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Class counsel for plaintiffs in the fen-phen nationwide class action settlement told a federal district judge Tuesday that the proposed amended settlement before the court is needed to resolve litigation that had arisen or threatened to arise from the settlement itself. “It’s essentially a settlement of a settlement,” attorney Michael D. Fishbein explained to U.S. District Judge Harvey Bartle III, who must approve any amendments to the diet-drug settlement. Under the current settlement agreement, it would take up to 17 years to process the least serious (but most abundant) claims filed with the settlement trust — aside from the fact that the trust would run out of money first, Fishbein said. Bartle and a gaggle of fen-phen litigators listened for several hours to Fishbein, who was the main witness on the first day of a fairness hearing on the proposed settlement change. The amendment would be the seventh since the $3.75 billion global settlement was approved by the court in 2000. The hearing, scheduled to last two days, began the morning after a group of 50 plaintiffs lawyers and Wyeth, the defendant in the litigation, announced they had negotiated a tentative settlement affecting 11,000 cases brought by individuals who opted out of the global settlement. The settlement announcement was not directly related to the fairness hearing, although it was discussed briefly during the proceedings. The 11,000 opt-out cases comprise about one-fifth of the opt-out cases filed in federal and state courts around the country. Lawyers administering the settlement hope that more litigators will join them “as time goes on,” said one, Wayne R. Spivey of Shrager Spivey & Sachs in Philadelphia. In a statement Tuesday, Wyeth said its agreement to go forward with the proposal “will depend upon, among other things, the overall level of participation in the process.” Under the terms of the tentative agreement, plaintiffs’ claims would be grouped by law firm, and most claimants could pursue one of two options, according to court documents. There is the “expedited” option — for quicker payments of a set amount — or the more complex “grid” option, with settlement amounts ranging from $5,250 to $200,000 that would be determined by claimants’ position in a matrix ranking type and severity of their heart-valve damage and other factors. Under both options, Wyeth would pay an additional $100,000 toward any surgery the claimants undergo, according to court papers. Spivey said that he, along with Jerry Alexander of Alexander & Associates in Omaha, Neb., and Ellen Presby of Baron & Bud in Dallas would implement the settlement process. The deadline is Feb. 15 for filing the necessary paperwork with Wyeth, Spivey said. Wyeth and the lawyers filed a motion with Bartle Tuesday, asking him to approve a procedure by which the court would stay groups of the diet drug cases so that attorneys could devote their time to the settlement efforts in those cases instead of litigation. Bartle said the documents were delivered to his chambers but he had not yet reviewed them. In 1997, Pennsylvania corporation American Home Products (now the Madison, N.J.-based Wyeth) withdrew its diet-drug combination known as fen-phen from the market after medical studies reported the drugs could cause heart trouble. The amended settlement discussed in court in the Eastern District Court of Pennsylvania Tuesday would restructure the processing of Level I and Level II claims, which comprise 98 percent of the cases in the national settlement. The amended settlement was executed in May 2004 and the new structure is intended to get money — although less of it — in claimants’ hands more quickly. Class members had until Nov. 9 to decide whether to participate in the amended version of the settlement or opt out and remain under the terms of the original settlement agreement. Wyeth had a right to “walk away” from the amended settlement, but its deadline for doing so passed Jan. 8. Discussions regarding the amended settlement began in August 2003. Fishbein said he and other lawyers realized something needed to be done about problems threatening to topple the settlement fund. The trust was being overwhelmed by exaggerated claims; the medical auditing process intended to catch dubious claims was letting too many through. Also, things weren’t on schedule. “For whatever reason, it was difficult to get these claims audited and processed,” said Fishbein, an attorney at Levin Fishbein Sedran & Berman. “There was an increasing amount of administrative strictness that prevented the claims from being fairly processed.” Although experts at fairness hearings in 2000 thought that $3.75 billion would be enough for the settlement fund, it turns out it isn’t, Fishbein said. “The fact is, today there is $1.65 billion left,” he said. “An average of $400,000 is paid per claim on levels one and two. That would be enough for only 4,000 more claims.” If approved, the amended settlement would create a supplemental fund in which Wyeth would deposit $1.275 billion. Those who pass a medical review and qualify would receive a prorated share of the $1.275 billion, depending on the type and severity of their condition, their age and how long they took the diet drugs. Participants could also submit claims for heart-valve surgery or other serious conditions occurring before the end of 2011. It’s been estimated that Level II claims would get about $40,000 to $50,000 under the amended settlement structure. Individuals who don’t qualify for payment after the medical review would receive $2,000 from the supplemental fund. Participants would give up any further opt-out rights and would generally release the trust and Wyeth from future claims. Before Tuesday’s hearing began, lawyers told Bartle they would depose Debra Rhea, a class member from Louisville, Ky., who objects to the proposed amendment, by the end of the week. In court papers, Rhea and two others argue that “class members should not have to give up additional rights, for lesser compensation, in order to require the defendant to do something it has already obligated itself to do.” Rhea is represented by Joe Bishop of Bishop & Associates in Louisville, who declined Tuesday to comment on his client’s objection. The fairness hearing was scheduled to conclude today. Dean Karalis, a cardiologist, was scheduled to testify about the medical aspects of the amended settlement. Counsel for Wyeth, Orran L. Brown of Brown Greer in Richmond, Va., was to follow Karalis.

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