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Lawyers on both sides in the massive $3.75 billion fen-phen diet drug settlement asked a federal judge Wednesday to halt all payments for two months to those with the least serious claims to give the lawyers time to finalize an amended settlement that will revamp the claims process. In court papers, the lawyers told U.S. District Judge Harvey Bartle III that the settlement fund has been overwhelmed with claims and is simply running out of money — and that something must be done soon to save it. Under the terms of the proposed amended settlement, lawyers said, the claims process would be restructured so that some claimants with Level I and Level II claims would get less money, but it would be guaranteed. If the amendment is approved by the court, drug company Wyeth would deposit $1.275 billion in an account for an “alternative claims facility” to be run by an administrator appointed by the court, lawyers said in the motion. In the motion, lead lawyers in the case said they had presented the proposed amendment to other lawyers who represent large numbers of claimants “and have secured support for it from lawyers representing nearly three-fourths of the over 41,000 … Level I and II claims.” “Under the current system, there’s only enough money to pay a couple of thousand more claims,” said Dallas attorney Kip A. Petroff, who supports the change and represents several thousand claimants. “It’s going to pay people about a fifth of what they would have gotten before, but it will pay all people who pass the medical audit.” But attorney Marc Jay Bern of Napoli Kaiser & Bern in New York, who represents about 1,000 claimants in the settlement and 5,000 others who opted out, said he opposes the amendment. “It is absolutely unbelievable. I think there is a huge ethical problem and moral problem with what they have done in signing on to this motion,” Bern said. The restructuring would affect Level I and Level II claims, which Petroff said account for 98 percent of the cases in the national settlement. Bern said Level II claims, which now get about $450,000, would get $40,000 to $50,000 under the new plan. There are five levels of claims provided for in the settlement, with Level V being the most serious. Attorney Michael Fishbein of Levin Fishbein Sedran & Berman, the lead lawyers for the plaintiffs’ class, said that although the proposed amendment reduces the payouts to some claimants, it also includes important new guarantees — including more efficient processing and quicker payouts. Under the current version of the settlement, Fishbein said, a Level I or II claimant who later develops more serious medical problems — such as heart valve disease requiring surgery — has only one option: pursuing a new claim in the tort system. But the new version of the settlement would allow such a claimant to file a renewed claim under Level III or higher, Fishbein said. Fishbein said the main reason for amending the settlement was “to free ourselves of processing gridlock.” The gridlock, he said, stemmed from a previous restructuring of the settlement when lawyers for the settlement trust told Bartle that the fund was being drained by exaggerated and meritless claims. In response, Bartle approved an amendment that called for medical audits of all claims. Fishbein said that since the 100 percent audit system began, the trust has been rejecting a high percentage of claims. In mid-April, Fishbein said, the trust announced that it was suspending all payouts for at least one month — a move that Fishbein said amounted to a “de facto” stay. Fishbein said a high percentage of lawyers for claimants have said they support the amendment because they recognize that their clients will benefit from quicker payments and a guarantee of eligibility for additional payments if they develop worse symptoms later. Madison, N.J.-based Wyeth, formerly known as American Home Products, made Pondimin, the fenfluramine half of fen-phen, and a chemical cousin, Redux. The company said the restructuring would “expedite payments and could provide a degree of certainty for Wyeth.” “The existing settlement trust’s ability to provide compensation to legitimate claimants has been seriously compromised by an avalanche of questionable claims,” Wyeth general counsel Lawrence V. Stein said in a statement. Wyeth has paid out about $1 billion from the $3.75 billion AHP Settlement Trust set up in 1999 to compensate individuals who took Pondimin or Redux and to settle class action lawsuits. Trust participants have received varying amounts, from reimbursement for the cost of the prescription diet drugs to payments for medical care. Of the 72,000 pending claims made to the Philadelphia-based trust, about 29,000 were disqualified as baseless and about 14,500 are nearly ready to be paid. About 28,500 claimants have since decided to opt out of the settlement or must have errors in their claims fixed. About 78,000 claimants decided not to participate in the trust and instead to sue Wyeth; many claims have been settled confidentially by Wyeth. Other lawsuits are pending or have gone to trial, with a few jury verdicts well above $10 million. But some of the verdicts were reduced later. A Texas jury on April 27 awarded $1 billion to the family of a woman who died after taking one of the now-banned fen-phen diet drugs, but Wyeth and legal experts say the verdict is unlikely to stand. Fishbein said the Texas verdict is unrelated to the settlement because the plaintiff in that case suffered from pulmonary hypertension — an illness that is connected to fen-phen but that is not included in the settlement, which covers only claims of heart valve disease. Wyeth has set aside $16.6 billion to settle fen-phen cases since it pulled Pondimin and Redux off the market in 1997 amid mounting reports that they had caused heart valve and lung damage in some of the 5.8 million Americans who took them. The Associated Press contributed to this report.

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