th Circuit conceded that a class limited to purchasers in a single state or customers of a single dealer might be appropriate -- but added that such a group of buyers might be too small to justify class treatment. The court vacated an order by Chief Judge William C. Lee of the Northern District of Indiana certifying a nationwide class in a suit accusing Bridgeport of fraud and breach of warranty. The court sent the case back to Lee with instructions to make the factual and legal inquiries required under Federal Rule of Civil Procedure 23. Rule 23 requires a judge confronted with a request for class certification to consider such matters as whether joinder is impracticable because the proposed class has so many members and whether those seeking to become named plaintiffs will fairly represent the interests of the class. Lee certified a nationwide class at the request of plaintiff John D. Szabo, who claims all DX-32 units sold since the beginning of 1996 were defective. Szabo also claims that Bridgeport or its agents lied to customers about the abilities and limitations of milling machines equipped with DX-32 units. Bridgeport filed a petition under Federal Rule of Appellate Procedure 5 and Federal Rule of Civil Procedure 23(f) seeking review of the certification order. The 7th Circuit said it granted Bridgeport's request for review in part because "the class certification turns a $ 200,000 dispute the amount that Szabo claims as damages into a $ 200 million dispute." "Such a claim puts a bet-your-company decision to Bridgeport's managers and may induce a substantial settlement even if the customers' position is weak," Judge Frank H. Easterbrook wrote for a three-member panel of the 7th Circuit. "This is a prime occasion for the use of Rule 23(f), not only because of the pressure that class certification places on the defendant but also because the ensuing settlement prevents resolution of the underlying issues." The panel said granting review also allowed it to consider whether Lee and the other district judges whose decisions Lee cited "correctly understood the applicable principles" of law involved with certification requests. They didn't, the panel concluded. The panel held that Lee erred by certifying a class "without resolving factual and legal disputes that strongly influence the wisdom of class treatment." The panel acknowledged that a judge must assume that a lawsuit's claims are true for the purposes of ruling on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. But that approach is not appropriate when it comes to a motion for class certification, the panel held. "The reason why judges accept a complaint's factual allegations when ruling on motions to dismiss under Rule 12(b)(6) is that a motion to dismiss tests the legal sufficiency of a pleading," the panel said. "Its factual sufficiency will be tested later -- by a motion for summary judgment under Rule 56, and if necessary by a trial." But the panel noted that an order certifying a class "usually is the district judge's last word on the subject." That means the judge must make some factual as well as legal determinations in deciding whether the prerequisites of Rule 23 have been met, according to the panel. The panel said that if a judge in making that decision must consider matters that touch on the merits of a complaint -- for example, if he must determine which state's laws apply in order to determine if it would be difficult to manage the case as a class action -- "then the judge must make a preliminary inquiry into the merits." Joining the opinion written by Easterbrook were Judges Richard A. Posner and Anne Claire Williams. John D. Szabo, doing business as Zatron v. Bridgeport Machines Inc., No. 01-8003. (Chicago Daily Law Bulletin, May 7, 2001) CALICO COMMERCE: Levy and Levy Announces Securities Suit Filed in N.Y. ---------------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of all purchasers of the common stock of Calico Commerce, Inc. (Nasdaq: CLIC) from October 6, 1999, through March 23, 2001, inclusive (the "Class Period"). The complaint charges Calico Commerce and certain officers and directors with issuing a false and misleading registration statement and prospectus (the "Offering Documents") in connection with the Company's October 6, 1999, initial public offering. The complaint alleges that the Offering Documents were misleading because they failed to disclose to investors that at least two of the lead underwriters and two of the other underwriters had solicited and received excessive and undisclosed commissions from certain investors. No class has yet been certified in this action, and until a class is certified an investor is not represented. If you purchased Calico Commerce, Inc. securities during the Class Period, you have the right to be represented by counsel and to participate in this action as a plaintiff. Contact: Stephen G. Levy, Esq. of Levy and Levy, P.C., 866-338-3674, or 212-792-4343, or 203-622-7664, or LLNYCT@aol.com CALIFORNIA: Activisits Wage Suit over Blackouts, Urge for Safety Net -------------------------------------------------------------------- As she monitored the news of possibly more rolling blackouts Monday, Lori Gray braced for another tense day in the projected summer-long fallout from the state's worsening energy crisis. For the 39-year-old Berkeley woman--who is blind and suffers from epilepsy, asthma and chronic pain from aching joints that restrict movement--losing electricity is more than just an inconvenience. It could kill her, she says. Gray relies on electricity to run several life-saving machines that do everything from dispensing her asthma medication and opening her door by remote control to relaying her emergency telephone numbers in a computerized voice. Today, disability activists are calling on state officials and California's utilities to do more to assist residents like Gray--disabled people who are perilously vulnerable to any loss of electrical power. In letters to Gov. Gray Davis, the California Public Utilities Commission and Judge Dennis Montali, who is presiding over Pacific Gas & Electric's recent bankruptcy filing, an Oakland-based disability watchdog is calling for a comprehensive statewide system to ensure that disabled people do not fall through the energy crisis safety net. Lawyers from Disability Rights Advocates want a state-mandated emergency plan that responds to the "disproportionate and life-threatening impact of the energy crisis on people with disabilities." Activists are calling for a statewide early-warning system; the creation of charging stations on exempt circuits for recharging equipment during blackouts; funds to buy backup batteries and generators and a toll-free emergency hotline for the disabled. They also seek a state investigation into remedies for the long-term impacts--including rate increases. Gray says the prospect of losing power and relying on unreliable generators pervades even her dreams. "I spend my days worrying," she says. "I worry over when the next blackout will come. I worry about my friends who are in similar, if not worse, predicaments than me--who rely on their respirators. Let me tell you, this is no way to live." At least two utilities said Monday they already employ an early-warning system for many customers on life support, but were open to other suggestions on how to improve services for the disabled. They added that the burden also rests with state officials. Activists, who called the letters a first attempt to open discussions of the issues, say they have not ruled out a class-action lawsuit on behalf of what they say are 3 million people with disabilities in California. "The response should not be an ad hoc process--one utility doing this and another that," said Shawna Parks, an attorney for the Oakland nonprofit. "We want an organized system that addresses some very serious needs. And as for any lawsuit if this doesn't happen, we're not closing any doors." Disability Rights Advocates recently won major concessions in settling a lawsuit it filed against health care giant Kaiser Permanente for failing to address the needs of its wheelchair patients. PUC Commissioner Carl Wood said Monday he would be open to any suggestions to assist the sick, elderly and disabled in the event of continued blackouts. "The energy crisis has put a huge burden on the most vulnerable people in our society--people just trying to survive," he said. But funding new programs presents problems. "One utility faces bankruptcy and others could be close, so some might question the wisdom of giving them new mandates when there may be no money to fund them," Wood said. "The goals are reasonable. The question is where the money comes from." Dan Quigley, director of emergency communications for PG&E, said the company contacts about 22,000 life-support customers before anticipated blackouts. Another 48,000 are part of a medical baseline program in which they receive reduced electrical rates. "We didn't design the system to shut people off and cause them inconvenience," he said. "We're eager to work with the PUC and disabled advocates to figure out a system that reduces the disruption." Quigley added, however, that some of the activists' suggestions--such as community battery charging stations--would be better served by state emergency response groups. Anita Gore, a spokesperson for the state's massive health and human services agency, said the suggestions will be considered. "This is all relatively new," she said of the blackouts, "so we're gearing up to address concerns of the disabled and everyone else." Ed Van Herik, a spokesman for San Diego Gas & Electric, said the company notifies 3,500 life-support customers of impending blackouts and "calls those customers back later to make sure the power has come back on." He echoed concerns about the suggestion of an emergency hotline. "Some of those calls might be better handled by 911," he said. Disability Rights Advocates has recently heard from dozens of disabled residents from across the state, including a woman who uses a respirator to breathe at night--who says she must stay awake during blackouts because she cannot afford a generator. A deaf man who uses visual alarms for the phone, doorbell, smoke detector and baby monitor has lost them during blackouts and fears going without power at night--saying his family will have difficulty communicating because they use sign language. Another disabled woman who uses a wheelchair told advocates she was stranded in her apartment during a blackout because the elevator did not work and she could not use the stairs. Parks said activists want the utilities to expand services for the disabled. "There are situations faced by the disabled that aren't defined as critical by the utilities," she said. "There are many more definitions of being disabled than to be on a respirator or life support." Lori Gray knows how the system can fail the disabled. She was expelled from PG&E's medical baseline program last summer after failing to respond to a company letter requiring her to recertify. "They sent a printed letter, but I'm blind and can't see," she said. "But they bounced me anyway." Now Gray must acquire new letters from her doctors to get readmitted into the program. And when she asked utility officials to attach a staple to the return address of future letters so she could distinguish them as important mail, they refused--until she complained to PUC officials. Gray says she would do anything to be included in the early warning programs because notification could be a lifesaver. "It would relieve the stress of worrying when the next blackout is coming," she said. "I think the disabled deserve that much." (Los Angeles Times, May 8, 2001) COMPUTER ASSOCIATES: Market Punishes CA After Earnings 'Typo' ------------------------------------------------------------- Investors lopped more than $1 billion in value from shares of Computer Associates International Inc. yesterday, three days after the company blamed a typographical error for overstating a preliminary earnings figure. CA last Friday reported that a chart in an April 16 preliminary earnings release mistakenly put diluted operating earnings per share for the year ended March 31, 2001, at 40 cents. CA on Friday said the correct figure was 16 cents. CA shares had already been under pressure, following a published report last week that contended the company has for years used accounting "tricks" to create a "mirage" of revenue growth. CA last October switched to a new business model and a "pro forma, pro rata" accounting method, which the report suggested further masks the declines. CA called the allegations "misleading and at times false." Despite attempts by Wall Street analysts to downplay the report in The New York Times and the "typographical error," investors seemed worried by the combined impact of the recent news. CA shares yesterday closed down $2.50 to $ 28.20, a decline of around 8 percent. "Investors are on edge-they're looking for any reason to sell," said Brian Eisenbarth, who tracks CA for Collins & Co. LLC, in San Francisco. He said he didn't believe the error will be a long-term issue for CA. "These accounting issues pop up every once in a while" for many large software firms, he said. Others sought to downplay the error. "It's a meaningless number," Prudential Securities Inc. analyst John McPeake told Reuters. One group that certainly is watching are law firms specializing in shareholder lawsuits. David Rosenstein, a spokesman for Millberg Weiss, which in 1998 filed a class-action suit against CA, declined to comment on any possible new suit against CA. But speaking generally about financial reporting, he said: "Obviously, restatements are a major red flag. They are a major source for alerts about irregularities." "The typographical error was a human error," CA spokesman Bob Gordon said in an e-mail yesterday. "The timing was terrible. There's nothing more to say about that." CA said the quarterly diluted operating earnings per share figure (a loss of 29 cents) was reported correctly in the release, indicating that analysts could have arrived at the 16-cent figure by adding the fourth-quarter number to the previous three quarters. While CA never put a dollar figure on the misstated and corrected per-share amounts, published reports translated the error into an overstatement of around $140 million, since the per-share figures are multiplied by the number of shares CA has outstanding (around 575 million). While CA never said it, the incorrect 40-cent figure inflated diluted operating earnings to around $230 million, compared with the $90 million that resulted from the 16-cent figure. After weekend published reports extrapolated the error to its full-dollar amounts, investors began dumping CA shares en masse when trading resumed yesterday. Trading volume more than doubled average daily levels. "We don't think that they have been fair in their reporting of the nature of the error...no financial results were changed," CA's Gordon wrote. How serious the error was remains debatable. Securities and Exchange Commission spokesman John Heine declined to characterize how common such errors are, or whether the SEC views companies that make them with a more critical eye. (The SEC has inquired about CA's accounting practices in the past, though it's uncertain whether those inquiries have been completed, Newsday reported last week.) "There are typos and there are typos," Heine said. "But we don't keep statistics on them. We make too many of them ourselves. It would be a painful number." Gordon said CA has taken measures to make certain reporting errors don't happen again. "Someone without direct involvement in compiling the numbers for the printed document will check the releases from now on before they are issued," he said. (Newsday (New York, NY), May 8, 2001) ECONOMY SYNDROME: AAP Newsfeed Says British Victims to Sue for STG 7 Mil ------------------------------------------------------------------------ British victims of so-called economy class syndrome are reportedly following their Australian counterparts and are preparing a class action against major airlines. Lawyers have begun talks with 14 bereaved families on the possibility of STG 500,000 ($A1.4 million) payouts for each of the victims of deep vein thrombosis (DVT), which can cause fatal blood clots, British newspaper the Daily Express reported today. The STG7 million ($A19.6 million) compensation claim will argue that the airline industry was negligent and failed to warn passengers of the dangers of DVT before flying. The move follows the formation of a campaign group, Victims of Air-Related DVT Association (VARDA), involving victims' families and aviation experts. The group is chaired by Ruth Christoffersen, whose daughter Emma, 28, collapsed and died at Heathrow Airport after a flight from Australia. It has held talks with Manchester-based legal firm Leigh Day over the compensation case. "We truly believe that Emma and countless others have died needlessly," Mrs Christoffersen said. Australian lawyers are preparing cases on behalf of 800 alleged victims of DVT, but the VARDA move is the first sign of large-scale actions by UK victims, the paper said. VARDA also wants a public inquiry into the deaths. (AAP Newsfeed, May 8, 2001) FEN-PHEN: Court Denies Fed's Request to Delay Paying Claimants -------------------------------------------------------------- The judge presiding over the diet drug multidistrict litigation has refused the federal government's request to postpone the distribution of millions of dollars in settlement funds to claimants until the government can determine how much it is owed in reimbursements to Medicare and other federally funded health insurance programs. In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Products Liability Litigation, MDL No. 1203 (E.D. Pa., Mar. 21, 2001). U.S. District Judge Louis C. Bechtle in the Eastern District of Pennsylvania held that the government may only recover from American Home Products Corp., the chief defendant in thousands of diet drug cases across the country, and not the plaintiffs or the settlement trust. Since there is no evidence that AHP cannot satisfy the claims of both the plaintiffs and the government, he said he saw no reason to delay distribution of the payouts from the settlement trust. However, he ordered AHP to set aside $7 million to pay the United States in subrogation reimbursements once the government identifies those plaintiffs whose diet-drug-related health-care costs were covered by a government health plan. AHP has entered into a $3.75 billion settlement agreement with thousands of plaintiffs to pay for both medical monitoring and for injuries allegedly resulting from using the diet drugs phentermine and fenfluramine. The court approved the settlement last year and the first payments amounting to $4.8 million are ready to go out. The drugs are alleged to have caused serious heart valve damage and pulmonary hypertension in some users, and several of those patients have died from their illnesses. The federal government sent the court a letter last July in which it asserted that the U.S. Departments of Health and Human Services, and Defense and Veterans Affairs, along with the Indian Health Service, are entitled to reimbursements from the proceeds of the settlement for payments made to individual class members for medical treatment paid for by the government. The plaintiffs then moved to require the trust to distribute the proceeds of the settlement without regard to the government's claims. Judge Bechtle held a hearing on the motion March 13 at which the government did not put in an appearance. The government has refused to inform the fund trustees of any specific individuals to whose payments it asserts a claim or the estimated dollar amounts of those claims, Judge Bechtle said. Instead, it is demanding that the plaintiffs and AHP provide it with the names, addresses, Social Security numbers and medical treatment histories of all class members so that it can cull the list to identify those who are covered by government insurance programs. The parties asserted that if they were forced to acquiesce to the government's demands it would breach the trust's obligations to distribute settlement proceeds promptly and maintain the confidentiality of the class members' personal information, ultimately resulting in significant delays in the processing of compensation benefits. It might even cause the plaintiffs to rescind the agreement, they warned. Judge Bechtle analyzed the government's request as a motion for a preliminary injunction and found that postponing distribution of the settlement proceeds would cause irreparable harm to the claimants. On the other hand, he said, proceeding with the payouts would not cause the government any harm since it would still have an independent cause of action to recover its costs under the terms of the settlement regardless of when its insureds are paid by the fund. He further concluded that the government would have little likelihood of succeeding on the merits of its claims, either under the Medical Care Recovery Act or the Medicare Secondary Payer Act. On the issue of delays, Judge Bechtle noted that in the multidistrict orthopedic bone screw litigation, over which he also presides, the parties cooperated with the government by postponing distribution of settlement funds and giving the government a complete list of claimants from which to identify and quantify its claims. The result, the judge said, was that the payouts from the bone screw settlement fund were delayed for nearly two years from April 1999 until December 2000 when the government made its first specific demand for payment to settle Medicare claims. In this case, the government has not offered to follow any timetable for identifying the claimants in whom it has an interest, but the government's lawyers did estimate that the whole process might take from four to 18 months. Under the Medical Care Recovery Act, the government may recover from a third-party tortfeasor the reasonable costs of medical services rendered to the tortfeasor's victims. Here, Judge Bechtle said, the government may have a case against AHP. However, its interest does not extend to funds held in trust for class members under the settlement agreement because the MCRA makes no provision for recovery against an injured party or from funds paid to the injured party by the tortfeasor. In order to recover from AHP, the government will have to prove that the company is liable, since it admits no liability in its settlement with the class. " T his is an unavoidable burden for the Government to carry and one as which, as of this point in time, it has not disclosed even a hint of any real attempt to satisfy," Judge Bechtle said. Similarly, under the provisions of the Medicare Secondary Payer Act, the government may recover Medicare expenditures from a health insurer or self- insured company for expenses covered under the insurer's plan that were paid for by the government. In this case, the court said, the government cannot claim the settlement trust is a self-insurance plan merely because AHP funded the trust itself instead of getting the money from its liability insurers. (Medical Devices Litigation Reporter, April 6, 2001) HIP IMPLANTS: Sulzer Opposes Consolidation, Could Live with C.D. Cal. --------------------------------------------------------------------- If all the federal cases involving its defective hip implants must be consolidated in one court, the manufacturer of those devices has asked the Judicial Panel on Multidistrict Litigation to transfer the suits to the Central District of California where one of the earliest cases is already well under way. In re Inter-Op Hip Prosthesis Products Liability Litigation, MDL No. 1401, response filed (J.P.M.L., Feb. 26, 2001). Sulzer Orthopedics Inc. filed a response Feb. 26 to a plaintiff's motion to transfer and consolidate the cases in the Northern District of Ohio. Sulzer argues that it was not necessary to establish a multidistrict l itigation court anywhere, but that if the JPML chooses to consolidate, it should designate the Central District of California because more cases have been filed in California's federal and state courts than any other state. Sulzer recalled 25,000 of its Inter-Op hip implants on Dec. 8, 2000, after it discovered that a small residue of oil left on the outside of the shell that attaches to the pelvic bone was preventing the device from bonding with the patient's bones. Some 17,500 of the devices have already been implanted in patients, and more than 748 people have undergone additional surgery to replace the defective prosthesis. According to Sulzer's Feb. 26 response, more than 90 lawsuits involving the Inter-Op acetabular shells have been filed in state and federal courts around the nation. Most of the suits were filed in the South and West, with the largest number of cases filed in California, Texas and Florida. About 20 of the lawsuits are in federal court, and eight are class actions, Sulzer said in the response. The company now estimates that a total of 250 suits have been filed in various state and federal courts. A survey by the Medical Devices Litigation Reporter found at least 50 lawsuits have been filed in the largest federal courts, and two or three new complaints are being filed in federal district courts per day. Sulzer argued that a federal MDL court is not necessary because it is already coordinating pretrial discovery in the most advanced individual cases. Conventional case-handling practices in each district should be adequate to manage the litigation, Sulzer said. It is in the process of culling documents related to the implants and establishing an electronic document database and document depository that will be available to all the litigants, it said. In Texas, a Travis County judge ordered Sulzer to begin turning over documents to the plaintiffs within 30 days after it filed objections to each of the plaintiffs' 53 document requests. Sulzer, pleading it needed more time, had said it would produce an estimated 160,000 documents by June but under Texas court rules, defendants must begin submitting discovery documents within 30 days. If the JPML does choose to transfer and coordinate the cases, Sulzer argued that the Central District of California would be the best venue because at least 10 cases have already been filed there and because one of those cases, Starkman v. Sulzer Medica, No. 01-CV-20, is already further along in the discovery process than most of the other cases. The judge in that case, Gary A. Fees, has set a case management conference and the parties have met and conferred on a stipulated pretrial schedule, including landmark dates for discovery and determination of class certification. The Central District of California has judges experienced in handing MDL cases and is up to date on its docket. The court is located in Los Angeles, which is one of the most accessible cities in the United States for air travelers, Sulzer said. The company noted that at least some discovery and depositions would occur in Texas where it is headquartered, no matter where the cases are consolidated. Several plaintiffs also filed responses with the JPML. Most argued all the federal cases should be consolidated in the court where they have filed their own complaints. The JPML has not yet scheduled a hearing on the motion to consolidate and transfer. (Medical Devices Litigation Reporter, April 6, 2001) HMOs: Fd Judge Hears Arguments on Cert. of Racketeering Suit in Miami Ct ------------------------------------------------------------------------ More than 50 lawyers crammed into a Miami courtroom Monday as a federal judge entertained arguments on whether a racketeering lawsuit against nine managed care companies should be accorded class-action status. If U.S. District Court Judge Federico Moreno sides with the estimated 600,000 doctors who filed the suit, it would open the case to all doctors who believe they were denied reimbursement claims or subjected to delaying tactics by HMOs. "The only meaningful way to address it is through a nationwide remedy," said Harley Tropin of Miami, one of the lawyers representing doctors. "A busy doctor cannot carry on one of these litigations against these people. That's obvious." The lawsuit is actually an amalgamation of doctor-vs.-lawyer lawsuits filed across the country. The doctors accuse nine health maintenance organizations of racketeering, fraud and extortion in cheating them out of more than $ 1 billion. Among the defendants are Aetna, Cigna, Humana, United HealthCare and Prudential. Lawyers for the HMOs countered that there was no premeditated, computer-programmed swindling of doctors. Brian Boyle, representing Humana, said doctors' claims are handled in varying ways, many manually. He said certifying the case as a class action would require a "leap of faith" by Moreno that any fraud or extortion on the HMOs' part was collective. "I think trying to resolve this case on a class-action basis would be mind-numbing," Boyle said. "There's no need to try to stage a gargantuan, epic trial trying to resolve every physician grievance ever uttered." Boyle said the proper venue for the doctors' complaints would be through individual lawsuits or arbitration hearings. Moreno isn't expected to rule on the class-action request for months. The judge struggled at times with the arcane terminology of medical claims coding, which varies from one company to another. He seemed flustered over the industry's use of "down-coding" or "right-coding" to deny or lower doctors' reimbursement claims, if they merely translate into paying less. "It doesn't matter how you do it, if you do it," Moreno said. A parallel lawsuit pits health care consumers against HMOs. Plaintiffs are seeking class-action status in that case, too. (The Miami Herald, May 8, 2001) HMOs: Plaintiffs Say Claims against Insurers Would Unravel Without Cert. ------------------------------------------------------------------------ The nation's biggest health insurers argued in a federal court here today against consolidating the claims of 600,000 doctors into a single class-action suit. In March, the managed care companies won a partial victory from United States District Judge Federico A. Moreno. He rejected racketeering and other accusations by the doctors, who contended that the insurers cheated on fees. A lawyer for Aetna, Richard Doren, said the contentions by doctors and other health care providers were too complex and varied to be lumped into a single class action. Aetna, he said, has 22,000 rates for medical services and Humana, another big health insurer, has 24,000 rates. In addition, not all the disputed claims were incorrectly handled by the insurers and were covered by different contractual terms and as many as 50 state laws. Most disputes between health care providers and the insurers are resolved outside court, said John Harkins, a lawyer for Cigna. "Over 90 percent of claims are paid as submitted," Mr. Harkins said. "Most of the time, the problems get worked out." Plaintiffs' lawyers representing the doctors and medical groups said the claims against the insurers would probably unravel without class-action status because the amounts sought by any single health care provider were relatively small. A class action allows a handful of people to sue on behalf of thousands of others similarly harmed by the wrongful actions of a defendant. "This case, if it's going to proceed, it has to be as a class," said Joe Watley, a lawyer for the plaintiffs. "While we are arguing procedure, we are really deciding the whole ballgame." The lawsuits contend that the insurers are liable for violating contracts and misrepresenting business practices to the doctors and organizations that provide services to the insurers' clients. The plaintiffs accuse the companies of lumping together itemized bills from doctors and paying a single, substantially smaller fee. Janet Humphreys, a member of a team of lawyers pressing the cases against the managed care companies, said the insurers routinely and systematically underpaid doctors. It was not certain when Judge Moreno would rule on the class-action request. Besides Aetna, Humana and Cigna, UnitedHealth Group and WellPoint Health Networks are among the defendants. (The New York Times, May 8, 2001) HOLOCAUST VICTIMS: Lawsuit Cites Army Brass In Vanished Hungarian Loot ---------------------------------------------------------------------- A group of Hungarian survivors of Holocaust death camps sued the U.S. government in federal court Monday in Miami, seeking compensation for property seized from them by Nazis and eventually taken by the Army but never returned. The case stems from the Nazi seizure of more than $200 million in gold, jewelry, Oriental rugs, clothing and artwork including paintings by Rembrandt and Durer. The booty was loaded aboard a train that the Nazis abandoned and which Army personnel took over. The treasure trove ultimately vanished, a U.S. commission found. "This is the first case of its type -- a class action brought on behalf of Holocaust survivors that charges the U.S. government with improperly disposing of assets," said Washington lawyer Jonathan Cuneo, one of the plaintiffs attorneys. Until now, the wave of Holocaust-related compensation lawsuits that started in 1996 has primarily been directed against large corporations, mostly banks, industries and insurance firms based in Europe. Charles Miller, a Justice Department spokesman, said the government wouldn't comment until it had seen the lawsuit. The case, based partly on reports issued in October 1999 and December 2000 by the President's Advisory Commission on Holocaust Assets, dates to late in World War II when the Nazis loaded a train in Hungary with loot seized from Jews imprisoned in concentration camps. The report said the 24-boxcar train never made it to Germany. The Nazis abandoned it in Austria, where U.S. soldiers took control of it. Some of the booty immediately vanished, with the remainder being sent to U.S. military warehouses in Austria. But the treasure continued to dwindle, much of it taken by senior Army officers, according to the advisory commission reports. Specifically, the report said Maj. Gen. Harry Collins, the chief U.S. military official in western Austria at the end of the war, placed orders from the warehouse for enough china and silver for 45 people, as well as a dozen silver candlesticks, glassware, 30 sets of table linens, carpets and furs for his villa and a personal railroad car. Collins commanded that the material be "of the very best quality and workmanship available in the land." Collins, who married an Austrian woman, died in 1963 and is buried in Salzburg. Cuneo said it remains a mystery as to what happened to the goods Collins requisitioned. The Hungarian Jewish community repeatedly asked that the property be returned, to no avail, the report said. According to a 1994 book, "The Spoils of War," by Kenneth . Alford, an American historian, the approximate value of the property on the gold train was $206 million in 1945. Inflation would raise that value to about $1.95 billion today. The material was wrongfully classified as "enemy property," as well as unidentifiable property, enabling the Army to violate its own rules for the return of property to rightful owners, the lawsuit asserts. The United States allowed some of it to be sold or distributed through outlets of the Army Exchange Service and transferred some of it to an international relief agency, which auctioned it off in the United States or Europe. (Chicago Tribune, May 8, 2001) MANORCARE INC: Hagens Berman Announces Suit over Systemic Negligence -------------------------------------------------------------------- A lawsuit filed May 8 in California Superior Court accuses ManorCare Inc. (NYSE:HCR), one of the nation's largest and most profitable nursing home chains, of failing to meet state and federal minimum standards in providing nursing care to thousands of elderly residents housed in nine ManorCare facilities in California. The suit was filed on behalf of the general public by Ila Swan, a longtime activist for nursing home reform, and involves all ManorCare nursing homes in California. ManorCare operates 300 nursing homes in 31 states nationwide. The suit alleges that ManorCare systemically failed to meet the standards of the Nursing Home Reform Act. Passed by Congress in 1987, the Nursing Home Reform Act mandates that a nursing home "must provide services and activities to attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident in accordance with a written plan of care...." Based in part on a sampling of complaints and violations confirmed by state health authorities, the suit highlights cases of ManorCare staff repeatedly failing to respond to call lights and forcing patients to sit in their own waste for hours, as well as instances of patients developing necrotic oozing bedsores from unsanitary conditions, lack of turning, and malnutrition. "When you look at ManorCare's promotional material, you see an organization that purports to deliver the highest quality of care," said Steve Berman, the Seattle attorney representing the residents. "They use the words 'best' and 'highest quality' when they lure the elderly in," observed Berman. "The allegations of the complaint paint a far different picture -- one of abject neglect and callous disregard for the human condition. "The complaint alleges that ManorCare proudly promotes the fact that the company's profit margins are well above the industry average," continued Berman. "What our case asserts is that ManorCare delivered these profits by instituting high patient-to-staff ratios and low quality of care." According to the complaint, ManorCare has received dozens of California Department of Health Services violations and deficiency notices, despite knowing about inspections in advance. Two ManorCare facilities were cited for poor nutrition that put residents in serious jeopardy, and five ManorCare facilities had a higher degree of reported pressure sores than the national average. Pressure sores are a strong indication of neglectful care. "The elderly are our heritage -- our mothers, our fathers and our grandparents," said activist Swan. "ManorCare nursing homes have purposely short-staffed their facilities and used our loved ones as profit units. When you are dealing with human lives, you can't put profits first. These elderly are living in pain and indignity and we must do something to stop it." Five of the nine ManorCare facilities named in the suit are located outside the Los Angeles and San Diego areas, while the other four are scattered throughout northern California. Thousands of elderly residents live in the nine facilities identified in the complaint, and approximately 120,000 elderly reside in California nursing homes. The suit alleges ManorCare violated the California Business and Professions Code by engaging in unfair and fraudulent business practices, as well as untrue and misleading advertising. The suit points out examples of ManorCare's false and deceptive advertising. ManorCare advertises that "residents receive the best nursing care available" although ManorCare's nursing staff and certified nursing aides woefully lack proper training, according to the complaint. ManorCare also advertises that patients are encouraged to "maintain the highest degree of independence at all times" when in actuality ManorCare does not provide adequate toileting assistance to keep residents continent, the suit claims. Ila Swan, a national advocate for nursing home reform, is filing the suit. Swan became an advocate after witnessing her mother neglected and mistreated at a Vacaville, Calif., nursing home. Since then Swan has campaigned throughout the country for nursing home reform and assisted the chairman of the Senate's Special Committee on Aging, Charles Grassley, in an investigation of California nursing homes. Swan also has created two documentaries, Untold Suffering and My Soul to Keep, containing nursing home horror stories as described by family members. The suit seeks a court injunction ordering ManorCare to fully comply with the Nursing Home Reform Act, an order to stop deceptive advertising campaigns, and restitution. Contact: Hagens Berman, Seattle Steve Berman, 206/623-7292 steve@hagens-berman.com or Hagens Berman, Los Angeles Kevin Roddy, 213/861-7454 kevin@hagens-berman.com or Firmani & Associates Mark Firmani, 206/443-9357 (media) mark@firmani.com URL: http://www.businesswire.com PENN TREATY: Decries Merit of Securities Suits; Capital Raising to Go on ------------------------------------------------------------------------Penn Treaty American Corporation (NYSE: PTA) commented on May 8 on the recent filings by several law firms of securities class action lawsuits against the Company. "We consider these lawsuits to be entirely baseless and without merit," said Irving Levit, Chairman, President and CEO of Penn Treaty. "We are working vigorously, along with our legal counsel, to preserve our Company's good name and reputation in the face of this unwarranted litigation. Unfortunately, it is all too common today for certain law firms to file opportunistic 'strike suits' against companies whose share prices have been adversely impacted by financial developments." Mr. Levit added, "As previously announced, Penn Treaty is continuing to take steps to raise additional statutory capital for our insurance operations. The Company recently mailed documents for a shareholder Rights Offering that, if completely subscribed, would generate net proceeds of approximately $27 million. Penn Treaty also entered into a letter of intent to sell a book of non-core business at a purchase price of approximately $13 million." PTA, through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, Penn Treaty (Bermuda), Ltd., United Insurance Group Agency, Inc., Network Insurance Senior Health Division and Senior Financial Consultants Company, is primarily engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long term nursing home and home health care. PTA is licensed to conduct business in 50 states and the District of Columbia. PRUDENTIAL DISCOVERY: Reports to SEC on Lawsuits over Sales Practices --------------------------------------------------------------------- Prudential Discovery Permier Group reports to the SEC that, as of December 31, 2000, Prudential and/or Pruco Life remained a party to approximately 109 individual sales practices actions filed by policyholders who "opted out" of the class action settlement relating to permanent life insurance policies issued in the United States between 1982 and 1995. Some of these cases seek substantial damages while others seek unspecified compensatory, punitive or treble damages. It is possible that substantial punitive damages might be awarded in one or more of these cases. Additional suits may also be filed by other individuals who "opted out" of the settlements. As of December 31, 2000 Prudential has paid or reserved for payment $4.405 billion before tax, equivalent to $2.850 billion after tax to provide for remediation costs, and additional sales practices costs including related administrative costs, regulatory fines, penalties and related payments, litigation costs and settlements, including settlements associated with the resolution of claims of deceptive sales practices asserted by policyholders who elected to "opt-out" of the class action settlement and litigate their claims against Prudential separately, and other fees and expenses associated with the resolution of sales practices issues. TAISHUN TUNNEL: Farmers in China Sue for Damages in Lung Disease ---------------------------------------------------------------- A group of 192 farmers in east China's Zhejiang Province have sued their employers for 208.86 million yuan (about 26 million U.S. dollars) in damages for the lung disease they said they developed when working as tunnel diggers eight years ago. The lawsuit, listing as plaintiffs 192 farmers from Taishun County, is said to be China's first class-action case seeking compensation for silicosis, a form of lung disease. Among the defendants are the Taishun County Tunnel Engineering Company, the Taishun County Local Civil Engineering Company and a man identified as Chen Yixiao. The farmers also sued the bureaus of Township Enterprises and Finance for their liability in the case. According to the farmers, they were employed by the defendants in 1993 to dig the Wujialiang Tunnel on the highway linking Shenyang and Benxi cities, both in northeast China's Liaoning Province. They claimed that the quartzite in the tunnel has silicon dioxide content as high as 97.6 percent, but the defendants took no preventive measures to effectively protect them from silicosis, a disease resulting from the chronic inhalation of silicon dust and leading to persistent coughs, short breath and tuberculosis. A report by the Zhejiang Provincial Committee for Diagnosis and Appraisal of Occupational Diseases in September 2000 confirmed that 196 persons working at the tunnel had acquired silicosis. In November 2000, the labor authority of the county issued appraisal reports which confirmed that the 196 persons were suffering from second-to seventh-grade of disability. To date, 10 of them have died. Starting in October 2000, the patients had begun to file separate suits in the local court. Considering the complexity of the cases and the huge damages involved, the cases were later transferred to the Intermediate People's Court of Wenzhou City, where the judges decided to treat the cases as a class action. Subsequent investigations have brought the judges to Liaoning, Beijing, Jilin, Yunnan and other places, and led to the freezing of six million yuan worth of property of the defendants, including 1.6 million yuan in bank deposits. The court has also ordered the defendants to pay 1.328 million yuan in advance to the farmers, to cover their medication and funeral costs and minimum living allowances. The authority also arranged for five attorneys to provide free judicial aid to the farmers, many of whom could not afford to pay lawyer fees independently. The court is expected to hear the case soon. (Xinhua General News Service, May 8, 2001) TOBACCO LITIGATION: Cigarette Makers Agree to Pay FL Smokers $710 Mil --------------------------------------------------------------------- Three cigarette makers who lost a record-setting dlrs 145 billion verdict to sick Florida smokers agreed to pay them dlrs 710 million, no matter how their appeals turn out, attorneys for both sides said. ''That amount of money is guaranteed to the class win, lose or draw,'' said Lorillard general counsel Ronald Milstein on Monday. ''We've decided this is the surest path to (making) the appeals process unencumbered and unhindered.'' The guarantee represents the industry's first major financial commitment directly to smokers in nearly four decades of hotly contested tobacco litigation. The industry agreed in the late 1990s to pay dlrs 248 billion over 25 years to settle state lawsuits. ''Obviously this is a milestone,'' said longtime industry critic Richard Daynard. ''At least for a moment, the industry spin stopped long enough for them to shell out dlrs 700 million.'' Philip Morris, Lorillard and Liggett chose for the agreement to keep the sick smokers from challenging the constitutionality of a new state law placing a dlrs 500 million cap on appeal bonds in the case. Without the law, the companies would have been required to buy bonds worth more than the dlrs 145 billion verdict to be able to get higher court review an impossibly high requirement, in the industry's view. ''Even if we were to lose ultimately, which I hope and pray would not happen, the class would be guaranteed dlrs 700 million,'' said smokers' attorney Stanley Rosenblatt. ''This dlrs 700 million plus interest, the class would keep.'' Under a 28-page order approved by Miami-Dade Circuit Judge Gerald Hubbard, the three companies agreed to increase their current bond from dlrs 203 million already on deposit with the trial court to dlrs 2 billion, including the nonrefundable dlrs 710 million. ''No money is going to change hands until all appeals are exhausted in this case,'' said Philip Morris vice president William Ohlemeyer. ''That was the price we were willing to pay to remove this uncertainty and get this appeal focused on the real issues,'' he said. ''We wanted to eliminate any uncertainty or any distraction that might exist.'' Ohlemeyer said the money might not go to smokers if an appeals court reverses a key decision on class-action status, which unites Florida residents under a single lawsuit. The allocation then would be up to a Miami-Dade Circuit judge. Former smoker Frank Amodeo sat through the two-year trial and won a dlrs 5.8 million compensatory damage award from the same jury for his throat cancer. He said he was aware the talks were going on but had little to say other than, ''I'm very satisfied.'' R.J. Reynolds and Brown & Williamson have two weeks to decide whether to join. If they do, the amount of the guarantee would increase. If they don't and Rosenblatt appeals the bond cap, they take their chances. Both companies were left out of the negotiations and said they learned of the agreement Monday. Reynolds issued a statement expressing confidence in the constitutionality of the bond cap law. Brown & Williamson spokesman Mark Smith said his company was evaluating the agreement. Daynard said he expects the other two companies to join the bond agreement and bring the total reserved for smokers to about dlrs 1 billion. He said the alternative would be a bankruptcy risk if the bond law enacted last year during trial were challenged and overturned. The jury decision on punitive damages last July broke all records for damages in a lawsuit. The industry responded by saying it wasn't an amount any business could pay and confidently predicted an appellate victory. ''It really flies in the face of the expressions of confidence that they have made to date'' about appeals, said Martin Feldman, Salomon Smith Barney's tobacco analyst. He said he was surprised by the agreement and called it ''an expensive insurance policy.'' The financial split is dlrs 500 million by industry leader Philip Morris, dlrs 200 million by No. 4 Lorillard and dlrs 10 million by No. 5 Liggett. (AP Worldstream, May 8, 2001) TOBACCO LITIGATION: FL Ruling Delays Payments To Smokers Pending Appeals ------------------------------------------------------------------------ The Philip Morris Companies and other tobacco companies will not have to pay damages to Florida smokers until appeals of a $145 billion jury award, the largest in history, are resolved, a state judge ruled today. In return for posting a $2 billion bond to cover the damages, three tobacco companies, Philip Morris, Lorillard Inc. and Liggett Group Inc., agreed to pay at least $709 million in the case, no matter what the outcome on appeal. Two other defendants, R. J. Reynolds Tobacco Holdings Inc. and the Brown & Williamson Tobacco Corporation, are not part of the agreement, but stand to benefit from it without posting bond. The agreement shields the companies from the possibility that a court would overturn a new Florida law that requires the companies to post only $100 million to appeal the jury award. Lawyers for the plaintiffs have threatened to challenge the law in an effort to force the companies to post the full $145 billion in a bond. Judge Gerald D. Hubbart of Miami-Dade County Circuit Court approved the plan, letting the tobacco industry appeal the case as far as the United States Supreme Court if necessary, said William S. Ohlemeyer, a lawyer for Philip Morris. Mr. Ohlemeyer estimated that it might take three years to resolve the case if it reached the nation's highest court. Under today's agreement, the three companies will post about $2 billion in bond, with some $1.3 billion refundable if the damage award is overturned on appeal. Stanley Rosenblatt, a lawyer for the smokers, said $709.7 million plus interest "will be guaranteed" to the smokers "even if the class were to lose in appellate court." Mr. Ohlemeyer said it would be up to Judge Hubbart to decide what to do with the money. Some companies said they would be forced out of business if they had to pay the full damages. Philip Morris's share would be $74 billion and R. J. Reynolds's share $36.3 billion. Brown & Williamson, a unit of British American Tobacco P.L.C., would have to pay $17.6 billion; Lorillard, a unit of the Loews Corporation, $16.3 billion; and Liggett, a unit of Vector Group, $790 million. Representatives from R. J. Reynolds and Brown & Williamson said they were evaluating the agreement. Unless they reach a similar pact with the plaintiffs, Mr. Rosenblatt could still challenge the law imposing the bond cap as it applies to them. A Miami jury in July awarded $145 billion to thousands of sick smokers or the families of dead smokers in what is known as the Engle lawsuit, named for the lead plaintiff, Dr. Howard Engle. The companies agreed in earlier settlements with the 50 states to pay $246 billion over 25 years. Florida and other states have voiced concern that the class-action verdict in Miami may jeopardize those payments. (The New York Times, May 8, 2001) TOBACCO LITIGATION: Tobacco Groups Post $ 2 Bil Bond ---------------------------------------------------- Three big tobacco companies yesterday agreed to post a bond of Dollars 2bn in an attempt to hedge their exposure during an appeal of last year's record Engel court ruling in Florida. Philip Morris, Loew's Lorillard and Vector Group's Liggett agreed to the bond terms, which are related to the landmark class-action suit. That decision required the five largest tobacco companies to pay Dollars 145bn to Florida plaintiffs. The companies are appealing. R.J. Reynolds and British American Tobacco, also defendants in the lawsuit, did not agree to the bond. In addition to the Dollars 2bn bond, the three companies also agreed Dollars 709m of that amount would be non-refundable regardless of the outcome of the case. (Financial Times (London), May 8, 2001) U.K. HOSPITALS: Parents to Sue over Removal of Kids' Organs after Death ----------------------------------------------------------------------- Families of British children whose organs were removed without consent after they had died are planning a nationwide campaign for compensation. Lawyers acting for the National Committee Relating to Organ Retention (NACOR), an umbrella group for affected families, are set to make a High Court application for a group litigation order-equivalent to a US class action suit. If successful, the lawsuit could cost Britain's National Health Service millions of pounds. "This is the beginning of a court action that involves over 500 families," said Ruth Webster, NACOR's national coordinator. "It is designed to pave the way for compensation claims relating to up to 134 hospitals across Britain." The NACOR action is separate from the claims against Alder Hey Hospital in Liverpool, where pathologist Dick van Velzen and his staff are accused of removing organs from more that 800 dead children without consent. The first hospital affected by NACOR's action is Leeds Teaching Hospitals NHS Trust. Newspapers have reported that Alder Hey and Leeds hospitals amassed a collection of 4,700 body parts, including over 650 baby hearts. (Transplant News, April 30, 2001) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *