IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
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IN RE DIET DRUGS )
(PHENTERMINE/FENFLURAMINE/ )
DEXFENFLURAMINE) PRODUCTS )
LIABILITY LITIGATION ) MDL NO. 1203
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THIS DOCUMENT RELATES TO: )
ALL ACTIONS )
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SHEILA BROWN, et al. v. AMERICAN HOME PRODUCTS )CIVIL ACTION NO. 99-20593
CORPORATION )
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NATIONWIDE CLASS ACTION
SETTLEMENT AGREEMENT WITH
AMERICAN HOME PRODUCTS CORPORATION
(AS AMENDED)
Dated: November 18, 1999
Amended: November 24, 1999
January 10, 2000
March 24, 2000
July 20, 2000
<PAGE>
TABLE OF CONTENTS
PREAMBLE....................................................................1
I. DEFINITIONS...........................................................2
II. SCOPE OF THE SETTLEMENT CLASS.........................................15
III. AHP'S PAYMENT OBLIGATIONS.............................................18
A. ESTABLISHMENT OF SETTLEMENT TRUST............................18
B. FUND A.......................................................19
C. FUND B.......................................................20
D. OTHER PROVISIONS..............................................23
E. SECURITY ARRANGEMENTS........................................24
IV. CLASS MEMBER RIGHTS AND BENEFITS......................................29
A. SCREENING/REFUND/MEDICAL SERVICES/CASH/RESEARCH BENEFITS
PAYABLE FROM FUND A...................................29
1. BENEFITS FOR CLASS MEMBERS WHO INGESTED PONDIMIN(R)AND/OR
REDUX(TM)FOR 61 OR MORE DAYS...........................29
a. SCREENING PROGRAM ...................................29
b. COST OF TRANSTHORACIC ECHOCARDIOGRAM.................29
c. ADDITIONAL MEDICAL SERVICES OR CASH..................29
d. REFUND...............................................30
2. BENEFITS FOR CLASS MEMBERS WHO INGESTED PONDIMIN(R)AND/OR
REDUX(TM)FOR 60 DAYS OR LESS..........................30
a. REFUND...............................................30
b. SCREENING PROGRAM....................................30
c. ADDITIONAL MEDICAL SERVICES OR CASH..................31
3. BENEFITS FOR ALL CLASS MEMBERS............................31
a. MEDICAL RESEARCH AND EDUCATION FUND..................31
b. MEDICAL/LEGAL REGISTRY...............................32
c. ECHOCARDIOGRAM IN THE CASE OF FINANCIAL HARDSHIP.....32
d. REIMBURSEMENT FOR CERTAIN PRIVATELY-OBTAINED
ECHOCARDIOGRAMS.........................32
4. TERMS OF MEDICAL SCREENING PROGRAM AND PROVISION OF
ADDITIONAL MEDICAL SERVICES...............................33
5. SOURCE OF FUND A BENEFITS.................................33
B. COMPENSATION BENEFITS PAYABLE FROM FUND B......................33
1. ELIGIBLE CLASS MEMBERS...................................33
2. BENEFITS AVAILABLE........................................35
C. PAYMENT PROVISIONS............................................50
D. OPT-OUT RIGHTS................................................51
1. DERIVATIVE CLAIMANTS.....................................51
2. INITIAL OPT-OUT..........................................51
a. ELIGIBILITY..........................................51
b. METHOD OF EXERCISE...................................52
c. EFFECT OF EXERCISE...................................52
d. REVOCATION OF EXERCISE...............................52
3. INTERMEDIATE OPT-OUT.....................................52
a. ELIGIBILITY..........................................52
b. METHOD OF EXERCISE...................................53
c. EFFECT OF EXERCISE...................................53
4. BACK-END OPT-OUT.........................................55
a. ELIGIBILITY..........................................55
b. METHOD OF EXERCISE...................................55
c. EFFECT OF EXERCISE...................................56
V. ACCELERATED IMPLEMENTATION OPTION.....................................58
VI. CLAIMS ADMINISTRATION.................................................64
A. THE INTERIM ESCROW AGENT, INTERIM CLAIMS ADMINISTRATOR(S),
CLAIMS ADMINISTRATOR(S) AND TRUSTEES...................64
B. NOTICE........................................................78
C. CLAIMS ADMINISTRATION AND CRITERIA FOR BENEFITS DETERMINATIONS.81
1. ECHOCARDIOGRAM CRITERIA..................................81
2. CLAIMS INFORMATION.......................................83
3. GENERAL CLAIMS PROCESSING PROCEDURES AND THE REGISTRY....88
4. ADMINISTRATION OF MATRIX COMPENSATION BENEFIT CLAIMS.....97
D. PROCEDURE FOR RECOGNITION OF CREDITS...........................106
E. AUDITS OF CLAIMS BY TRUSTEES AND/OR CLAIMS ADMINISTRATOR(S)....110
F. AHP-INITIATED AUDITS OF CLAIMS.................................114
VII. AHP RIGHTS AND BENEFITS...............................................118
A. CREDITS.........................................................118
B. EFFECT ON CLAIMS................................................120
C. PROTECTION OF AHP FROM CLAIMS BY NON-SETTLING DEFENDANTS........122
D. PROTECTION OF AHP FROM POSSIBLE SUBROGATION CLAIMS..............129
E. WALKAWAY RIGHTS.................................................129
F. LIMITATION ON FINANCIAL OBLIGATIONS.............................130
VIII. SETTLEMENT IMPLEMENTATION..........................................131
A. GENERAL.........................................................131
B. JURISDICTION....................................................131
C. APPROVAL PROCESS AND NOTICE PROVISIONS..........................132
D. CONDITIONS......................................................133
E. ATTORNEYS' FEES.................................................135
F. OTHER PROVISIONS................................................139
<PAGE>
14
TABLE OF EXHIBITS
1. Trust Agreement
2. Fund A Legal Fee Escrow Account Agreement
3. Security Fund and Escrow Agreement
4. Articles of Incorporation and Bylaws of Medical
Research and Education Fund
5. Summary Notice to Pharmacists
6. ORANGE FORM (Initial Opt-Out Notice Form)
7. ORANGE FORM #2 (Intermediate Opt-Out Notice Form)
8. ORANGE FORM #3 (Back-End Opt-Out Notice Form)
9. PINK FORM (for Election of the Accelerated Implementation
Option) [as amended by Second Amendment]
10. Interim Escrow Agreement
11. Proposed Preliminary Approval Order
12. A Class Member's Guide to Settlement Benefits
[as amended by Second Amendment]
13. Official Court Notice [as amended by Second Amendment]
14. Matrix Compensation Benefits Guide for Physicians, Attorneys
and Class Members
15. Publication Notice [as amended by Second Amendment]
16. Plan of Media Notice [as amended by First Amendment and
Second Amendment]
17. Script of Television Notice
18. Summary Notice to Physicians [as amended by First Amendment]
19. WHITE FORM (for reimbursement of Echocardiogram expenses
incurred independent of the Screening Program) [as amended by
Second Amendment]
20. GRAY FORM (for qualifications of Board-Certified Cardiologist
and Echocardiogram results)
21. BLUE FORM (for registration of Settlement Benefits)
[as amended by Second Amendment]
22. GREEN FORM (for Matrix Compensation Benefits)
23. BROWN FORM (for compassionate and humanitarian and true financial
hardship Echocardiograms) [as amended by Second Amendment]
24. Notice of Appeal of Determination of Trustees and/or Claims
Administrator(s)
25. RED FORM (Credits for Initial and Back-End Opt-Out) [as amended
by Fourth Amendment]
26. [Exhibit deleted by Fourth Amendment]
27. Class Representative's Release and Covenant Not to Sue
[as amended by Fourth Amendment]
<PAGE>
NATIONWIDE CLASS ACTION SETTLEMENT AGREEMENT
WITH AMERICAN HOME PRODUCTS
CORPORATION
PREAMBLE
American Home Products Corporation ("AHP") and the undersigned
representatives of the purported class and subclasses defined herein (the "Class
Representatives") (together, the "Parties") hereby agree to propose a nationwide
Class Action Settlement which would resolve, on the terms set forth in this
Settlement Agreement, "Settled Claims" against AHP and other "Released Parties"
arising from the marketing, sale, distribution and use of the diet drugs
Pondimin(R)and Redux(TM), pending in various courts, including but not limited
to claims which have been made in the actions that have been transferred for
coordinated or consolidated pretrial proceedings to the United States District
Court for the Eastern District of Pennsylvania under Docket No. MDL 1203 (the
"Federal District Court"), in Vadino et al. v. AHP (Docket No. MID-L-425-98),
and in the numerous other State Courts around the United States. The Parties to
this Agreement are aware of the following certified or conditionally certified
nationwide or statewide classes involving Pondimin(R)and Redux(TM)as of October
7, 1999: United States District Court for the Eastern District of Pennsylvania,
Jeffers v. American Home Products Corp., C.A. No. 98-CV-20626 (E.D. Pa.) (In re
Diet Drug Products Liability Litigation, MDL 1203) (nationwide medical
monitoring class); West Virginia (Burch et al. v. AHP, Civil Action No.
97-C-204(1-11)) (statewide personal injury and medical monitoring class);
Illinois (Rhyne v. AHP, 98 CH 4099) (statewide refund and monitoring
reimbursement class); New Jersey (Vadino et al. v. AHP, Docket No. MID-L-425-98)
(statewide Unfair and Deceptive Acts and Practices and medical monitoring
class); New York (New York Diet Drug Litigation, Index No. 700000/98) (statewide
medical monitoring class); Pennsylvania (Pennsylvania Diet Drug Litigation,
Master Docket No. 9709-3162 C.C.P. Phila.) (statewide medical monitoring class);
Texas (Earthman v. AHP, No. 97-10-03970 CV, Dist. Ct. Montgomery Co. Texas)
(statewide medical monitoring class); and Washington (St. John v. AHP,
97-2-06368-4) (statewide medical monitoring class).
This Settlement Agreement shall not be construed as evidence of or as an
admission by AHP of any liability or wrongdoing whatsoever or as an admission by
the Class Representatives or members of the Settlement Class as defined herein
("Class Members") of any lack of merit in their claims.
Accordingly, AHP and the Class Representatives hereby agree, subject to
Final Judicial Approval (except as to the Accelerated Implementation Option
("AIO") described in Section V below), compliance with applicable legal
requirements, and other conditions, all as set forth below, that Fund A and Fund
B shall be established, from which the benefits described herein will be paid to
the Class Members of the proposed Settlement Class and Subclasses, and that the
Settled Claims against AHP and other Released Parties, as defined herein, will
be settled, compromised and released, in accordance with the following terms.
I. DEFINITIONS
For purposes of this Settlement Agreement the following terms
(designated by initial capitalization throughout this Agreement) shall have the
meanings set forth in this Section. Terms used in the singular shall be deemed
to include the plural and vice versa.
1. "Adjusted Maximum Available Fund B Amount" shall mean the amount
determined by adding the balance in Fund A which was transferred to
Fund B pursuant to the terms of Section III.A.4. of the Settlement
Agreement to the Maximum Available Fund B Amount as defined in this
section. If there has been no such transfer, then the Adjusted Maximum
Available Fund B Amount shall be equal to the Maximum Available Fund B
Amount. The "Maximum Available Fund B Amount" shall mean the amount
determined by adding $2,550,000,000 and the Fund B Accretions, and by
then subtracting from the resulting sum: (i) the Fund B Initial
Payment under Section III.C.2; (ii) all amounts paid or transferred to
the Trustees to pay Fund B benefits pursuant to Fund B Quarterly
Notices under Section III.C.3 and pursuant to Requests for Fund B AIO
Payments under Section V.F; and (iii) Credits to which AHP is entitled
under Section VII.A (Opt-Out Credits) and Section VII.C.1.g
(Cross-Claim Credits), provided that Initial Opt-Out Credits, as
defined in Section VII.A.2, shall be applied to reduce the Adjusted
Maximum Available Fund B Amount only when and as provided in Section
VII.A. "Fund B Accretions" are determined as follows: Beginning with
the earlier of the Final Judicial Approval Date or the date on which
it is determined that Final Judicial Approval will not be obtained,
the Trustees shall calculate a quarterly accretion to the Maximum
Available Fund B Amount which will be one and one-half percent (1
1/2%) of the Maximum Available Fund B Amount determined as of the
close of each AIO Fiscal Quarter or Fiscal Quarter, whichever is
applicable. Such accretions shall be added to the Maximum Available
Fund B Amount as of the first day of the quarter following the quarter
for which such accretion is calculated.
2 "Administrative Reserve" has the meaning provided in Section
III.C.3.b.
3. [This section intentionally left blank.]
4. "AHP" means American Home Products Corporation, its successors and
assigns.
5. "AHP Released Parties" shall mean the Released Parties described in
Sections I.48.a and I.48.b herein.
6. "AIO Fiscal Year" shall mean the partial calendar year and each
calendar year after the date on which it is finally determined that
Final Judicial Approval will not be obtained or the Settlement
Agreement is otherwise terminated, as follows. The first AIO Fiscal
Year shall be the partial calendar year beginning on the date on which
it is determined that Final Judicial Approval will not be obtained or
the Settlement Agreement is otherwise terminated. The second AIO
Fiscal Year shall be the calendar year beginning on the first day of
the year following the year in which Final Judicial Approval is not
obtained or the Settlement Agreement is otherwise terminated, and so
forth. "AIO Fiscal Quarter" shall mean the partial calendar quarter
and each calendar quarter after the date on which it is finally
determined that Final Judicial Approval will not be obtained or the
Settlement Agreement is otherwise terminated, as follows. The first
AIO Fiscal Quarter shall be the partial calendar quarter beginning on
the date on which it is determined that Final Judicial Approval will
not be obtained or the Settlement Agreement is otherwise terminated.
The second AIO Fiscal Quarter shall be the calendar quarter beginning
on the first day of the calendar quarter following the quarter in
which Final Judicial Approval is not obtained or the Settlement
Agreement is otherwise terminated, and so forth.
7. "AIO Start Date" shall mean the date on which the Trial Court
determines by oral or written decision whether or not to approve the
Settlement or the date on which AHP terminates the Settlement
Agreement, whichever is earlier.
8. "Business Day" shall mean any day other than Saturday, Sunday or New
Year's Day, Birthday of Martin Luther King, Jr., Washington's
Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, Christmas Day, and any other day
appointed as a holiday by the President or the Congress of the United
States.
9. "Claim for Benefits" or "Claim for Settlement Benefits" or "Claim"
refers to the submission of a form in which a Class Member elects the
Accelerated Implementation Option (or "AIO"), or the submission of a
form in which a Class Member seeks to register for any of the benefits
available to Class Members pursuant to this Settlement Agreement, or
the submission of a form through which a Class Member seeks Matrix
Compensation Benefits pursuant to the matrices, along with all other
materials including correspondence, documents and video tapes or disks
of Echocardiograms submitted with such forms or in support of such a
Claim.
10. "Class Counsel" shall mean those attorneys executing this Settlement
Agreement on behalf of the Class Representatives, or such other
attorneys as shall be approved by the Court as counsel to the
Settlement Class.
11. "Claims Administrator" shall mean any person or persons to be
appointed by the Trustees, subject to approval of the Court, to
administer Claims for Benefits pursuant to the Settlement Agreement.
12. "Class Counsel Representative(s)" shall mean one or more individual
members of the Class Counsel who are selected by the Class Counsel to
represent the Class Counsel with respect to those matters specified in
this Settlement Agreement.
13. "Class Representatives" shall mean Sheila Brown, Sharon Gaddie, Jose
Gaddie, Vivian Naugle, Quentin Layer, Joan S. Layer, Joby Jackson-Reid
and Harvey E. Reid, or such other or different persons as shall be
designated by the Court as the representatives of the Settlement
Class, in the action captioned Sheila Brown, et al. v. American Home
Products Corporation, Civil Action No. 99-20593, pending in the United
States District Court for the Eastern District of Pennsylvania.
14. "Common Benefit Attorneys" shall mean those attorneys who contributed
to the creation of the Settlement Trust through work devoted to the
"common benefit" of Class Members, including any attorney who
reasonably believes that he or she actually conferred benefits upon
the Class Members as a whole through state court litigation, subject
to determination by the Court.
15. "Court" and/or "Trial Court" and/or "Federal District Court" means the
United States District Court for the Eastern District of Pennsylvania
presiding over MDL Docket No. 1203.
16. "Credit" has the meaning provided in Section VII.A.
17. "Cross-Claim Credit" has the meaning provided in Section VII.C.1.g.
18. "Date 1" is the date which is 210 days after Final Judicial Approval,
by which (1) Class Members in Subclasses 1(a) and 1(b) must register
to receive refund and/or Screening Program benefits from Fund A, and
(2) Class Members in Subclasses 2(a) and 2(b) must register to receive
refund benefits from Fund A.
19. "Date 2" is the date which is 120 days after the end of the Screening
Period.
20. "Diet Drug(s)" shall mean Fenfluramine marketed under the brand name
Pondimin(R) and/or Dexfenfluramine marketed under the brand name
Redux(TM).
21. "Endocardial Fibrosis" is defined as a condition (a) diagnosed by (1)
endomyocardial biopsy that demonstrates fibrosis and cardiac
catheterization that demonstrates restrictive cardiomyopathy or (2)
autopsy that demonstrates endocardial fibrosis and (b) other causes,
including dilated cardiomyopathy, myocardial infarction, amyloid,
Loeffler's endocarditis, endomyocardial fibrosis as defined in
Braunwald1 (involving one or both ventricles, located in the inflow
tracts of the ventricles, commonly involving the chordae tendinae,
with partial obliteration of either ventricle commonly present), focal
fibrosis secondary to valvular regurgitation (e.g., "jet lesions"),
focal fibrosis secondary to catheter instrumentation, and hypertrophic
cardiomyopathy with septal fibrosis, have been excluded.
22. "FDA Positive" is defined as follows:
a. With respect to a diagnosis based on an Echocardiogram conducted
between the commencement of Diet Drug use and September 30, 1999,
FDA Positive is a condition in which the Cardiologist
interpreting the Echocardiogram, in the ordinary course of
medical treatment, has issued a written report which clearly
states that the individual has mild or greater regurgitation of
the aortic valve and/or moderate or greater regurgitation of the
mitral valve; provided however, that this definition shall be
applicable only to qualification of a Diet Drug Recipient for
Fund A benefits. In order to qualify for Matrix Compensation
Benefits, a Diet Drug Recipient must present evidence that he or
she had an Echocardiogram prior to the end of the Screening
Period that meets the requirements of Section I.22.b below.
b. With respect to a diagnosis based on an Echocardiogram conducted
after September 30, 1999, FDA Positive is defined as mild or
greater regurgitation of the aortic valve of the heart and/or
moderate or greater regurgitation of the mitral valve of the
heart as these levels are defined in Singh2 (1999) and measured
by an echocardiographic examination performed and evaluated by
qualified medical personnel following the protocol as outlined in
Feigenbaum3 (1994) or Weyman4 (1994).
The degrees of regurgitation are determined as follows:
- Aortic Valve -- Mild or greater regurgitation, defined as
regurgitant jet diameter in the parasternal long-axis view
(or in the apical long-axis view, if the parasternal
long-axis view is unavailable), equal to or greater than 10%
of the outflow tract diameter (JH/LVOTH).
- Mitral Valve -- Moderate or greater regurgitation, defined
as regurgitant jet area in any apical view equal to or
greater than 20% of the left atrial area (RJA/LAA).
23. "Final Judicial Approval" refers to the approval of the Settlement
Agreement as a whole by the Federal District Court and such approval
becoming final by the exhaustion of all appeals, if any, without
substantial modification of the order or orders granting such
approval. Final Judicial Approval shall be deemed not to have been
obtained in the event that Trial Court Approval is denied, and the
period for appealing such denial has expired without any such appeal
having been taken.
24. "Final Judicial Approval Date" shall mean the date on which Final
Judicial Approval occurs.
25. "Fiscal Year" shall mean the partial calendar year and each calendar
year after the Final Judicial Approval Date as follows. The first
Fiscal Year shall be the partial calendar year beginning on the Final
Judicial Approval Date. The second Fiscal Year shall be the calendar
year beginning on the first day of the year following the year in
which the Final Judicial Approval Date occurs, and so forth. "Fiscal
Quarter" shall mean the partial calendar quarter and each calendar
quarter after the Final Judicial Approval Date as follows. The first
Fiscal Quarter shall be the partial calendar quarter beginning on the
Final Judicial Approval Date. The second Fiscal Quarter shall be the
calendar quarter beginning on the first day of the calendar quarter
following the quarter in which the Final Judicial Approval Date
occurs, and so forth.
26. "Full Credit" has the meaning provided in Section VII.A.4.
27. "Fund A Amounts" has the meaning provided in Section III.B.1.
28. "Fund A Escrow Account" has the meaning provided in Section III.B.3.
29. "Fund B Amounts" has the meaning provided in Section III.C.1.
30. "Fund B Deposit Amount" has the meaning provided in Section III.C.3.
31. "Fund B Quarterly Notice" has the meaning provided in Section III.C.3.
32. "Initial Opt-Out Period" shall mean the period to be established by
the Court during which Class Members may exercise the Initial Opt-Out
right described in Section IV.D.2.
33. "Interim Claims Administrator(s)" shall mean the two persons mutually
agreed upon by AHP and Class Counsel subject to approval by the Court
pursuant to Section VI.A.2 to exercise all of the functions which are
to be exercised by the Claims Administrator and/or the Trustees prior
to approval of the Trustees.
34. "Interim Escrow Agent" shall mean the person or entity mutually agreed
upon by AHP and Class Counsel subject to approval by the Court
pursuant to Section VI.A.1 to receive, hold and disburse Fund A
Amounts and Fund B Amounts until Court approval of the Trustees
pursuant to Section VI.A.3 herein.
35. [This section intentionally left blank.]
36. "Judgment" has the meaning provided in Section VII.A.4.
37. "Matrix-Level Condition" shall mean a physiological condition with a
level of severity meeting any of the criteria specified in Section
IV.B.2.c.
38. "Mild Mitral Regurgitation" refers to mild mitral valve regurgitation
as that level is defined in Singh5 (1999) and measured by an
echocardiographic examination performed and evaluated by qualified
medical personnel following the protocol as outlined in Feigenbaum6
(1994) or Weyman7 (1994). That degree of regurgitation is determined
as follows: (1) either the RJA/LAA ratio is more than 5% or the mitral
regurgitant jet height is greater than 1 cm from the valve orifice,
and (2) the RJA/LAA ratio is less than 20%.
39. "Mitral Valve Prolapse" refers to a condition where (a) the
echocardiogram video tape or disk includes the parasternal long axis
view and (b) that echocardiographic view shows displacement of one or
both mitral leaflets >2mm above the atrial-ventricular border during
systole, and >5mm leaflet thickening during diastole, as determined by
a Board-Certified Cardiologist.8
40. "Non-AHP Released Parties" shall mean those Released Parties other
than the AHP Released Parties.
41. "Nonpayment Hearing" has the meaning provided in Section III.E.6.a.
42. "Plaintiffs' Counsel" shall mean the Class Counsel and the Common
Benefits Attorneys.
43. [This section intentionally left blank.]
44. "Preliminary Approval" shall mean the Federal District Court's
conditional certification of the Settlement Class and preliminary
approval of this Settlement Agreement pursuant to Fed. R. Civ. P.
23(a), 23(b)(2), 23(b)(3), 23(c)(1) and 23(e) and entry of an order or
orders providing for issuance of notice to the Settlement Class.
45. "Preliminary Approval Date" shall mean the date on which Preliminary
Approval occurs.
46. "Primary Pulmonary Hypertension" ("PPH") is defined as either or both
of the following:
a. For a diagnosis based on examinations and clinical findings prior
to death:
(1) (a) Mean pulmonary artery pressure by cardiac
catheterization of > 25 mm Hg at rest or > 30 - - mm Hg with
exercise with a normal pulmonary artery wedge pressure < 15
mm Hg9; or -
(b) A peak systolic pulmonary artery pressure of > 60 mm Hg
at rest measured by Doppler - echocardiogram utilizing
standard procedures; or
(c) Administration of Flolan to the patient based on a
diagnosis of PPH with cardiac catheterization not done
due to increased risk in the face of severe right heart
dysfunction; and
(2) Medical records which demonstrate that the following
conditions have been excluded by the following results10:
(a) Echocardiogram demonstrating no primary cardiac disease
including, but not limited to, shunts, valvular disease
(other than tricuspid or pulmonary valvular
insufficiency as a result of PPH or trivial, clinically
insignificant left-sided valvular regurgitation), and
congenital heart disease (other than patent foramen
ovale); and
(b) Left ventricular dysfunction defined as LVEF < 40%
defined by MUGA, Echocardiogram or cardiac
catheterization; and
(c) Pulmonary function tests demonstrating the absence of
obstructive lung disease (FEV1/FVC > 50% of predicted)
and the absence of greater than mild restrictive lung
disease (total lung capacity > 60% of predicted at
rest); and
(d) Perfusion lung scan ruling out pulmonary embolism; and
(e) If, but only if, the lung scan is indeterminate or high
probability, a pulmonary angiogram or a high resolution
angio computed tomography scan demonstrating absence of
thromboembolic disease; and
(3) Conditions known to cause pulmonary hypertension11,12,13
including connective tissue disease known to be causally
related to pulmonary hypertension, toxin induced lung
disease known to be causally related to pulmonary
hypertension, portal hypertension, significant obstructive
sleep apnea, interstitial fibrosis (such as silicosis,
asbestosis, and granulomatous disease) defined as greater
than mild patchy interstitial lung disease, and familial
causes, have been ruled out by a Board-Certified
Cardiologist or Board-Certified Pulmonologist as the cause
of the person's pulmonary hypertension.
-OR-
b. For a diagnosis made after the individual's death:
(1) Autopsy demonstrating histopathologic changes in the lung
consistent with primary pulmonary hypertension and no
evidence of congenital heart disease (other than a patent
foramen ovale) with left-to-right shunt, such as ventricular
septal defect as documented by a Board-Certified
Pathologist; and
(2) Medical records which show no evidence of alternative causes
as described above for living persons.
This definition of PPH ("the PPH Definition") is intended solely for
the purpose of describing claims excluded from the definition of
Settled Claims and for purposes of Section VII.B.4 and 5, below. The
Parties agree that the PPH Definition includes but is broader than the
rare and serious medical condition suffered by the individuals
described in L. Abenhaim, et al., Appetite-Suppressant Drugs and the
Risk of Primary Pulmonary Hypertension, International Primary
Pulmonary Hypertension Study Group, 335(9), New England Journal of
Medicine, 609-16 (1996) (the "IPPHS study"). The subjects in that
study exhibited significantly elevated pulmonary artery pressures with
an average systolic pulmonary artery pressure of 88 mm Hg and average
mean pulmonary artery pressure of 57 mm Hg. Two-thirds of the IPPHS
patients demonstrated NYHA Class III or IV symptoms. While the IPPHS
subjects would fall within the PPH Definition, the definition also
includes persons with a milder, less serious medical condition.
47. "Qualified Physician" shall mean a Board-Certified or Board-Eligible
Cardiologist.
48. "Released Parties" shall mean:
a. AHP and each of its subsidiaries, affiliates, and divisions,
including, but not limited to, Wyeth-Ayerst Laboratories
Division, Wyeth-Ayerst Laboratories Co., Wyeth-Ayerst
Pharmaceuticals Inc., and American Cyanamid Corporation, along
with each of their respective current and former officers,
directors, employees, attorneys, agents, and insurers;
b. Any and all predecessors, successors, and/or shareholders of AHP
and each of its subsidiaries, affiliates, and divisions;
provided, however, that any such person or entity shall be
considered a Released Party only to the extent that such person
or entity is sued in its capacity as a predecessor, successor,
and/or shareholder of AHP or its subsidiaries, affiliates, and
divisions;
c. Any and all suppliers of materials, components, and services used
in the manufacture of Pondimin(R) and/or Redux(TM), including the
labeling and packaging thereof, along with each such person's or
entity's predecessors, successors, parents, subsidiaries,
affiliates, and divisions, and each of their respective current
and former shareholders, officers, directors, employees,
attorneys, agents, and insurers; provided, however, that no
person or entity described in this subsection shall be a Released
Party with respect to any claims based upon his, her or its own
independent negligence or culpable conduct;
d. All distributors of Pondimin(R)and/or Redux(TM), including
wholesale distributors, private label distributors, retail
distributors, hospitals and clinics, and their respective
predecessors, successors, parents, subsidiaries, affiliates, and
divisions, and their respective current and former shareholders,
officers, directors, employees, attorneys, agents, and insurers;
provided that: (1) such persons and entities described in this
section shall be a Released Party only as to claims as to which
such persons would have a statutory or common-law right of
indemnity against AHP; (2) no person or entity described in this
section shall be a Released Party to the extent that any claim is
based upon his, her or its own independent negligence or culpable
conduct, including, without limitation, negligence or
professional malpractice asserted against hospitals, clinics, and
diet centers; and (3) no person or entity described in this
section shall be a Released Party with respect to the
manufacture, sale, or distribution of any Phentermine
hydrochloride or Phentermine resin pharmaceutical product.
e. All physicians who prescribed, and all pharmacists and pharmacies
who dispensed, Pondimin(R) and/or Redux(TM) to the extent that
liability against such physicians, pharmacists or pharmacies is
based on:
(1) the prescription or dispensing of Pondimin(R)and/or
Redux(TM)in a manner consistent with the product labeling;
and/or
(2) the prescription or dispensing of Pondimin(R)for any period
longer than a "few weeks"; and/or
(3) the prescription or dispensing of Pondimin(R)and/or
Redux(TM)for concomitant use with Phentermine hydrochloride
or Phentermine resin; and/or
(4) a claim that the physician's or pharmacist's liability stems
solely from having prescribed or dispensed Pondimin(R)and/or
Redux(TM); and/or
(5) a claim that the physician's or pharmacist's liability stems
solely from the prescription or dispensing of a defective or
unreasonably dangerous product.
Physicians, pharmacists and pharmacies are not Released Parties
with respect to any claims based on their independent negligence
or culpable conduct, not consisting of the conduct described in
paragraphs (1)-(5) of this Subsection I.48.e.
Notwithstanding the foregoing, manufacturers, sellers,
wholesalers, or distributors of any Phentermine hydrochloride or
Phentermine resin pharmaceutical product are not Released Parties
with respect to the manufacture, sale, or distribution of any
Phentermine hydrochloride or Phentermine resin pharmaceutical
product, and Les Laboratoires Servier S.A. and all of its
affiliates and subsidiaries, including, without limitation,
Servier S.A.S., Oril, Orsem, Servier Amerique, Science Union et
Cie, Institut de Recherches Internationales Servier, Servier
Research (collectively hereinafter "Servier") and Interneuron
Pharmaceuticals, Inc. (hereinafter "Interneuron") are not
Released Parties.
49. "Screening Period" refers to the 12-month period (or such longer
period that shall be permitted by the Court for good cause shown, but
in any case not to exceed 18 months) during which benefits shall be
available under the Screening Program.
50. "Screening Program" refers to the program for providing Transthoracic
Echocardiograms and associated interpretive physician visit benefits,
as set forth in Sections IV.A.1.a and IV.A.2.b.
51. "Security Fund" has the meaning provided for in Section III.E.2.
52. "Security Fund Escrow Account" has the meaning provided in Section
III.E.8.
53. "Settled Claims" shall mean any and all claims, including assigned
claims, whether known or unknown, asserted or unasserted, regardless
of the legal theory, existing now or arising in the future by any or
all members of the Settlement Class arising out of or relating to the
purchase, use, manufacture, sale, dispensing, distribution, promotion,
marketing, clinical investigation, administration, regulatory
approval, prescription, ingestion, and labeling of Pondimin(R)and/or
Redux(TM), alone or in combination with any other substance,
including, without limitation, any other drug, dietary supplement,
herb, or botanical. These "Settled Claims" include, without limitation
and by way of example, all claims for damages or remedies of whatever
kind or character, known or unknown, that are now recognized by law or
that may be created or recognized in the future by statute,
regulation, judicial decision, or in any other manner, for:
a. personal injury and/or bodily injury, damage, death, fear of
disease or injury, mental or physical pain or suffering,
emotional or mental harm, or loss of enjoyment of life;
b. compensatory damages, punitive, exemplary, statutory and other
multiple damages or penalties of any kind;
c. loss of wages, income, earnings, and earning capacity, medical
expenses, doctor, hospital, nursing, and drug bills;
d. loss of support, services, consortium, companionship, society or
affection, or damage to familial relations, by spouses, parents,
children, other relatives or "significant others" of Settlement
Class Members;
e. consumer fraud, refunds, unfair business practices, deceptive
trade practices, Unfair and Deceptive Acts and Practices
("UDAP"), and other similar claims whether arising under statute,
regulation, or judicial decision;
f. wrongful death and survival actions;
g. medical screening and monitoring, injunctive and declaratory
relief;
h. economic or business losses or disgorgement of profits arising
out of personal injury; and
i. prejudgment or post-judgment interest.
Notwithstanding the foregoing, Settled Claims do not include claims
based on PPH, including claims for compensatory, punitive, exemplary
or multiple damages based on PPH; provided, however, that if a Class
Member receives settlement benefits from Fund B, he/she may not bring
a lawsuit based upon a claim for PPH, unless the Class Member was
diagnosed with PPH before the Class Member had left-sided heart valve
abnormalities (other than those which produce trivial, clinically
insignificant left-sided regurgitation) or Endocardial Fibrosis. In
addition, notwithstanding the foregoing, Settled Claims do not include
claims arising from the exposure of unborn children, in utero, to
Pondimin(R) or ReduxTM, and persons alleging exposure in utero to
Pondimin(R) or ReduxTM shall not be considered Diet Drug Recipients
eligible for benefits under this Agreement.
54. "Transthoracic Echocardiogram" means a non-invasive, standard
Echocardiogram which includes an M-Mode and 2D Echocardiogram, and
Doppler and color Doppler evaluations of all four chambers of the
heart and all four heart valves.
55. "Trial Court Approval" shall mean the granting, by order, of the
approval of the Settlement Agreement by the Federal District Court.
56. "Trial Court Approval Date" shall mean the date upon which Trial Court
Approval occurs.
57. "Trust" or "Settlement Trust" shall mean a trust established to
receive funds to be paid by AHP as provided in this Settlement
Agreement pursuant to a Trust Agreement substantially in the form
appended hereto as Exhibit "1."
58. "Trustees" shall mean those individuals approved by the Court as
Trustees of the Settlement Trust in accordance with Section VI.A.3
herein.
<PAGE>
II. SCOPE OF THE SETTLEMENT CLASS
A. The Parties shall seek certification by the Federal District Court of
a nationwide class solely for Settlement purposes (the "Settlement
Class") in the case entitled Sheila Brown, et al. v. American Home
Products Corporation, Civil Action No. 99-20593, pending in the United
States District Court for the Eastern District of Pennsylvania.
B. The Settlement Class will consist of:
All persons in the United States, its possessions and territories
who ingested Pondimin(R) and/or Redux(TM) ("Diet Drug
Recipients"), or their estates, administrators or other legal
representatives, heirs or beneficiaries ("Representative
Claimants"), and any other persons asserting the right to sue AHP
or any Released Party independently or derivatively by reason of
their personal relationship with a Diet Drug Recipient, including
without limitation, spouses, parents, children, dependents, other
relatives or "significant others" ("Derivative Claimants"). The
Settlement Class does not include any individuals whose claims
against AHP and/or the AHP Released Parties, arising from the use
of Diet Drugs, have been resolved by judgment on the merits or by
release (other than releases provided pursuant to this
Settlement).
C. There will be five subclasses as follows:
1.(a)"Subclass 1(a)" shall consist of all Diet Drug Recipients in the
Settlement Class (1) who ingested Pondimin(R) and/or Redux(TM)
for 60 days or less, and (2) who have not been diagnosed by a
Qualified Physician as FDA Positive by an Echocardiogram
performed between the commencement of Diet Drug use and September
30, 1999, and all Representative and Derivative Claimants in the
Settlement Class whose claims are based on their personal or
legal relationship with a Diet Drug Recipient (1) who ingested
Pondimin(R) and/or Redux(TM) for 60 days or less, and (2) who has
not been diagnosed by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of Diet Drug
use and September 30, 1999.
1.(b)"Subclass 1(b)" shall consist of all Diet Drug Recipients in the
Settlement Class (1) who ingested Pondimin(R) and/or Redux(TM)
for 61 or more days, and (2) who have not been diagnosed by a
Qualified Physician as FDA Positive by an Echocardiogram
performed between the commencement of Diet Drug use and September
30, 1999, and all Representative and Derivative Claimants in the
Settlement Class whose claims are based on a personal or legal
relationship with a Diet Drug Recipient (1) who ingested
Pondimin(R) and/or Redux(TM) for 61 or more days, and (2) who has
not been diagnosed by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of Diet Drug
use and September 30, 1999.
2.(a)"Subclass 2(a)" shall consist of all Diet Drug Recipients in the
Settlement Class (1) who ingested Pondimin(R) and/or Redux(TM)
for 60 days or less, and (2) who have been diagnosed by a
Qualified Physician as FDA Positive by an Echocardiogram which
was performed between the commencement of Diet Drug use and
September 30, 1999, and all Representative and Derivative
Claimants in the Settlement Class whose claims are based on a
personal or legal relationship with a Diet Drug Recipient (1) who
ingested Pondimin(R) and/or Redux(TM) for 60 days or less, and
(2) who has been diagnosed by a Qualified Physician as FDA
Positive by an Echocardiogram which was performed between the
commencement of Diet Drug use and September 30, 1999.
2.(b)"Subclass 2(b)" shall consist of all Diet Drug Recipients in the
Settlement Class (1) who ingested Pondimin(R) and/or Redux(TM)
for 61 or more days, and (2) who have been diagnosed by a
Qualified Physician as FDA Positive by an Echocardiogram which
was performed between the commencement of Diet Drug use and
September 30, 1999, and all Representative and Derivative
Claimants in the Settlement Class whose claims are based on a
personal or legal relationship with a Diet Drug Recipient (1) who
ingested Pondimin(R) and/or Redux(TM) for 61 or more days, and
(2) who has been diagnosed by a Qualified Physician as FDA
Positive by an Echocardiogram which was performed between the
commencement of Diet Drug use and September 30, 1999.
3. "Subclass 3" (which may include persons also included in
Subclasses 1(a) and 1(b)) shall consist of all Diet Drug
Recipients in the Settlement Class who have been diagnosed by a
Qualified Physician as having Mild Mitral Regurgitation by an
Echocardiogram performed between the commencement of Diet Drug
use and the end of the Screening Period, but who have not been
diagnosed by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of Diet Drug
use and the end of the Screening Period, and all Representative
and Derivative Claimants in the Settlement Class whose claims are
based on a personal or legal relationship with a Diet Drug
Recipient who has been diagnosed by a Qualified Physician as
having Mild Mitral Regurgitation by an Echocardiogram performed
between the commencement of Diet Drug use and the end of the
Screening Period, but who has not been diagnosed by a Qualified
Physician as FDA Positive by an Echocardiogram performed between
the commencement of Diet Drug use and the end of the Screening
Period.
<PAGE>
III. AHP'S PAYMENT OBLIGATIONS
A. ESTABLISHMENT OF SETTLEMENT TRUST
1. A Settlement Trust shall be established to receive the Fund
A Amounts and Fund B Amounts to be paid by AHP under the
terms of this Settlement Agreement pursuant to the terms of
a Trust Agreement substantially in the form appended to the
Settlement Agreement as Exhibit "1."
2. The Parties agree that, as provided in the Trust Agreement,
the Trustees of the Settlement Trust will be nominated by
the Parties and that each nomination will be subject to
agreement of the Parties and subject to approval by the
Court consistent with the provisions stated in Section
VI.A.3 herein and the Trust Agreement substantially in the
form appended to the Settlement Agreement as Exhibit "1".
3. The Settlement Trust will begin as a reversionary trust and
will become non-reversionary upon Final Judicial Approval.
If Final Judicial Approval is not obtained, or if the
Settlement Agreement is terminated in accordance with its
terms for any other reason, all amounts remaining in the
Settlement Trust after payment of any charges and expenses
which the Settlement Agreement expressly authorized or
required to be incurred and expended prior to the reversion
date, including any amounts expended to assist in seeking
Final Judicial Approval, shall be returned to AHP, except as
provided in Section V hereof relating to the administration
of claims of Class Members who have accepted the Accelerated
Implementation Option.
4. AHP shall have no right to any of the funds previously
deposited, nor to any of the funds subsequently deposited
into the Settlement Trust, as of the date the Trust becomes
non-reversionary. AHP shall have no further claim to such
funds for any purpose.
5. Subject to the conditions set forth in this Settlement
Agreement, AHP shall be obligated to make payments as set
forth in Sections III.B ("Fund A") and III.C ("Fund B")
below to the Settlement Trust. Such payments shall be made
by wire transfer. If any date of payment provided herein is
not a Business Day, such payment shall be due and payable on
the first Business Day following such date.
B. FUND A
1. AHP shall make payments into Fund A as follows (such amounts
collectively referred to herein as the "Fund A Amounts"):
a. $50 million five Business Days after the Preliminary
Approval Date.
b. $383 million five Business Days after the Trial Court
Approval Date.
c. $383 million 180 days after the preceding payment of
$383 million.
d. $184 million five Business Days after the Final
Judicial Approval Date.
2. The monies held by Fund A shall be available and shall be
used to pay all benefits payable from Fund A, out-of-pocket
and pre- settlement litigation expenses of Plaintiffs'
Counsel approved by the Court for reimbursement in relation
to Fund A, and all proper administrative expenses associated
with the administration of the Settlement and the Settlement
Trust insofar as they relate to Fund A.
3. In addition to the foregoing, within five Business Days
after the Final Judicial Approval Date, AHP shall pay $200
million into an escrow account under the supervision of the
Court (the "Fund A Escrow Account"). The funds in the Fund A
Escrow Account shall be used to pay compensation to
Plaintiffs' Counsel. In addition, the funds in the Fund A
Escrow Account may be used to make incentive awards to the
Class Representatives in the following State and Federal
Court class actions involving Pondimin(R)and Redux(TM):
United States District Court for the Eastern District of
Pennsylvania, Brown v. American Home Products Corp., C.A.
No. 99-20593; Jeffers v. American Home Products Corp., C.A.
No. 98-CV-20626 (E.D. Pa.) (In re Diet Drug Products
Liability Litigation, MDL 1203); New Jersey (Vadino et al.
v. AHP, Docket No. MID-L-425-98); New York (New York Diet
Drug Litigation, Index No. 700000/98); Pennsylvania
(Pennsylvania Diet Drug Litigation, Master Docket No.
9709-3162 C.C.P. Phila.); Washington (St. John v. AHP,
97-2-06368-4); Illinois (Rhyne v. American Home Products, 98
CH 4099); and Texas (Earthman v. AHP, No. 97-10-03970 CV,
Dist. Ct. Montgomery Co. Texas). The payment of said
compensation, relating to Fund A, to Plaintiffs' Counsel and
the certified State and Federal Court Class Representatives
shall be in such manner and in such amounts as the Court,
with advice and counsel of the State Court Judicial Advisory
Committee, may determine is appropriate, as contemplated by
Sections VIII.B.3 and VIII.E.1.a hereof and pursuant to a
Fund A Escrow Account Agreement substantially in the form
attached hereto as Exhibit "2." AHP shall take no position
on the amount of such fees to be awarded as attorneys' fees
or incentive awards or the allocation thereof. All Class
Members shall have standing to object to or support the
award of attorneys' fees and incentive awards for Class
Representatives from the Fund A Escrow Account. Any amount
in the Fund A Escrow Account not awarded in attorneys' fees
shall be returned to AHP by order of the Court.
4. When the Trustees decide that Fund A's purposes have been
met, the remaining balance, if any, in Fund A shall be
transferred to Fund B.
5. Any transfer from Fund A to Fund B will not reduce the
maximum obligation of AHP to make payments to Fund B.
C. FUND B
1. Fund B Amounts. Fund B shall consist of (i) the Fund B
Initial Payment under Section III.C.2; (ii) all Fund B
Deposit Amounts paid pursuant to Fund B Quarterly Notices
under Section III.C.3; (iii) all Fund B AIO Deposit Amounts
paid pursuant to Requests for Fund B AIO Payments under
Section V.F; and (iv) all interest and other income earned
by the Trust on such amounts.
2. Fund B Initial Payment. No later than five Business Days
after the Preliminary Approval Date, AHP shall pay $25
million into Fund B.
3. Additional Fund B Deposits. Beginning on the Final Judicial
Approval Date, the Trustees may request in writing on a
quarterly basis (each a "Fund B Quarterly Notice") an
additional amount (such amount being referred to as a "Fund
B Deposit Amount"):
a. to pay claims received which qualify for payment from
Fund B pursuant to Section IV.B., awards of counsel
fees and costs under Section VIII.E.1.b., and
authorized administrative expenses which have not been
paid due to an insufficient cash balance in Fund B,
and/or
b. to maintain a $50 million reserve in Fund B for
administrative expenses (the "Administrative Reserve").
AHP shall pay each Fund B Deposit Amount so requested
no later than 15 days after the date on which AHP
receives from the Trustees a Fund B Quarterly Notice
requesting such Fund B Deposit Amount; provided,
however, that AHP's obligation to pay Fund B Deposit
Amounts shall at all times be limited to the Adjusted
Maximum Available Fund B Amount.
4. Termination of AHP's Fund B Payment Obligations.
a. AHP's obligation to make payments to Fund B shall
terminate upon the earlier of: (i) the date of AHP's
payment into Fund B of the amount that reduces the
Adjusted Maximum Available Fund B Amount to zero; or
(ii) the date of AHP's payment to Fund B of the Final
Projected Amount under Section III.C.4.b. below. Such
payment shall be referred to in this Agreement as the
"Final Payment."
b. The Final Projected Amount shall be determined as
follows:
(i) As of the end of the sixteenth Fiscal Year, the
Trustees shall cause an actuarial determination to be
made, based on the experience of the Settlement Trust,
as to the amount of additional funds, if any, which
will be required to fund payments to Class Members who
have qualified or who are likely to qualify in the
future for benefits from Fund B in accordance with the
provisions of Section IV.B and Section IV.C, determined
without regard to any limitation on the obligation of
AHP to make Fund B payments under this Agreement, and
to fund the payment of associated administrative
expenses. The Trustees shall also take into
consideration the then cash balance in Fund B
(including the Administrative Reserve), its projected
future investment and other income, and an estimate of
required future administrative expenses.
(ii) No later than 30 days after the date on which the
Trustees are required to make the estimate under
Section III.C.4.a.(i), the Trustees shall provide a
written report ("Final Projected Amount Report") to
Class Counsel and to AHP setting forth the Trustees'
projection of the amount of additional funds, if any,
which will be necessary to meet the obligations of Fund
B as described in Section III.C.4.a.(i). The Final
Projected Amount Report shall contain all supporting
information necessary to allow Class Counsel and AHP to
evaluate the accuracy and reasonableness of the
estimate. Such supporting information shall include,
without limitation, the Trustees' methodology for
making the estimate and any assumptions used in making
the estimate. AHP and/or Class Counsel shall have the
right to obtain from the Trustees any additional
information reasonably requested by them relating to
the estimate contained in the Final Projected Amount
Report.
(iii)Within 30 days after the date of the Final Projected
Amount Report, Class Counsel and/or AHP may appeal the
Trustees' estimate to the Court, which shall modify the
Trustees' estimate to the extent appropriate upon a
judicial finding that the Trustees' estimate was either
unreasonable or lacking in substantial support. If such
an appeal is not taken or if such an appeal is taken
and the Court determines not to modify the Trustees'
estimate, then the Trustees' estimate, as set forth in
the Final Projected Amount Report, will become the
"Final Projected Amount" for purposes of this
Agreement. If such an appeal of the Trustees' estimate
is taken and the Court modifies the estimated amount in
connection with such an appeal, then the estimated
amount determined by the Court will become the "Final
Projected Amount" for purposes of this Agreement. The
Parties waive any right to appeal any determination of
the Court with respect to the Final Projected Amount.
(iv) If the Adjusted Maximum Available Fund B Amount as of
the date on which the Final Projected Amount is
determined exceeds the Final Projected Amount, then
within five business days after the date of the
determination of the Final Projected Amount in
accordance with this Agreement, AHP shall pay the Final
Projected Amount into Fund B and such payment shall
constitute the Final Payment under this Agreement. If
the Final Projected Amount exceeds the Adjusted Maximum
Available Fund B Amount as of the date on which the
Final Projected Amount is determined, then within five
business days after the date of the determination of
the Final Projected Amount in accordance with this
Agreement, AHP shall pay the Adjusted Maximum Available
Fund B Amount into Fund B and such payment shall
constitute the Final Payment under this Agreement. In
no event shall AHP's payment into Fund B exceed the
Adjusted Maximum Available Fund B Amount.
c. The monies held by Fund B shall be available and shall
be used to pay all benefits payable from Fund B, all
attorneys' fees and common benefit fees and costs
awarded by the Court in relation to Fund B and all
proper administrative expenses associated with the
administration of the Settlement and the Settlement
Trust insofar as they relate to Fund B, and for the
purposes described in Section III.C.4.d.
d. The Trustees shall use any residual funds remaining in
Fund B after the satisfaction of all Fund B obligations
to Class Members to either pay for or create a reserve
for payment of all administrative expenses which have
been or will be incurred to wind up the administration
of the Trust on behalf of the Settlement Class,
including adequate provision for maintaining or
disposing of the database created pursuant to Section
VI.C.3.c, and shall transfer any funds remaining after
satisfaction of the foregoing to the Medical Research
and Education Fund created under Section IV.A.3.a.
D. OTHER PROVISIONS
1. The Settlement Trust shall be structured and managed to
qualify as a Qualified Settlement Fund under Section 468B of
the Internal Revenue Code and related regulations and will
contain customary provisions for such trusts including
obligations of the Settlement Trust to make tax filings and
to provide to AHP information to permit AHP to report
deductions properly for tax purposes.
2. The Parties agree that all of the amounts being paid
pursuant to the terms of this Settlement are being paid as
damages (other than punitive damages) on account of alleged
physical personal injuries or alleged physical sickness of
the members of the Settlement Class as described in Section
104(a)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Parties further agree that the claims set
forth in the definition of Settled Claims in Section I.53
have their origin in such alleged physical personal injuries
or physical sickness.
3. Except as provided in Section V herein relating to the
Accelerated Implementation Option, AHP shall have no
financial obligations under this Settlement Agreement other
than as explicitly set forth in this Section III (AHP's
Payment Obligations). AHP shall have no responsibility for
the management of the Settlement Trust or any liability to
any Class Member arising from the handling of claims by the
Trustees.
E. SECURITY ARRANGEMENTS
1. During the period beginning on the first Business Day
following the Trial Court Approval Date and ending on the
fifth Business Day following the Final Judicial Approval
Date, AHP shall maintain credit facilities in an aggregate
principal amount of One Billion Dollars ($1,000,000,000)
exclusively as security for its obligations under this
Settlement Agreement over the sum of (1) the greater of (a)
the aggregate minimum principal amount of credit facilities
that would be required by Moody's Investors Service to
satisfy back-up liquidity on AHP's commercial paper
obligations or (b) the aggregate minimum principal amount of
credit facilities that would be required by Standard &
Poor's Rating Services as sufficient to satisfy back-up
liquidity on AHP's commercial paper obligations, plus (2)
the amount of any uses (other than the payments under this
Settlement Agreement) for which such credit facilities have
been committed, plus (3) outstanding drawings under such
credit facilities.
2. Fifteen days after the Final Judicial Approval Date, or the
first Business Day thereafter if such fifteenth day is not a
Business Day, AHP shall establish and thereafter maintain a
fund (the "Security Fund") consisting of cash and high-grade
marketable commercial securities (which shall consist of the
"Permitted Investments," defined herein) selected by AHP
having a principal value equal to $370 million. If the
credit rating for AHP as reported by both Moody's Investors
Service and Standard & Poor's Rating Services is below
investment grade at any time during which the Security Fund
must be maintained hereunder, AHP shall deposit additional
cash and Permitted Investments selected by AHP having an
aggregate principal value of an additional $180 million. For
purposes of this Section III.E, the term "Permitted
Investments" shall mean any of the following: (a) readily
marketable direct obligations of the United States or any
agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of
the United States, maturing within 365 days of purchase (in
the case of all such obligations other than direct
obligations of the United States Treasury); (b) certificates
of deposit or time deposits maturing within 365 days of
purchase with any commercial bank that (1) has deposits
insured by the Federal Deposit Insurance Corporation, (2) is
organized under the laws of the United States or any state
thereof, (3) has a minimum long-term rating of "A-3" (or the
then equivalent) by Moody's Investors Service and a
long-term rating of "A-" (or the then equivalent) by
Standard & Poor's Rating Services, and (4) has combined
capital and surplus of at least $10 billion; (c) commercial
paper issued by any corporation organized under the laws of
any state of the United States and rated at least "Prime-1"
short-term (or the then equivalent grade) and "A-1"
long-term (or the then equivalent grade) by Standard &
Poor's Rating Services, in each case with a maturity of not
more than 180 days from the date of acquisition thereof; or
(d) investments, classified as current assets of AHP or any
of its subsidiaries under generally accepted accounting
principles, in money market investment programs registered
under the Investment Company Act of 1940, as amended, which
are administered by financial institutions that have the
highest rating obtainable from either Moody's Investors
Service or Standard & Poor's Rating Services, and the
portfolios of which are limited solely to investments of the
character, quality and maturity described in clauses (a),
(b) or (c) of this definition.
3. The Security Fund shall be terminated upon AHP's making the
Final Payment provided for in Section III.C.4.a.
4. AHP shall be entitled to withdraw from the Security Fund all
income earned thereby. However, in the event that, and so
long as, the credit rating of AHP reported by both Moody's
Investors Service and Standard & Poor's Rating Services is
below investment grade at any time during which the Security
Fund must be maintained, AHP shall no longer be entitled to
withdraw from the Security Fund the income earned thereby,
except that AHP shall thereafter be entitled to withdraw, at
each tax payment date, such amount thereof as shall equal
all federal, state and local taxes payable by AHP with
respect to or on account of the whole amount of the Security
Fund. AHP shall be responsible for the payment of all
federal, state and local taxes payable with respect to or on
account of the Security Fund.
5. AHP shall grant to the Trustees a perfected security
interest in the Security Fund as collateral for AHP's
obligations under the Settlement Agreement pursuant to the
terms of a Security Fund and Escrow Agreement in the form
appended hereto as Exhibit "3" hereto. The assets in the
Security Fund shall at all times be owned by AHP, subject to
the rights of the Trust as a secured creditor.
6. For purposes of this Settlement Agreement, an "Uncured
Failure to Make Payment" is an event in which:
a. AHP fails to make a payment to Fund B which was due and
not timely paid, and such failure to make payment was
due to either a financial inability to pay or a
deliberate unwillingness to pay, such determinations
having been made by order of the Court after an
evidentiary hearing (a "Nonpayment Hearing"); and
b. AHP fails to make that payment within thirty days after
such order becomes final after exhaustion of all
appeals, if any, or AHP fails to make that payment
thirty days after a Trial Court order declaring an
Uncured Failure to Make Payment and is unable to obtain
a stay of that order pending an appeal from such order.
7. At least thirty days prior to any Nonpayment Hearing, AHP
and Class Counsel shall have the right to receive from the
Trustees such information as they reasonably request
relating to the Trustees' claim that such payment was due
and owing, as to which issue the Trustees shall have the
burden of proof.
8. In the event of an Uncured Failure to Make Payment,
securities and/or cash in the Security Fund having a
principal value equal to the entire amount of the Security
Fund shall be transferred to the escrow agent of an escrow
account to be maintained under the supervision of the Court
(the "Security Fund Escrow Account"), without impairing the
security interest of the Trust. The portion of the Security
Fund Escrow Account, if any, needed to satisfy the
obligations of AHP under the Settlement Agreement shall be
paid to the Trust pursuant to order of the Court or on
agreement of the Parties. Any unused amount of the Security
Fund Escrow Account shall be returned to AHP at the time the
Final Payment is made or deemed to have been made. Any
income earned on the account shall remain the property of
the account, and all federal, state and local taxes payable
with respect to the Security Fund Escrow Account shall be
paid out of the account. Additional conditions and
procedures for the establishment, operation and distribution
of the Security Fund Escrow Account are set forth in Exhibit
"3," which is to be executed substantially in that form by
the escrow agent.
9. In the event of the following occurrences:
a. The occurrence of more than one Uncured Failure to Make
Payment within a two-year period; and
b. The depletion of the amount of the assets which AHP is
required to have on deposit in the Security Fund or in
the Security Fund Escrow Account described above by
more than fifty percent of the then-required amount of
assets; and
c. A determination by the Court after notice and an
opportunity to be heard by all interested parties that
the remaining assets in the Security Fund or in the
Security Fund Escrow Account are not likely to be
sufficient to pay the remaining Fund B obligations to
Class Members as of that point in time;
all Diet Drug Recipients who (i) are diagnosed by a
Qualified Physician as FDA Positive or as having Mild
Mitral Regurgitation by an Echocardiogram performed
between the commencement of Diet Drug use and the end
of the Screening Period and who have registered for
settlement benefits by Date 2, or (ii) are diagnosed
as having Endocardial Fibrosis by September 30, 2005,
and have registered for Fund B benefits by January
31, 2006, together with their associated
Representative and/or Derivative Claimants, will have
a right to opt out of the Settlement and pursue all
of their Settled Claims (except for those claims set
forth in subparagraphs (e) and (g) of Section I.53 of
this Agreement), against AHP and the other Released
Parties, including claims for punitive and multiple
damages (hereinafter the "Financial Insecurity
Opt-Out Right"), provided such Class Members have not
received Matrix-Level V benefits set forth in Section
IV.B.2.
10. Within thirty (30) days of the date of the entry of any
Order determining that the remaining assets in the Security
Fund or in the Security Fund Escrow Account are not likely
to be sufficient to pay the remaining Fund B obligations, as
referred to in Sections III.E.6.a and III.E.9.c, above, the
Trustees and/or Claims Administrator(s) shall provide
written notice to all affected Class Members of the
circumstances giving rise to the Financial Insecurity
Opt-Out Right by first class mail, postage prepaid. Within
one-hundred and twenty (120) days of the transmission of
that notice, each Class Member who is eligible to exercise a
Financial Insecurity Opt-Out Right may send a written notice
advising the Trustees and/or Claims Administrator(s) of the
Class Member's election to exercise the Financial Insecurity
Opt-Out Right on a form prescribed by the Trustees and/or
Claims Administrator(s). In the event of such an opt-out,
the Class Member may pursue any and all claims (except for
those claims set forth in subparagraphs (e) and (g) of
Section I.53 of this Agreement) against AHP in the legal
system, and none of the Released Parties may assert any
defense to such claims based on any statute of limitations
or repose, the doctrine of laches, any other defense
predicated on the failure to timely pursue the claim, any
defense based on "splitting" a cause of action, any defense
based on any release signed pursuant to the Settlement
Agreement, and/or any other defense based on the existence
of the Settlement Agreement, except to the extent provided
in Section III.E.9 of this Agreement. In any legal action
commenced by a Class Member exercising a right of opt-out
under these circumstances, the Class Member shall reduce the
amount of his or her recovery by the amount of any cash that
the Class Member has received from AHP and/or the Trust
under any terms of the Settlement. There shall be no
deduction, offset, or reduction for any Medical Screening or
Medical Services received by a Class Member.
11. Nothing contained in this Section of the Agreement shall be
construed to be a waiver of or a limitation on rights which
the Class Members, Class Representatives or Trustees would
otherwise have under the law in the event of a breach of the
Settlement Agreement.
12. Immediately upon termination of the Security Fund under
Section III.E.3 above, any remaining balance in the Security
Fund, including any income earned thereon, shall be released
to AHP.
<PAGE>
IV. CLASS MEMBER RIGHTS AND BENEFITS
A. SCREENING/REFUND/MEDICAL SERVICES/CASH/RESEARCH BENEFITS PAYABLE FROM
FUND A
1. BENEFITS FOR CLASS MEMBERS WHO INGESTED PONDIMIN(R) AND/OR
REDUX(TM) FOR 61 OR MORE DAYS
a. SCREENING PROGRAM: Diet Drug Recipients in Subclass 1(b)
will be eligible for one Transthoracic Echocardiogram and an
associated interpretive physician visit. Eligible Class
Members must register for this benefit by Date 1. This
Screening Program shall be conducted for a 12-month period
after Final Judicial Approval. This period may be extended
for up to an additional 6 months by the Court for good cause
shown.
b. COST OF TRANSTHORACIC ECHOCARDIOGRAM: Diet Drug Recipients
in Subclass 1(b) who do not elect the Accelerated
Implementation Option described in Section V below and who,
independent of the Screening Program, obtain an
Echocardiogram after the end of the Initial Opt-Out Period
but before the Final Judicial Approval Date, may recover
from Fund A the lesser of (i) the Trust's direct cost of
providing for a Transthoracic Echocardiogram and associated
interpretive physician visit under the Screening Program and
(ii) the actual amount paid by the Class Member for the
Echocardiogram and associated interpretive physician visit,
net of amounts paid or reimbursed by an insurance carrier or
other third-party payor, but only in the event that the
Settlement receives Final Judicial Approval. Eligible Class
Members must submit a claim for this benefit by Date 2.
Class Members receiving such a payment may not also
participate in the Screening Program benefits described in
Section IV.A.1.a.
C. ADDITIONAL MEDICAL SERVICES OR CASH: All Diet Drug
Recipients in Subclass 2(b) and those Diet Drug Recipients
in Subclass 1(b) who have been diagnosed by a Qualified
Physician as FDA Positive by an Echocardiogram performed
between the commencement of Diet Drug use and the end of the
Screening Period, will be entitled to receive, at the Class
Member's election, either (i) valve-related medical services
up to $10,000 in value to be provided by the Trust; or (ii)
$6,000 in cash. Such cash payments and funds for such
medical services will come from Fund A. Eligible Class
Members must register for this benefit and make the
affirmative election as to whether they wish to receive cash
or services by Date 2.
d. REFUND: Diet Drug Recipients in Subclasses 1(b) and 2(b), or
their associated Representative Claimants, will be eligible
for a refund in the fixed amount of $30 per month of use for
Pondimin(R) and $60 per month of use for Redux(TM), subject
to a maximum of $500 per Class Member; provided, however,
that such benefits will be made available to members of
Subclasses 1(b) and 2(b) only if, and to the extent that,
Fund A possesses sufficient assets to pay such benefits
after paying or creating a reserve for payment of all other
authorized expenses and benefits to be provided by Fund A.
Eligible Class Members must register for this benefit by
Date 1.
2. BENEFITS FOR CLASS MEMBERS WHO INGESTED PONDIMIN(R) AND/OR
REDUX(TM) FOR 60 DAYS OR LESS:
a. REFUND: Diet Drug Recipients in Subclasses 1(a) and 2(a) or
their associated Representative Claimants will be eligible
for a refund in the fixed amount of $30 per month of use for
Pondimin(R) and $60 per month of use for Redux(TM). Eligible
Class Members must register for this refund benefit by Date
1.
b. SCREENING PROGRAM:
(1) In general, members of Subclass 1(a) are not entitled
to screening benefits.
(2) LIMITED REIMBURSEMENT FOR SCREENING EXAMINATIONS. If,
however, during the Screening Period, a Diet Drug
Recipient in Subclass 1(a), independent of the
Screening Program, obtains an Echocardiogram and is
diagnosed by a Qualified Physician as FDA Positive
based on that Echocardiogram, he/she may recover from
Fund A the lesser of (i) the direct cost to the Trust
of providing a Transthoracic Echocardiogram and an
associated interpretive physician visit under the
Screening Program, and (ii) the actual amount paid by
the Class Member for the Echocardiogram and associated
interpretive physician visit, net of amounts paid or
reimbursed by an insurance carrier or other third-party
payor, but only in the event that the Settlement
receives Final Judicial Approval. Eligible Subclass
1(a) members must register for this benefit by Date 2.
(3) COMPASSIONATE AND HUMANITARIAN PROGRAM. In addition,
the Trustees may, in their discretion in appropriate
cases for compassionate and humanitarian reasons,
provide a Transthoracic Echocardiogram and associated
interpretive physician visit during the Screening
Period for members of Subclass 1(a) who are Diet Drug
Recipients, where the Trustees determine that (a) such
persons are in need of such services and are otherwise
unable to obtain them; or (b) where there are other
compelling reasons to provide such services to such
persons. Total disbursements for such services shall
not exceed $20 million. Eligible Subclass 1(a) members
must apply for such benefits by Date 1.
c. ADDITIONAL MEDICAL SERVICES OR CASH. All members of Subclass
2(a) who are Diet Drug Recipients as well as those members
of Subclass 1(a) who are Diet Drug Recipients and who have
been diagnosed by a Qualified Physician as FDA Positive by
an Echocardiogram performed between the commencement of Diet
Drug use and the end of the Screening Period, will be
entitled to receive, at the Class Member's election, either
(i) valve-related medical services up to $5,000 in value to
be provided by the Trust or (ii) $3,000 in cash. Such cash
payments and funds for such medical services will come from
Fund A. Eligible Class Members must register for this
benefit and make the affirmative election as to whether they
wish to receive cash or services by Date 2
3. BENEFITS FOR ALL CLASS MEMBERS
a. MEDICAL RESEARCH AND EDUCATION FUND. An amount in Fund A not to
exceed $25 million may be used to finance medical research and
education related to heart disease. The Medical Research and
Education Fund will be funded by the transfer of up to $25
million from Fund A to an organization formed for that purpose
and described in Subsection (c)(3) of Section 501 of the Internal
Revenue Code pursuant to Articles of Incorporation and Bylaws
substantially in the form appended hereto as Exhibit "4." The
management of the Medical Research and Education Fund will be by
an independent Board of Directors. The Parties agree that the
Directors of the Medical Research and Education Fund will be
nominated by the Parties and that each nominee will be subject to
agreement of the Parties and subject to Court approval
b. MEDICAL/LEGAL REGISTRY. The Trustees shall apply a portion of
Fund A to establish, operate and maintain a "Registry" to track
the medical condition of Class Members, both for purposes of
processing claims for benefits under the terms of the Settlement
and for purposes of medical research and education. The funds
expended to create, maintain and operate this Registry shall be
considered administrative expenses of Fund A and shall not reduce
the $25 million which is available for medical education and
research.
c. ECHOCARDIOGRAM IN THE CASE OF FINANCIAL HARDSHIP. In addition,
the Trustees may, in their discretion, for members of Subclasses
1(a) and 1(b), in cases of true financial hardship provide a
Transthoracic Echocardiogram and associated interpretive
physician visit to such persons after Trial Court Approval of
this Settlement. Total disbursements for such services shall not
exceed $10 million.
d. REIMBURSEMENT FOR CERTAIN PRIVATELY-OBTAINED ECHOCARDIOGRAMS.
Diet Drug Recipients or their Representative Claimants will be
eligible for reimbursement of the cost of Echocardiograms and
associated interpretive visits not otherwise reimbursed under
this Agreement where such procedures were performed after the
commencement of Diet Drug use; provided, however, that such
reimbursement benefits will be made available to Diet Drug
Recipients or their Representative claimants only if, and to the
extent that, Fund A possesses sufficient assets to pay such
benefits after paying or creating a reserve for payment of all
other authorized expenses and benefits to be provided by Fund A,
except for the refund benefits described in Section IV.A.1.d of
the Settlement Agreement, which refund benefits described in
Section IV.A.1.d shall be paid only after paying or creating a
reserve for the payment of the reimbursement benefit described in
this Section IV.A.3.d. The reimbursement to be provided hereunder
shall be the lesser of (i) the direct cost to the Trust of
providing a Transthoracic Echocardiogram and associated
interpretive visit under the Screening Program and (ii) the
actual amount paid by the Class Member for the Echocardiogram and
associated interpretive visit, net of amounts paid or reimbursed
by an insurance carrier or other third-party payor. Class Members
seeking such reimbursement must apply for it by Date 1.
4. TERMS OF MEDICAL SCREENING PROGRAM AND PROVISION OF ADDITIONAL MEDICAL
SERVICES.
a. In order to supply Transthoracic Echocardiograms and associated
interpretive physician visits pursuant to Sections IV.A.1.a,
IV.A.1.b, IV.A.2.b.2, IV.A.2.b.3 and IV.A.3.c of this Settlement
Agreement, and the additional medical services which Class
Members are entitled to receive in accordance with Sections
IV.A.1.c and IV.A.2.c of this Settlement Agreement, the Trustees
and/or Claims Administrator(s) may enter into a contract with a
network of providers of health services.
b. The "additional medical services" which eligible Class Members
are entitled to receive under Sections IV.A.1.c and IV.A.2.c of
this Settlement Agreement shall be determined by the Trustees and
may include the following services, when performed, supervised,
or prescribed by a physician specializing in internal medicine,
cardiology, or cardiothoracic surgery:
(1) Comprehensive physical examinations;
(2) Chest x-rays;
(3) Electrocardiograms;
(4) Standard laboratory testing;
(5) Medically-appropriate Echocardiograms;
(6) Medically-supervised nutritional counseling; and/or
(7) Any new, accepted technology or modalities for the
management of valvular heart disease.
5. SOURCE OF FUND A BENEFITS. The benefits referred to in Section
IV.A.1 through and including Section IV.A.4 shall be paid only
out of Fund A.
B. COMPENSATION BENEFITS PAYABLE FROM FUND B
1. ELIGIBLE CLASS MEMBERS. The following Class Members, and only
such Class Members, shall be entitled to the compensation
benefits from Fund B ("Matrix Compensation Benefits"):
a. Diet Drug Recipients who have been diagnosed by a Qualified
Physician as FDA Positive or as having Mild Mitral
Regurgitation by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the Screening
Period and who have registered for further settlement
benefits by Date 2;
b. The Representative Claimants of Diet Drug Recipients who
have been diagnosed by a Qualified Physician as FDA Positive
or as having Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use and the
end of the Screening Period, where either the Diet Drug
Recipient or the Representative Claimant(s) for the Diet
Drug Recipient has registered for further settlement
benefits by Date 2;
c. The Derivative Claimants of Diet Drug Recipients who have
been diagnosed by a Qualified Physician as FDA Positive or
as having Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use and the
end of the Screening Period, where the Derivative Claimants
have registered for further settlement benefits by Date 2,
to the extent that such persons have a legally recognized
claim for loss of services, consortium, support, or the
like, arising from injury to the associated Diet Drug
Recipient;
d. Diet Drug Recipients who have been diagnosed by a Qualified
Physician as having Endocardial Fibrosis by September 30,
2005 and have registered for Fund B benefits by January 31,
2006;
e. The Representative Claimants of Diet Drug Recipients who
have been diagnosed by a Qualified Physician as having
Endocardial Fibrosis by September 30, 2005, where either the
Diet Drug Recipient or the Representative Claimant(s) of the
Diet Drug Recipient has registered for Fund B benefits by
January 31, 2006;
f. The Derivative Claimants of Diet Drug Recipients who have
been diagnosed by a Qualified Physician as having
Endocardial Fibrosis by September 30, 2005, where the
Derivative Claimants have registered for Fund B benefits by
January 31, 2006, to the extent that such persons have a
legally recognized claim for loss of services, consortium,
support, or the like, arising from injury to the associated
Diet Drug Recipient.
2. BENEFITS AVAILABLE
a. For purposes of providing Matrix Compensation Benefits to those
Class Members eligible to receive such payments, the following
four payment matrices (hereinafter the "Matrices" or "Matrix")
are established:
<TABLE>
Matrix A-1
Age at diagnosis/event
<CAPTION>
Severity =or< 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I $123,750 $117,563 $111,685 $106,100 $100,795 $95,755 $90,967 $86,419
II $643,500 $611,325 $580,759 $551,721 $524,135 $497,928 $473,032 $449,381
III $940,500 $893,475 $848,801 $806,361 $766,043 $727,741 $691,354 $656,786
IV $1,336,50 $1,269,675 $1,206,191 $1,145,881 $1,088,587 $1,034,158 $982,450 $933,327
V $1,485,00 $1,410,750 $1,340,213 $1,273,202 $1,209,542 $1,149,065 $1,091,612 $1,037,031
</TABLE>
<TABLE>
Matrix A-1 (continued)
<CAPTION>
Severity 60-64 65-69 70 - 79
<S> <C> <C> <C>
I $82,098 $73,888 $36,944
II $426,912 $384,221 $192,111
III $623,947 $561,552 $280,776
IV $886,661 $797,995 $398,998
V $985,180 $886,662 $443,331
</TABLE>
Matrix A-2
<TABLE>
Age at diagnosis/event
<CAPTION>
Severity =or< 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $1,250 $1,187 $1,128 $1,072 $1,018 $967 $919 $873 $829 $739 $500
II $6,500 $6,175 $5,866 $5,573 $5,294 $5,030 $4,778 $4,539 $4,312 $3,842 $1,921
III $9,500 $9,025 $8,574 $8,145 $7,738 $7,351 $6,983 $6,634 $6,302 $5,616 $2,808
IV $13,500 $12,825 $12,184 $11,575 $10,996 $10,446 $9,924 $9,428 $8,956 $7,980 $3,990
V $15,000 $14,250 $13,537 $12,861 $12,218 $11,607 $11,026 $10,475 $9,951 $8,867 $4,433
</TABLE>
Matrix B-1
<TABLE>
Age at diagnosis/event
<CAPTION>
Severity =or< 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $24,750 $23,513 $22,337 $21,221 $20,159 $19,152 $18,194 $17,284 $16,420 $14,778 $7,389
II $128,700 $122,265 $116,152 $110,344 $104,827 $99,586 $94,606 $89,876 $85,383 $76,844 $38,422
III $188,100 $178,695 $169,760 $161,272 $153,208 $145,548 $138,270 $131,357 $124,790 $112,310 $56,155
IV $267,300 $253,935 $241,238 $229,176 $217,717 $206,831 $196,489 $186,665 $177,332 $159,599 $79,800
V $297,000 $282,150 $268,043 $254,641 $241,908 $229,813 $218,322 $207,406 $197,036 $177,332 $88,666
</TABLE>
Matrix B-2
<TABLE>
Age at diagnosis/event
<CAPTION>
Severity =or< 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
II $1,300 $1,235 $1,173 $1,115 $1,059 $1,006 $956 $908 $862 $768 $500
III $1,900 $1,805 $1,715 $1,629 $1,548 $1,470 $1,397 $1,327 $1,260 $1,123 $562
IV $2,700 $2,565 $2,437 $2,315 $2,199 $2,089 $1,985 $1,885 $1,791 $1,596 $798
V $3,000 $2,850 $2,707 $2,572 $2,444 $2,321 $2,205 $2,095 $1,990 $1,773 $886
</TABLE>
b. Each Matrix describes the amount which an eligible Class Member
is entitled to recover based on (1) the level of severity of a
Diet Drug Recipient's disease pursuant to Section IV.B.2.c below,
and (2) the age at which the Diet Drug Recipient is first
diagnosed as suffering from that level of disease severity.
c. The levels of disease severity in a Diet Drug Recipient which
qualify eligible Class Members for payment on the Matrices are as
follows:
(1) MATRIX LEVEL I is severe left sided valvular heart disease
without complicating factors, and is defined as one of the
following:
(a) Severe aortic regurgitation (AR) > 49% jet height/left
ventricular outflow tract height (JH/LVOTH)14 and/or
severe mitral regurgitation (MR) > 40% regurgitant jet
area/left atrial area (RJA/LAA)15 16 and no
complicating factors as defined below;
(b) FDA Positive valvular regurgitation14 with bacterial
endocarditis contracted after commencement of
Pondimin(R) and/or Redux(TM) use.
(2) MATRIX LEVEL II is left sided valvular heart disease with
complicating factors, and is defined as:
(a) Moderate AR (25% - 49% JH/LVOTH)18 or Severe AR (> 49%
JH/LVOTH)19 with one or more of the following:
i) Pulmonary hypertension secondary to severe aortic
regurgitation with a peak systolic pulmonary artery
pressure > 40 mm Hg measured by cardiac catheterization
or with a peak systolic pulmonary artery pressure > 45
mm Hg15 measured by Doppler Echocardiography, at rest,
utilizing standard procedures16,17 assuming a right
atrial pressure of 10 mm Hg;
ii) Abnormal left ventricular end-systolic dimension > 50
mm18 by M-mode or 2-D Echocardiography or abnormal left
ventricular end-diastolic dimension > 70 mm19 as
measured by M-mode or 2-D Echocardiography;
iii) Ejection fraction of < 50%20; and/or
(b) Moderate MR (20% - 40% RJA/LAA)21 or Severe MR (> 40%
RJA/LAA)22 with one or more of the following:
i) Pulmonary hypertension secondary to valvular heart
disease with peak systolic pulmonary artery pressure >
40 mm Hg measured by cardiac catheterization or with a
peak systolic pulmonary artery pressure > 45 mm Hg23
measured by Doppler Echocardiography, at rest,
utilizing the procedures described in Section
IV.B.2.c.(2)(a)(i) above;
ii) Abnormal left atrial supero-inferior systolic dimension
> 5.3 cm24 (apical four chamber view) or abnormal left
atrial antero-posterior systolic dimension > 4.0 cm
(parasternal long axis view) measured by 2-D directed
M-mode or 2-D echocardiography with normal sinus rhythm
using sites of measurement recommended by the American
Society of Echocardiography;25
iii) Abnormal left ventricular end-systolic dimension > 45
mm26 by M-mode or - 2-D Echocardiogram;
iv) Ejection fraction of < 60%27; -
v) Arrhythmias, defined as chronic atrial
fibrillation/flutter that cannot be converted to normal
sinus rhythm, or atrial fibrillation/flutter requiring
ongoing medical therapy, any of which are associated
with left atrial enlargement; as defined above in
Section IV.B.2.c.(2)(b)(ii).
(3) MATRIX LEVEL III is left sided valvular heart disease
requiring surgery or conditions of equal severity, and is
defined as:
(a) Surgery to repair or replace the aortic and/or mitral
valve(s) following the use of Pondimin(R) and/or
Redux(TM); or
(b) Severe regurgitation and the presence of ACC/AHA Class
I indications for surgery to repair or replace the
aortic28 and/or mitral29 valve(s) and a statement from
the attending Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist supported by medical
records regarding the recommendations made to the
patient concerning valvular surgery, with the reason
why the surgery is not being performed; or
(c) Qualification for payment at Matrix Level I(b) (as
described in Section IV.B.2.c.(1)(b) above) or Matrix
Level II and, in addition, a stroke due to bacterial
endocarditis contracted after use of Pondimin(R) and/or
Redux(TM) or as a consequence of chronic atrial
fibrillation with left atrial enlargement as defined in
Section IV.B.2.c.(2)(b)(ii) which results in a
permanent condition which meets the criteria of AHA
Stroke Outcome Classification30 Functional Level II,
determined six months after the event.
(4) MATRIX LEVEL IV is defined as follows:
(a) Qualification for payment at Matrix Level I(b) (as
described in Section IV.B.2.c.(1)(b) above), II or III
and, in addition, a stroke due to Bacterial
Endocarditis contracted after use of Pondimin(R) and/or
Redux(TM) or as a consequence of chronic atrial
fibrillation with left atrial enlargement as defined in
Section IV.B.2.c.(2)(b)(ii) which results in a
permanent condition which meets the criteria of AHA
Stroke Outcome Classification31 Functional Level III,
determined six months after the event; or
(b) Qualification for payment at Matrix Level I.b, II, or
III and, in addition, a peripheral embolus due to
Bacterial Endocarditis contracted after use of
Pondimin(R) and/or Redux(TM) or as a consequence of
atrial fibrillation with left atrial enlargement as
defined in Section IV.B.2.c.(2)(b)(ii) which results in
severe permanent impairment to the kidneys, abdominal
organs, or extremities, where severe permanent
impairment means:
i) for the kidneys, chronic severe renal failure requiring
hemodialysis or continuous abdominal peritoneal
dialysis for more than six months;
ii) for the abdominal organs, impairment requiring intra-
abdominal surgery;
iii) for the extremities, impairment requiring amputation of
a major limb; or
(c) The individual has the following:
i) Qualification for payment at Matrix Level III; and
ii) New York Heart Association Functional Class I or Class
II symptoms as documented by the attending
Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist; and
iii) Valvular repair and replacement surgery or
ineligibility for surgery due to medical reasons as
documented by the attending Board- Certified
Cardiothoracic Surgeon or Board-Certified Cardiologist;
and
iv) Significant damage to the heart muscle, defined as: (a)
a left ventricular ejection fraction < 30% with aortic
regurgitation or a left ventricular ejection fraction <
35% with mitral regurgitation in patients who have not
had surgery and meet the criteria of Section
IV.B.2.c.(3)(b) above or (b) a left ventricular
ejection fraction < 40% six months after valvular
repair or replacement surgery in patients who have had
such surgery; or
(d) The individual has had valvular repair or replacement
surgery and has one or more of the following
complications which occur either during surgery, within
30 days after surgery, or during the same hospital stay
as the surgery:
i) Renal failure, defined as chronic, severe renal failure
requiring regular hemodialysis or continuous abdominal
peritoneal dialysis for greater than six months
following aortic and/or mitral valve replacement
surgery;
ii) Peripheral embolus following surgery resulting in
severe permanent impairment to the kidneys, abdominal
organs, or extremities;
iii) Quadriplegia or paraplegia resulting from cervical
spine injury during valvular heart surgery; or
(e) A stroke caused by aortic and/or mitral valve surgery
and the stroke has produced a permanent condition which
meets the criteria of the AHA Stroke Outcome
Classification32 Functional Levels II or III determined
six months after the event;
(f) The individual has had valvular repair or replacement
surgery and suffers from post operative endocarditis,
mediastinitis or sternal osteomyelitis, any of which
requires reopening the median sternotomy for treatment,
or a post-operative serious infection defined as HIV or
Hepatitis C within six months of surgery as a result of
blood transfusion associated with the heart valve
surgery.
(g) The individual has had valvular repair or replacement
surgery and requires a second surgery through the
sternum within 18 months of the initial surgery due to
prosthetic valve malfunction, poor fit, or
complications reasonably related to the initial
surgery.
(5) MATRIX LEVEL V is defined as:
(a) Endocardial Fibrosis (1) diagnosed by (a)
endomyocardial biopsy that demonstrates fibrosis and
cardiac catheterization that demonstrates restrictive
cardiomyopathy or (b) autopsy that demonstrates
endocardial fibrosis and (2) other causes, including
dilated cardiomyopathy, myocardial infarction, amyloid,
Loeffler's endocarditis, endomyocardial fibrosis as
defined in Braunwald (involving one or both ventricles,
located in the inflow tracts of the ventricles,
commonly involving the chordae tendinea, with partial
obliteration of either ventricle commonly present)33,
focal fibrosis secondary to valvular regurgitation
(e.g., "jet lesions"), focal fibrosis secondary to
catheter instrumentation, and hypertrophic
cardiomyopathy with septal fibrosis, have been
excluded; or
(b) Left sided valvular heart disease with severe
complications, defined as Matrix Levels I(b) (as
described in Section IV.B.2.c.(1)(b) above), III or IV
above with one or more of the following:
i) A severe stroke caused by aortic and/or mitral valve
surgery or due to bacterial endocarditis contracted
after use of Pondimin(R) and/or Redux(TM) or as a
consequence of chronic atrial fibrillation with left
atrial enlargement as defined in Section
IV.B.2.c.(2)(b)(ii) and the severe stroke has resulted
in a permanent condition which meets the criteria of
AHA Stroke Outcome Classification34 Functional Levels
IV or V, determined six months after the event;
ii) The individual has the following:
a) Qualification for payment at Matrix Levels III or IV;
and
b) New York Heart Association Functional Class III or
Class IV symptoms as documented by the attending
Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist; and
c) Valvular repair or replacement surgery or ineligibility
for surgery due to medical reasons as documented by the
attending Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist; and
d) Significant damage to the heart muscle, defined as: (i)
a left ventricular ejection fraction < 30% with aortic
regurgitation or a left ventricular ejection fraction <
35% with mitral regurgitation, in patients who have not
had surgery and meet the criteria in Section
IV.B.2.c.(3)(b) above or (ii) a left ventricular
ejection fraction < 40% six months after valvular
repair or replacement surgery in patients who have had
such surgery; or
iii) Heart transplant;
iv) Irreversible pulmonary hypertension (PH) secondary to
valvular heart disease defined as peak-systolic
pulmonary artery pressure > 50 mm Hg35 (by cardiac
catheterization) at rest following repair or
replacement surgery of the aortic and/or mitral
valve(s);
v) Persistent non-cognitive state36 caused by a
complication of valvular heart disease (e.g., cardiac
arrest) or valvular repair/replacement surgery
supported by a statement from the attending
Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist, supported by medical
records; or
(c) Death resulting from a condition caused by valvular
heart disease or valvular repair/replacement surgery
which occurred post-Pondimin(R) and/or Redux(TM) use
supported by a statement from the attending
Board-Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist, supported by medical
records; or
(d) The individual otherwise qualifies for payment at
Matrix Level II, III, or IV and suffers from
ventricular fibrillation or sustained ventricular
tachycardia which results in hemodynamic compromise.
d. The circumstances which determine whether Matrix A-1 or Matrix
B-1 is applicable to a claim for Matrix compensation benefits are
as follows:
(1) FOR MATRIX A-1: Diet Drug Recipients who ingested
Pondimin(R) and/or Redux(TM) for 61 or more days, who were
diagnosed by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of Diet
Drug use and the end of the Screening Period, whose
conditions are eligible for Matrix payments but who do not
have any condition or circumstance which makes Matrix B-1
applicable, or their Representative Claimants, shall be
entitled to receive Matrix Compensation Benefits determined
by application of Matrix A-1, provided that such Diet Drug
Recipients or Representative Claimants have registered (or
are deemed to have registered) for settlement benefits by
Date 2.
(2) FOR MATRIX B-1: Diet Drug Recipients who are eligible for
Matrix Compensation Benefits and to whom one or more of the
following conditions apply, or their Representative
Claimants, will receive Matrix Compensation Benefits
determined by application of Matrix B-1, provided that such
Diet Drug Recipients or Representative Claimants have
registered (or are deemed to have registered) for settlement
benefits by Date 2:
(a) For claims as to the mitral valve, Diet Drug Recipients
who were diagnosed by a Qualified Physician as having
Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use and
the end of the Screening Period (regardless of the
duration of ingestion of Pondimin(R) and/or Redux(TM));
or
(b) Diet Drug Recipients who ingested Pondimin(R) and/or
Redux(TM) for 60 days or less, who were diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period; or
(c) Diet Drug Recipients who ingested Pondimin(R) and/or
Redux(TM) for 61 or more days, who were diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period, with
any of the following conditions:
i) With respect to an aortic valve claim:
a) The following congenital aortic valve abnormalities:
unicuspid, bicuspid or quadricuspid aortic valve,
ventricular septal defect associated with aortic
regurgitation;
b) Aortic dissection involving the aortic root and/or
aortic valve;
c) Aortic sclerosis in people who are > 60 years old as of
the - time they are first diagnosed as FDA Positive;
d) Aortic root dilatation > 5.0 cm;
e) Aortic stenosis with an aortic valve area < 1.0 square
centimeter by the Continuity Equation.
ii) With respect to a mitral valve claim:
a) The following congenital mitral valve abnormalities:
parachute valve, cleft of the mitral valve associated
with atrial septal defect;
b) Mitral Valve Prolapse;
c) Chordae tendineae rupture or papillary muscle rupture;
or acute myocardial infarction associated with acute
mitral regurgitation;
d) Mitral annular calcification;
e) M-Mode and 2-D echocardiographic evidence of rheumatic
mitral valves (doming of the anterior leaflet and/or
anterior motion of the posterior leaflet and/or
commissural fusion), except where a Board-Certified
Pathologist has examined mitral valve tissue and
determined that there was no evidence of rheumatic
valve disease.
iii) With respect to claims for the aortic and/or mitral
valve(s):
a) Heart valve surgery prior to Pondimin(R)and/or
Redux(TM)use on the valve that is the basis of claim;
b) Bacterial endocarditis prior to Pondimin(R)and/or
Redux(TM)use;
c) FDA Positive regurgitation (confirmed by
Echocardiogram) prior to Pondimin(R)and/or Redux(TM)use
for the valve that is the basis of claim;
d) A diagnosis of Systemic Lupus Erythematosus or a
diagnosis of Rheumatoid Arthritis37 and valvular
abnormalities of a type associated with those
conditions;38
e) Carcinoid tumor of a type associated with aortic and/or
mitral valve lesions;
f) History of daily use of methysergide or ergotamines for
a continuous period of longer than 120 days.
e. Matrix A-2 and Matrix B-2 describe the amount of compensation to
which Derivative Claimants are entitled if the Diet Drug
Recipient with whom they are associated has a Matrix-Level
Condition, to the extent that applicable state law recognizes
that they have a claim for loss of consortium, services or
support. Derivative Claimants will be paid based on the
Matrix-Level Condition and age of diagnosis of the Diet Drug
Recipient whose alleged injury forms the basis of their claim for
loss of consortium, services, or support under applicable state
law. Matrix A-2 will apply if the Diet Drug Recipient, whose
alleged injury forms the basis of the claim for loss of
consortium, services, or support under applicable state law,
meets the criteria for payment under Matrix A-1. Matrix B-2 will
apply if the Diet Drug Recipient, whose alleged injury forms the
basis of the claim for loss of consortium, services, or support
under applicable state law, meets the criteria for payment on
Matrix B-1.
f. If a Diet Drug Recipient qualifies for Matrix payments due to
more than one condition, the Diet Drug Recipient and/or his or
her associated Representative and Derivative Claimants who have
registered (or who are deemed to have registered) for settlement
benefits by Date 2 shall be entitled to receive only the higher
of such payments, but not both such payments.
g. Matrices A-1 and B-1 set forth the maximum aggregate amount to
which the Diet Drug Recipient or his or her Representative
Claimants are collectively entitled to receive from Fund B. Where
there is more than one Representative Claimant associated with
any particular Diet Drug Recipient eligible for such Matrix
Compensation Benefits, the Trustees and/or Claims
Administrator(s) shall allocate this amount among all of the
Representative Claimants who have made a claim for such benefits
according to applicable law. Matrices A-2 and B-2 set forth the
maximum aggregate amount to which all Derivative Claimants
associated with any particular Diet Drug Recipient are
collectively entitled to receive from Fund B. Where there is more
than one Derivative Claimant associated with any particular Diet
Drug Recipient eligible for such Matrix Compensation Benefits,
the Trustees and/or Claims Administrator(s) shall allocate the
Matrix amount, pro rata among all of the Derivative Claimants who
have made a claim for such benefits, to the extent that
applicable state law recognizes that they have a claim for loss
of consortium, services or support.
h. Diet Drug Recipients who have been diagnosed by a Qualified
Physician as FDA Positive (but not also as having Mild Mitral
Regurgitation) by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the Screening Period
and have registered for settlement benefits by Date 2, and their
associated Representative and Derivative Claimants who have
registered (or who are deemed to have registered) for settlement
benefits by Date 2, shall be eligible for Matrix payments for
Matrix-Level Conditions resulting from the valve or valves for
which there was an FDA Positive diagnosis by a Qualified
Physician by the end of the Screening Period, subject to the
above provision that if he/she qualifies for more than one
benefit, he/she shall be entitled to the higher benefit, but not
both.
i. Diet Drug Recipients who have been diagnosed by a Qualified
Physician as having Mild Mitral Regurgitation (but not also as
FDA Positive) by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the Screening Period
and have registered for settlement benefits by Date 2, and their
associated Representative and Derivative Claimants who have
registered (or who are deemed to have registered) for settlement
benefits by Date 2, shall be eligible for Matrix payments only
for claims based upon the mitral valve, subject to the above
provision that if he/she qualifies for more than one benefit,
he/she shall be entitled to the higher benefit, but not both.
j. Diet Drug Recipients who have been diagnosed by a Qualified
Physician both as FDA Positive (due to mild or greater aortic
regurgitation) and as having Mild Mitral Regurgitation by an
Echocardiogram performed between the commencement of Diet Drug
use and the end of the Screening Period and who have registered
for settlement benefits by Date 2, and their associated
Representative and Derivative Claimants who have registered (or
who are deemed to have registered) for settlement benefits by
Date 2, shall be eligible for Matrix payments based upon either
the aortic or the mitral valve.
k. Diet Drug Recipients who have been diagnosed by a Qualified
Physician as having Endocardial Fibrosis by September 30, 2005,
and have registered for Matrix Compensation Benefits for
Endocardial Fibrosis by January 31, 2006, and their associated
Representative and Derivative Claimants who have registered (or
who are deemed to have registered) for these settlement benefits
by January 31, 2006, shall be entitled to the Endocardial
Fibrosis benefits as set forth in Sections IV.B.2.a and
IV.B.2.c.(5)(a), regardless of whether or not the Diet Drug
Recipient had valvular regurgitation.
l. A Representative Claimant is deemed to have registered for
settlement benefits either when the Representative Claimant
registers for benefits or, if applicable, as of the date
when the Diet Drug Recipient to which the claim relates has
registered for settlement benefits.
C. PAYMENT PROVISIONS
1. The Matrix payment amounts set forth in Section
IV.B.2.a above will be increased by two percent (2%)
per year, compounded annually, beginning one year after
the Final Judicial Approval Date. In the event that the
Settlement does not receive Final Judicial Approval or
is terminated by AHP in accordance with its terms for
any other reason, then for purposes of providing
benefits to each Class Member who has entered into an
Individual Agreement pursuant to the Accelerated
Implementation Option (described in Section V below),
the Matrix payment amounts shall be increased by 2% per
year, compounded annually, beginning in the second "AIO
Fiscal Year" (as defined in Section I.6 and as
discussed in Section V.H.3 hereof).
2. A "Matrix Payment Cut-Off Date" is established for
purposes of this Settlement. The Matrix Payment Cut-Off
Date shall be a date which is 14 years from the Final
Judicial Approval Date or December 31, 2015, whichever
is earlier. Those Class Members who fail to qualify for
payment on the Matrices by the Matrix Payment Cut-Off
Date shall have no further right to claim benefits
under Fund B or to exercise a Back-End Opt-Out (as
described in Section IV.D.4 below). However, where a
Diet Drug Recipient does qualify for payment on the
Matrices by the Matrix Payment Cut-Off Date, the Diet
Drug Recipient and/or the associated Representative and
Derivative Claimants may continue to receive higher
amounts of Matrix Compensation Benefits, if any, if the
condition of the Diet Drug Recipient which qualified
such person for such payment progresses to a more
severe condition after the Matrix Payment Cut-Off Date.
3. Once a Diet Drug Recipient has reached a Matrix-Level
Condition before the Matrix Payment Cut-Off Date, the
Diet Drug Recipient and any associated Representative
and/or Derivative Claimants can step up to higher
Matrix-Level Conditions and will be paid the
incremental dollar amount, if any, by which the Matrix
payment for the higher Matrix-Level Condition exceeds
the Matrix payment previously received. Notwithstanding
the foregoing, Class Members who seek benefits for
Endocardial Fibrosis must qualify for payment on the
Matrices for that condition by September 30, 2005 and
register (or be deemed to have registered) for Matrix
Compensation Benefits for Endocardial Fibrosis by
January 31, 2006.
4. Prior to the payment of Fund B benefits to any Class
Member, the Trustees and/or Claims Administrator(s)
shall deduct the amount provided for in Section
VIII.E.1.b for the payment of attorneys' fees.
D. OPT-OUT RIGHTS
1. DERIVATIVE CLAIMANTS. As to all opt-outs, where there is
both a Diet Drug Recipient or a Representative Claimant and
one or more Derivative Claimants, the Diet Drug Recipient's
or the Representative Claimant's exercise or failure to
exercise an opt-out right shall be binding on the associated
Derivative Claimant(s).
2. INITIAL OPT-OUT
a. ELIGIBILITY: All Class Members are eligible to exercise
an Initial Opt-Out right.
b. METHOD OF EXERCISE: Each Class Member wishing to opt
out from this Settlement must sign and submit timely
written notice to the Claims Administrator(s), with a
copy to AHP, clearly manifesting the Class Member's
intent to opt out of the Settlement. The Claims
Administrator(s) shall then submit all Opt-Out forms to
the Court. The Court shall be the official registry of
Opt-Outs. This written notice shall be in the form
appended hereto as Exhibit "6" or in a substantially
identical written manifestation of intent. To be
effective, this written notice must be signed and
submitted by the expiration of the Initial Opt-Out
Period. The Parties will recommend that the Court
approve an Initial Opt-Out Period of 120 days from the
date on which class notice commences.
c. EFFECT OF EXERCISE: Any Class Member who timely and
properly exercises an Initial Opt-Out right may
initiate, continue with, or otherwise prosecute any
legal claim against AHP and the Released Parties
without any limitation, impediment or defense arising
from the terms of the Settlement Agreement and subject
to all defenses and rights which AHP and the Released
Parties would otherwise have in the absence of the
Settlement Agreement. AHP agrees that it will not use
the Settlement Agreement or any proceedings connected
therewith to cause delay to any Class Member who timely
and properly exercises his/her Initial Opt-Out right
and initiates, continues with, or otherwise prosecutes
a claim against AHP. Lawsuits initiated by Class
Members who timely and properly exercise an Initial
Opt-Out shall be subject to the provisions of Section
VIII.F.3.
d. REVOCATION OF EXERCISE: Any Class Member may revoke an
election to exercise a right of Initial Opt-Out and
thereby receive the benefits of the Settlement,
provided that the revocation takes place with the
written consent of AHP, which shall not be unreasonably
withheld.
3. INTERMEDIATE OPT-OUT
a. ELIGIBILITY: All Diet Drug Recipients (other than those who
have entered into AIO Individual Agreements pursuant to the
Accelerated Implementation Option) who are not members of
Subclasses 2(a), 2(b) or 3, and who have been diagnosed by a
Qualified Physician as FDA Positive by an Echocardiogram
performed between the commencement of Diet Drug use and the
end of the Screening Period, and their associated
Representative and/or Derivative Claimants, are eligible to
exercise a right to Intermediate Opt-Out
b. METHOD OF EXERCISE: Each Class Member who wants to exercise
a right of Intermediate Opt-Out must do so by completing,
signing, and timely submitting a written notice of the Class
Member's intent to do so in the form appended hereto as
Exhibit "7." This written notice must be submitted to the
Court, the Trustees and/or Claims Administrator(s), and to
AHP, no later than Date 2. In that form, the Class Member
must clearly express his/her desire to exercise a right of
Intermediate Opt-Out, certify that he/she is eligible to do
so, and expressly acknowledge an understanding of the
Settlement rights and benefits that will be relinquished by
the exercise of the Intermediate Opt-Out right. A Class
Member may not exercise an Intermediate Opt-Out right after
receiving either $6,000 in cash or any portion of $10,000 in
medical services in the case of members of Subclass 1(b)
(pursuant to Section IV.A.1.c above), or $3,000 in cash or
any portion of $5,000 in medical services in the case of
members of Subclass 1(a) (pursuant to Section IV.A.2.c
above). If a member of Subclass 1(a) or 1(b) is diagnosed
with a Matrix-Level Condition and exercises an opt-out right
after the end of the Initial Opt-Out Period, the opt-out
shall be deemed a Back-End Opt-Out.
c. EFFECT OF EXERCISE: The Intermediate Opt-Out is subject to
the following provisions. A Class Member who timely and
properly exercises an Intermediate Opt-Out right may pursue
all of his or her Settled Claims (except for those claims
set forth in subparagraphs (e) and (g) of Section I.53),
against the AHP Released Parties and/or the Non-AHP Released
Parties, but may only assert a claim against AHP Released
Parties and/or the Non-AHP Released Parties based on the
heart valve of the relevant Diet Drug Recipient which was
diagnosed by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of Diet
Drug use and the end of the Screening Program. If, at any
time after a Class Member exercises an Intermediate Opt-Out
right, the Class Member initiates a lawsuit seeking to
pursue a Settled Claim against AHP or any other Released
Party, the Released Party shall have the right to challenge,
in such lawsuit only, whether the opt-out was timely and
proper, including whether the Class Member was eligible to
exercise such an opt-out right. With respect to each Class
Member who timely and properly exercises the Intermediate
Opt-Out right and who initiates a lawsuit against any of the
Released Parties within one year from the date on which the
Intermediate Opt-Out right is exercised, the AHP Released
Parties shall not assert any defense based on any statute of
limitations or repose, the doctrine of laches, any other
defense predicated on the failure to timely pursue the
claim, any defense based on "splitting" a cause of action,
any defense based on any release signed pursuant to the
Settlement Agreement, and/or any other defense based on the
existence of the Settlement Agreement, except to the extent
provided herein. A Class Member timely and properly
exercising an Intermediate Opt-Out right may not seek
punitive, exemplary, or any multiple damages against the AHP
Released Parties or the Non-AHP Released Parties; provided,
however, as consideration for being a Non-AHP Released Party
and for receiving the benefit of this waiver of punitive,
exemplary, and multiple damages, the Non-AHP Released Party
must agree in writing not to assert any defense based on any
statute of limitations or repose, the doctrine of laches, or
any other defense predicated on the failure to timely pursue
the claim, any defense based on "splitting" a cause of
action, any defense based on any release signed pursuant to
the Settlement Agreement, and/or any other defense based on
the existence of the Settlement Agreement, except to the
extent provided herein; and provided further that if the
Non-AHP Released Party so agrees, then the Class Member may
not recover more than the total amount of compensatory
damages he or she is entitled to from all persons or
entities in connection with any claimed injury arising from
his/her use of Diet Drugs, except where such limitation is
inconsistent with applicable law. A Class Member timely and
properly exercising an Intermediate Opt-Out right may not
use any previous verdicts or judgments against the AHP
Released Parties, or factual findings necessary to such
verdicts or judgments, for purposes of establishing claims
or facts in order to obtain a verdict or judgment against
the AHP Released Parties under the doctrines of res
judicata, collateral estoppel or other doctrines of claim or
issue preclusion. Nor may a Class Member timely and properly
exercising an Intermediate Opt-Out right seek to introduce
into evidence against the AHP Released Parties, for any
purpose, such a verdict, judgment, or factual finding.
Lawsuits initiated by Class Members who timely and properly
exercise an Intermediate Opt-Out shall be subject to the
provisions of Section VIII.F.3.
4. BACK-END OPT-OUT
a. ELIGIBILITY:
(1) As to Matrix-Level claims based upon valvular
regurgitation, all Diet Drug Recipients (other than
those who have entered into AIO Individual Agreements
pursuant to the Accelerated Implementation Option) who
have been diagnosed by a Qualified Physician as FDA
Positive or as having Mild Mitral Regurgitation by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period, and
who reach a Matrix-Level Condition after September 30,
1999, but before the Matrix Payment Cut-Off Date, and
their associated Representative and/or Derivative
Claimants, may exercise a Back-End Opt-Out right,
provided that the Class Member has registered or is
deemed to have registered for settlement benefits by
Date 2. Class Members who knew prior to September 30,
1999, that they had injury to one or more of their left
side heart valves and a condition which would entitle
them to payments on the Matrices may not exercise a
Back-End Opt-Out.
(2) As to Matrix-Level claims based upon Endocardial
Fibrosis, all Diet Drug Recipients who have not
received the diagnosis of Endocardial Fibrosis from a
Qualified Physician by September 30, 1999, and who have
subsequently been diagnosed by a Qualified Physician as
having Endocardial Fibrosis by September 30, 2005, and
their associated Representative and/or Derivative
Claimants, may exercise a Back-End Opt-Out.
(3) Class Members who are not eligible for Matrix
Compensation Benefits may not exercise the Back-End
Opt-Out right provided by this Settlement.
b. METHOD OF EXERCISE: Each Class Member who wishes to exercise a
right of Back-End Opt-Out must complete, sign, and timely submit
written notice of the Class Member's intention to do so in the
form appended hereto as Exhibit "8." This written notice must be
submitted to the Court, the Trustees and/or Claims
Administrator(s), and to AHP, within 120 days after the date on
which the Class Member first knows or should have known in the
exercise of reasonable diligence that the relevant Diet Drug
Recipient developed a Matrix-Level Condition or by Date 2,
whichever is later. In that notice, the Class Member must clearly
express his or her decision to exercise a Back-End Opt-Out right,
certify that he or she is eligible to do so, and acknowledge an
understanding of the Settlement rights and benefits that will be
relinquished by the exercise of the Back-End Opt-Out. A Class
Member may not exercise a Back-End Opt-Out right after claiming
any Matrix Compensation Benefits.
c. EFFECT OF EXERCISE: The Back-End Opt-Out is subject to the
following provisions. A Class Member who timely and properly
exercises a Back-End Opt-Out may pursue all of his or her Settled
Claims (except for those claims set forth in subparagraphs (e)
and (g) of Section I.53), against the AHP Released Parties and/or
the Non-AHP Released Parties, but may only assert a claim against
the AHP Released Parties and/or the Non-AHP Released Parties as
follows: (i) if such person has opted out by reason of a
Matrix-Level Condition of one or more heart valves diagnosed by a
Qualified Physician as FDA Positive or Mild Mitral Regurgitation
by an Echocardiogram performed between the commencement of Diet
Drug use and the end of the Screening Period, such lawsuit may
only assert a claim based on that heart valve or valves and
condition; and (ii) if such person has opted out by reason of
Endocardial Fibrosis, such lawsuit may only assert a claim based
on Endocardial Fibrosis. If, at any time after a Class Member
exercises a Back-End Opt-Out right, the Class Member initiates a
lawsuit seeking to pursue a Settled Claim against AHP or any
other Released Party, the Released Party shall have the right to
challenge, in such lawsuit only, whether the opt-out was timely
and proper, including whether the Class Member was eligible to
exercise such an opt-out right. With respect to each Class Member
who timely and properly exercises the Back-End Opt-Out right and
who initiates a lawsuit against any of the Released Parties
within one year from the date on which the Back-End Opt-Out right
is exercised, the AHP Released Parties shall not assert any
defense based on any statute of limitations or repose, the
doctrine of laches, any other defense predicated on the failure
to timely pursue the claim, any defense based on "splitting" a
cause of action, any defense based on any release signed pursuant
to the Settlement Agreement, and/or any other defense based on
the existence of the Settlement Agreement, except to the extent
provided herein. A Class Member timely and properly exercising a
Back-End Opt-Out may not seek punitive, exemplary, or any
multiple damages against the AHP Released Parties or the Non-AHP
Released Parties; provided, however, as consideration for being a
Non-AHP Released Party and for receiving the benefit of this
waiver of punitive, exemplary, and multiple damages, the Non-AHP
Released Party must agree not to assert any defense based on any
statute of limitations or repose, the doctrine of laches, or any
other defense predicated on the failure to timely pursue the
claim, any defense based on "splitting" a cause of action, any
defense based on any release signed pursuant to the Settlement
Agreement, and/or any other defense based on the existence of the
Settlement Agreement, except to the extent provided herein; and
provided further that if the Non-AHP Released Party so agrees,
then the Class Member may not recover more than the total amount
of compensatory damages he or she is entitled to from all persons
or entities in connection with any claimed injury arising from
his/her use of Diet Drugs, except where such limitation is
inconsistent with applicable law. A Class Member timely and
properly exercising a Back-End Opt-Out may not use any previous
verdicts or judgments against the AHP Released Parties, or
factual findings necessary to such verdicts or judgments, for
purposes of establishing claims or facts in order to obtain a
verdict or judgment against the AHP Released Parties under the
doctrines of res judicata, collateral estoppel or other doctrines
of claim or issue preclusion. Nor may a Class Member timely and
properly exercising a Back-End Opt-Out right seek to introduce
into evidence against the AHP Released Parties, for any purpose,
such a verdict, judgment, or factual finding. Lawsuits initiated
by Class Members who timely and properly exercise a Back-End
Opt-Out shall be subject to the provisions of Section VIII.F.3.
V. ACCELERATED IMPLEMENTATION OPTION
A. All Class Members shall be offered the option of obtaining settlement
benefits prior to the Final Judicial Approval Date (the "Accelerated
Implementation Option" or "AIO") subject to the conditions defined
below.
B. Any Class Member may elect the AIO at any time from the Preliminary
Approval Date until the Final Judicial Approval Date or, unless AHP
elects to extend the offer date thereafter, the date on which it is
determined that the Settlement Agreement will not receive Final
Judicial Approval. Persons electing the AIO will begin receiving
benefits thereunder at such time as the Trial Court makes an oral or
written ruling on the approval or non-approval of the Settlement or at
such time as AHP exercises its "walkaway rights" pursuant to Section
VII.E hereof. A Derivative Claimant may not elect the AIO if the Diet
Drug Recipient with whom he or she is associated (or the
Representative Claimant of the Diet Drug Recipient) has not elected
the AIO.
C. In order to elect the AIO, a Class Member must complete and sign the
"PINK FORM" appended to this Settlement Agreement as Exhibit "9" and
submit it to the Trustees and/or Claims Administrator(s). Any person
properly executing the "PINK FORM" and delivering it to the Trustees
and/or Claims Administrator(s) during the period in which AHP is
offering the AIO, including any extension of the AIO offer, will have
entered into an individual agreement with AHP, separate from this
Settlement Agreement, under which the parties thereto shall have all
the same rights, benefits and obligations to one another as the
rights, benefits and obligations accorded to Class Members and to AHP
under the Settlement Agreement, except as provided below. Class
Members will have all the rights, benefits and obligations provided in
Section IV.A, IV.B, and IV.C, except for Section IV.A.1.b herein. AHP
will have all the rights, benefits and obligations provided in Section
VII., except subsection E. thereof. Such executed and delivered PINK
FORMS shall be referred to as "Individual Agreements."
D. Such Individual Agreements shall be effective prior to the Final
Judicial Approval Date and, even if AHP exercises its "walkaway right"
under Section VII.E, the Individual Agreements entered into prior to
the date of such exercise shall nevertheless be binding and effective.
If AHP does not exercise its "walkaway right," and the Settlement
Agreement with the Settlement Class does not receive Final Judicial
Approval or is terminated for any other reason, such Individual
Agreements shall nevertheless continue to be effective and binding.
E. No person exercising an Initial Opt-Out right will be eligible to
enter into an Individual Agreement, unless such Initial Opt-Out has
been revoked with AHP's consent pursuant to Section IV.D.2.d hereof.
Persons signing Individual Agreements will, by entering into such
Individual Agreements, knowingly and affirmatively waive all
Intermediate and Back-End Opt-Out rights otherwise provided for by the
Settlement Agreement regardless of whether or not the Settlement
Agreement receives Final Judicial Approval. Notwithstanding the
preceding sentence, Class Members who enter into Individual Agreements
pursuant to the Accelerated Implementation Option will be eligible to
exercise the Financial Insecurity Opt-Out Right described in Section
III.E.9 above. In addition, such persons will agree not to object to
approval of the Settlement by the Court and will agree not to appeal
from Trial Court Approval. The Individual Agreements shall also
provide for a Screening Period to commence on or about the AIO Start
Date and to conclude 12 months after the date on which the Settlement
Agreement obtains Final Judicial Approval or the date on which it is
determined that the Settlement Agreement will not receive Final
Judicial Approval or is otherwise terminated. Persons signing
Individual Agreements pursuant to the AIO shall also agree to be bound
by the provisions contained in Sections VII.C.1 through VII.C.4 herein
with respect to the protection of AHP from claims by Non-Settling
Defendants, notwithstanding the absence of any order enjoining and
barring all Non-Settling Defendants from commencing or prosecuting any
claim against AHP or any other Released Party for contribution and/or
non-contractual indemnity as set forth in Section VII.C.1.a and
Section VII.C.2 herein.
F. After Trial Court Approval or in the event Trial Court Approval is
denied and an appeal from that denial is taken in a timely manner, but
prior to the Final Judicial Approval Date, the following provisions
shall apply:
1. Fund A benefits for individuals accepting the AIO will be payable
only out of Fund A of the Settlement Trust and AHP's obligation
to make payments to Fund A for this and any other purpose shall
be unchanged from that set forth in Section III.B. hereof;
2. Fund B benefits for eligible individuals accepting the AIO will
be payable only out of Fund B of the Settlement Trust. Beginning
on the AIO Start Date, the Trustees may request in writing on a
monthly basis (each a "Request for Fund B AIO Payment") payment
of an amount (such amount being referred to as a "Fund B AIO
Deposit") to pay claims for Fund B benefits by eligible
individuals who have accepted the AIO which have not been paid
due to an insufficient cash balance in Fund B and to pay the
reasonable costs of administration associated with providing such
benefits. AHP shall pay the Fund B AIO Deposit amount so
requested no later than 15 days after the date on which AHP
receives from the Trustees a Request for Fund B AIO Payment
requesting such Fund B AIO Deposit; provided however, that AHP's
obligation to pay Fund B Deposits shall at all times be limited
to the Adjusted Maximum Available Fund B Amount. The payment of
attorneys' fees by AHP in the circumstances described by this
paragraph shall be in accordance with Sections VIII.E.2.,
VIII.E.3. and VIII.E.4.
G. In the event of Final Judicial Approval, all benefits due under the
AIO shall be paid from Fund A or Fund B, as applicable, and AHP shall
continue to have obligations as set forth in Sections III.B and III.C
hereof to make payments to Fund A and Fund B, but AHP shall have no
further obligation to make any Fund B AIO Deposits to Fund B pursuant
to Section V.F above for the payment of such AIO benefits. All
Individual Agreements shall be administered after Final Judicial
Approval in all respects as if they were part of the Settlement, other
than as set forth in Section V.E hereof; provided, however, that all
persons who have entered into Individual Agreements shall be deemed to
have registered for all benefits under the Settlement Agreement. Such
persons will be subject to the requirements for submission of
documentation and other evidence to establish their entitlement to
settlement benefits, including but not limited to submission of the
"GREEN FORM" in order to claim Matrix Compensation Benefits.
H. If Final Judicial Approval is not obtained or if the Settlement
Agreement is terminated by AHP for any reason, the following
provisions shall apply with respect to the Individual Agreements which
have been entered into pursuant to the AIO:
1. The Settlement Trust shall not automatically terminate, but shall
remain in effect to administer the Individual Agreements, subject
to Sections V.H.2, V.H.3, V.H.4 and V.H.5 hereof.
2. Notwithstanding the provisions of Section V.H.1 hereof, within
five Business Days after the date on which Final Judicial
Approval is not obtained or the date on which Settlement
Agreement is terminated for any other reason, the Trustees shall
transfer to AHP all amounts in the Settlement Trust after payment
of any charges and expenses which the Settlement Agreement
expressly authorized or required to be incurred and expended
prior thereto, including any amounts expended to assist in
seeking Final Judicial Approval, except that the Trust shall
retain the sum of $50 million and any additional amount which the
Trustees reasonably determine to be required to provide Fund A
and Fund B benefits to individuals who have qualified for
benefits pursuant to Individual Agreements but have not yet
received them. Thereafter, and subject to any changes negotiated
or determined by arbitration pursuant to Sections V.H.4 and V.H.5
hereof, AHP shall make payments to the Trust on a quarterly basis
of amounts required by the Trust to provide Fund A and Fund B
benefits to individuals who have qualified for such benefits
pursuant to Individual Agreements but have not yet received them
and to maintain a $50 million Administrative Reserve. Such
quarterly payments shall be based upon an AIO Fiscal Year. For
this purpose, AHP agrees to pay into the Settlement Trust such
amount as the Trustees may request in writing on such a quarterly
basis, no later than 15 days after the date on which the Trustees
provide AHP with such a quarterly request, subject to Section
V.H.3 below.
3. AHP's obligations to make payments pursuant to Individual
Agreements, including but not limited to payments to the Trust
pursuant to Section V.F and pursuant to Section V.H.2 above,
shall be subject in the aggregate to the same maximum limitations
on its obligations as would have been applicable to its Fund A
and Fund B obligations to the Settlement Trust had the Settlement
received Final Judicial Approval, subject to the following
modifications:
a. The payment amounts specified in Section III.B.1. hereof
shall be deemed to be AHP's maximum aggregate obligation
pursuant to all Individual Agreements to pay for or
otherwise provide benefits or other amounts which would have
been payable from Fund A had Final Judicial Approval been
obtained and for the cost of administration thereof.
b. In calculating the Adjusted Maximum Available Fund B Amount
(i) the AIO Fiscal Year shall be used in lieu of the Fiscal
Year; and (ii) no deduction shall be made for any Credits
pursuant to Section VII.A or any Cross-Claim Credits
pursuant to Section VII.C hereof.
4. During the 60-day period following the termination of the
Settlement Agreement, AHP and the Class Counsel shall engage in
good faith negotiations with respect to a mechanism to administer
the Individual Agreements in a manner designed to assure that
individuals electing the AIO have the same rights and benefits as
the rights and benefits accorded to Class Members under this
Agreement (except as provided in Section V.E hereof); to reduce
the cost of administering the Individual Agreements to an amount
which is reasonable in relation to the number of such agreements
which have been entered into; and to assure that AHP obtains the
most favorable tax treatment available under those circumstances,
and to assure that AHP receives all information requested by it
to permit it to take appropriate tax deductions and otherwise
calculate its taxes. Such negotiations shall address, without
limitation, the following matters:
a. whether a different mechanism other than the Settlement
Trust should be established for administering the Individual
Agreements; whether such an alternative mechanism is
necessary to reduce the cost of administering the Individual
Agreements to an amount which is reasonable in relation to
the number of such agreements which have been entered into;
or whether the Settlement Trust shall be retained as the
mechanism for administering the Individual Agreements, but
with changes in its structure or level of expenditures;
provided however that the Settlement Trust shall remain in
effect, as modified in accordance with Sections V.H.2 and
V.H.3 above, unless and until such changes or alternative
mechanisms are agreed upon pursuant to this Section V.H.4 or
are determined pursuant to Section H.5;
b. whether and to what extent an alternative means for
resolving disputes in the administration of the Individual
Agreements, including but not limited to disputes as to
whether or not AHP has failed to make any required payment,
should be used in lieu of the resolution of such disputes by
the Court;
c. whether and to what extent changes should be made to the
Security Fund structure and terms (including a reduction in
the amount of collateral and the treatment of the Financial
Insecurity Opt-Out Right) in light of the number of such
agreements which shall have been entered into and to reflect
the different circumstances then in effect;
d. in the event that the Settlement Trust is retained for the
purpose of administering the Individual Agreements, the
amount by which the Administrative Reserve is to be reduced
to reflect the reasonable administrative needs of the Trust
for the purpose of administering the Individual Agreements,
which shall be reasonable in relation to the number of such
agreements which have been entered into.
5. In the event that Class Counsel and AHP are not able to reach
agreement as to any or all of the matters described in Section
V.H.4, such matters shall be resolved by binding arbitration by a
panel of three arbitrators, one of whom shall be selected by AHP,
one of whom shall be selected by Class Counsel and the third of
whom shall be selected by the first two such arbitrators. The
cost of such arbitration shall be paid by the Settlement Trust as
an administrative expense. Such arbitration shall be conducted
under the rules of the American Arbitration Association and shall
be concluded in no more than 60 days after the end of the 60-day
period referred to in Section V.H.4 above, including the
rendering of a decision by the arbitrators.
I. If AHP exercises its "walkaway right" under Section VII.E hereof, the
Individual Agreements previously entered into shall nevertheless be
binding and effective on AHP and the other parties thereto. The
exercise of the "walkaway right" by AHP will not affect its
obligations to those Class Members who have accepted the AIO prior to
AHP's exercise of its "walkaway right" or during any subsequent period
in which AHP continues to offer the AIO, nor those Class Members'
obligations to AHP thereunder.
J. The Parties shall ask the Court to supervise the award of attorneys'
fees relating to the Individual Agreements, as set forth in Section
VIII.E hereof, whether or not the Settlement receives Final Judicial
Approval.
VI. CLAIMS ADMINISTRATION
A. THE INTERIM ESCROW AGENT, INTERIM CLAIMS ADMINISTRATOR(S), CLAIMS
ADMINISTRATOR(S) AND TRUSTEES.
1. In connection with their request for Preliminary Approval of the
Settlement, AHP and the Class Counsel Representative(s) shall mutually
select an Interim Escrow Agent, such selection being subject to
approval by the Court. Until such time as the Court approves the
appointment of Trustees, the Interim Escrow Agent shall have all of
the rights and responsibilities of the Trustees under the Settlement
Agreement with regard to the receipt and investment of Settlement
Funds and any payments which AHP is required to make to the Trustees
shall be paid to the Interim Escrow Agent.
2. In connection with their request for Preliminary Approval of the
Settlement, AHP and the Class Counsel Representative(s) shall request
that the Court approve the appointment of two (2) Interim Claims
Administrators. The Interim Claims Administrators will be nominated by
the Parties, and each nomination will be subject to agreement of the
Parties and subject to approval by the Federal District Court.
3. The Trustees shall consist of seven (7) independent individuals, all
of whom shall be jointly nominated by the Parties and subject to
agreement of AHP and the Class Counsel Representative(s). Four (4) of
the nominees shall be subject to the approval by the Judges who will
participate in the State Court Judicial Advisory Committee referred to
in Sections VIII.B.3-6 of this Agreement. These four Trustees shall
serve for a period ending December 31, 2004. The initial Trustees
shall be those persons named on the signature pages of the Trust
Agreement, and the Trustees who shall serve until December 31, 2004,
shall be designated as such on the signature pages of the Trust
Agreement. Beginning on January 1, 2005, the Trust will be comprised
of three (3) Trustees until the termination of the Trust. All nominee
Trustees shall be subject to the approval of and appointment by the
Federal District Court. AHP and the Class Counsel Representative(s)
shall use their best efforts to assure that such Trustees will be
appointed within 60 days of this Settlement Agreement. If any nominee
is not approved, the Parties shall jointly nominate another nominee,
who will be subject to agreement of AHP and the Class Counsel
Representative(s). If any vacancy occurs among the Trustees, the
successor Trustee, if any, shall be selected in accordance with
Article 3.06 of the Trust Agreement, subject to approval of the Court.
4. The Interim Escrow Agent, Interim Claims Administrator(s), Trustees
and Claims Administrator(s), shall have the following qualifications:
a. The Interim Claims Administrator(s), Trustees and Claims
Administrator(s) shall have relevant medical, financial, legal,
or administrative experience.
b. The following individuals and/or entities, may not be nominated,
approved, or serve as the Interim Escrow Agent or any other
escrow agent appointed hereunder, Interim Claims
Administrator(s), Claims Administrator(s), or Trustees:
i. Past or present officers, directors, agents, or employees of
AHP, Interneuron or Servier, or any successor or any
affiliates thereof.
ii. Past or present officers, directors, agents, or employees of
any manufacturer, seller, wholesaler, or distributor of any
Phentermine hydrochloride or Phentermine resin
pharmaceutical product.
iii. Attorneys or other persons who represent or have represented
or been retained to represent Interneuron, Servier, or any
of the Parties to this Agreement, including but not limited
to, AHP, any Diet Drug Recipients, Representative Claimants
or Derivative Claimants.
iv. Diet Drug Recipients, Class Members, Representative
Claimants, or Derivative Claimants.
v. Persons or entities related to or affiliated with any
attorneys or representatives of Diet Drug Recipients,
Representative Claimants, or Derivative Claimants.
vi. Persons who own any securities of AHP, Interneuron, Servier,
or any successor corporations or any affiliates thereof, or
who have any other financial interest in AHP, Interneuron,
Servier or, any successor corporations or any affiliates
thereof.
vii. Persons who own any securities of any manufacturer, seller,
wholesaler or distributor of any Phentermine hydrochloride
or Phentermine resin pharmaceutical product.
Notwithstanding the foregoing, upon written request and full
disclosure of any and all disqualifications under this
subsection, said disclosed disqualifications may be waived in
writing by the Parties to this Agreement, subject to Court
approval.
5. The rights and duties of the Interim Escrow Agent shall be set forth
in an escrow agreement substantially in the form appended hereto as
Exhibit "10."
6. Until the effective date of the Trust, the Interim Claims
Administrators shall jointly exercise all of the functions which are
to be exercised by the Claims Administrator(s) and/or Trustees under
the terms of this Settlement Agreement, except those functions which
will be exercised by the Interim Escrow Agent. Each Interim Claims
Administrator that was or is a party, or is threatened to be made a
party, to any threatened, pending, or completed action, suit or
proceeding of any kind, whether civil, administrative or arbitrative,
by reason of such Interim Claims Administrator being or having been an
Interim Claims Administrator, shall be indemnified by the Trust
against expenses, costs and fees of attorneys, judgments, awards,
costs, amounts paid in settlement, and liabilities of all kinds
incurred by such Interim Claims Administrator in connection with or
resulting from such action, suit, or proceeding if he or she acted in
good faith and in a manner such Interim Claims Administrator
reasonably believed to be in or not opposed to the best interests of
the Trust and/or the Interim Escrow established pursuant to the
Interim Escrow Agreement contemplated in this Section VI.A. Any
indemnification under this Section VI.A.6 shall be made only upon a
determination by the Court that indemnification of such Interim Claims
Administrator is proper in the circumstances. Reasonable expenses,
costs, and fees of attorneys incurred by or on behalf of an Interim
Claims Administrator in connection with any such action, suit, or
proceeding, whether civil, administrative or arbitrative, may be paid
by the Trust in advance of the final disposition thereof upon receipt
of an undertaking by or on behalf of such Interim Claims Administrator
to repay such amount unless it shall be determined ultimately that
such Interim Claims Administrator or former Interim Claims
Administrator is entitled to be indemnified by the Trust. If any
disbursements are required to be made for indemnification purposes
pursuant to this Section VI.A.6 prior to the effective date of the
Trust, and are ordered to be paid by the Court, the Interim Escrow
Agent shall have the authority to make disbursements from the Interim
Escrow for such purposes. Each Interim Claims Administrator may
purchase and maintain reasonable amounts and types of insurance
against liability asserted against or incurred by such individual in
that capacity or arising from his or her status as an Interim Claims
Administrator. Each Interim Claims Administrator shall have a prior
lien upon the Trust and the Interim Escrow Account to secure the
payment of any amounts payable to such Interim Claims Administrator
pursuant to this Section VI.A.6. The Interim Claims Administrators
shall not be required to post any bond or other form of surety unless
otherwise ordered by the Court.
7. In addition to the duties, obligations and procedures described in
this Settlement Agreement, the Interim Claim(s) Administrator(s) (if
required), Claims Administrator(s) and Trustees shall hire personnel,
including personnel qualified to provide expert medical advice.
8. Until the effective date of the Trust:
a. Disbursements for purposes of paying claims or providing benefits
under the Settlement Agreement shall be made by the Interim
Escrow Agent subject to the direction of the Interim Claims
Administrators; and
b. Disbursements for purposes of claims administration, including
the cost of providing notice to the Settlement Class, shall be
made by the Interim Escrow Agent subject to the joint direction
of AHP and Class Counsel. All disbursements will be subject to
review and approval by the Court.
9. As promptly as possible, after the effective date of the Trust, for
purposes of administering the Settlement Trust:
a. Control over Fund A and Fund B shall be transferred by the
Interim Escrow Agent to the Trustees and upon such transfer, the
Interim Escrow Agent shall cease to have any responsibility for
the future receipt, preservation, maintenance, investment, and
disbursement of the Settlement funds;
b. The Trustees shall have responsibility for each matter entrusted
to the "Trustees and/or Claims Administrator(s)" under the terms
of the Settlement Agreement. Until such time as Claims
Administrator(s) are appointed and approved by the Court
according to Section VI.A.9.c below, the Trustees may delegate
any portion of their responsibility for claims administration to
the Interim Claims Administrator(s);
c. The Trustees shall have responsibility for appointing Claims
Administrator(s) within 120 days of the date on which the
Trustees are appointed by the Court, and the appointment of the
Claims Administrator(s) shall be subject to approval of the
Court. At the time of such approval, the Interim Claims
Administrator(s) shall have no further duties or responsibilities
under the Settlement.
10. The Trustees (and the Interim Claims Administrator(s)) and Interim
Escrow Agent prior to the effective date of the Trust shall make
reports to the Court, AHP, and Class Counsel as follows:
a. Annual Reporting Obligations
(1) On an annual (calendar year) basis, the Trustees shall cause
an audit to be performed by a Certified Public Accountant
upon the calendar year financial statements of each of the
following (each financial statement being prepared in
accordance with generally accepted accounting principles)
and shall issue a report stating the result of each such
audit:
(a) the Settlement Trust and each Fund established
thereunder;
(b) the Security Fund; and
(c) each escrow account then in effect hereunder
(including, as to the Security Fund Escrow Account, the
amounts transferred from the Security Fund upon an
Uncured Failure to Make Payment).
(2) On an annual basis based on the calendar year, the Trustees
shall provide AHP with information sufficient to allow AHP
to calculate in a timely fashion its estimated taxes and
taxes in connection with payments made by AHP to the Trust,
including without limitation the actual payments made by the
Trust.
(3) The Trustees shall provide annual reports for each Fiscal
Year to be sent to AHP and to Class Counsel, reporting,
among other appropriate items, the following:
(i) the total amount paid out of each of Fund A and Fund B
for each category of benefit payable by each such Fund
for that Fiscal Year and cumulatively from the
Preliminary Approval Date;
(ii) the amounts incurred by the Settlement Trust in
administrative expenses and for any other purpose for
that Fiscal Year and cumulatively from the Preliminary
Approval Date, and how such disbursements have been
allocated between Fund A and Fund B;
(iii)the amount of cash and other liquid assets held by the
Settlement Trust at the end of that Fiscal Year;
(iv) the Trustees' calculation of the Fund B amounts paid by
AHP during that Fiscal Year;
(v) the Trustees' calculation of the Adjusted Maximum
Available Fund B Amount as of the end of the Fiscal
Year and appropriate accretions thereto for that Fiscal
Year;
(vi) the Trustees' calculation of the Credits and
Cross-Claim Credits to which AHP became entitled during
that Fiscal Year; and
(vii)the Trustees' calculation of the accumulated Initial
Opt-Out Credits which have become final as of the end
of that Fiscal Year, but which have not yet been
applied to reduce the Adjusted Maximum Available Fund B
Amount.
(4) On an annual (calendar year) basis for each year beginning
one (1) year after Final Judicial Approval, the Trustees
shall issue a report stating the value of Fund B Payment
Matrices payments, which are to be increased 2% per year
compounded annually.
(5) On an annual (calendar year) basis, the Trustees shall cause
an audit to be performed by a health care consulting firm
nominated and agreed to by the Parties and approved by the
Court(s) to conduct an audit regarding the processing of
claims and a report based on that audit shall be prepared by
the health care consulting firm conducting the audit stating
the results of the audit. The purpose of this audit shall be
to ensure that the claims administration process is being
administered in a manner which reasonably ensures that Class
Members who claim benefits are actually entitled to receive
them and that payments are not made to Class Members who are
not entitled to receive them.
b. Quarterly Reporting Obligations
(1) The Trustees shall cause to be prepared at the end of each
of the first three quarters of each calendar year, a
quarterly accounting containing unaudited financial
statements of the Trust as of the end of such quarter,
including without limitation, a balance sheet of the Trust,
a statement of receipts and disbursements, a statement of
profit and loss prepared on an accrual basis, and a
supplementary schedule of investments and assets, listing
both principal and income reported on, subject to normal
year-end adjustments, as to fairness of presentation in
accordance with generally accepted trust accounting
principles consistently applied, by the Trustees or by an
accountant or financial officer or agent regularly employed
the Trust.
(2) On a calendar quarter basis, the Trustees shall provide AHP
with information sufficient to allow AHP to calculate in a
timely fashion its estimated taxes and taxes in connection
with payments made by AHP to the Trust, including without
limitation the actual payments made by the Trust.
(3) On a Fiscal Year quarterly basis, the Trustees shall provide
AHP and the Class Counsel with a report with respect to each
of the items required to be reported annually under Section
VI.A.10.a(3) hereof.
(4) The Trustees shall report, on a quarterly (calendar) basis,
the following:
(a) Opt-Outs.
i) The number and identities of Class Members revoking an
Initial Opt-Out;
ii) The number and identities of Class Members exercising
an Intermediate Opt-Out; and
iii) The number and identities of Class Members exercising a
Back-End Opt-Out.
(b) Accelerated Implementation Option.
i) The number and identities of Class Members electing the
Accelerated Implementation Option;
ii) The number and identities of Initial Opt-Outs who have
revoked such opt-out and have elected the Accelerated
Implementation Option;
iii) All amounts paid to provide Fund A benefits to Class
Members electing the Accelerated Implementation Option;
and
iv) All payments from Fund B to Class Members electing the
Accelerated Implemented Option.
(c) General Registration.
i) The total number of Class Members who have registered
for settlement benefits;
ii) The number of Subclass 1(a) members who have registered
for benefits of any kind, and have not exercised an
opt-out right; and
iii) The number of Subclass 1(b) members who have registered
for benefits of any kind, and have not exercised an
opt-out right;
iv) The number of Subclass 2(a) members who have registered
for benefits of any kind, and have not exercised an
opt-out right;
v) The number of Subclass 2(b) members who have registered
for benefits of any kind, and have not exercised an
opt-out right; and
vi) The number of Subclass 3 members, who have registered
for benefits of any kind, and have not exercised an
opt-out right.
(d) Refund Benefits.
i) The number of Class Members who have registered for
refund benefits for use of Pondimin(R)and/or Redux(TM);
ii) The number of Subclass 1(a) members who have timely
registered for a refund for use of Pondimin(R) and/or
Redux(TM); the number of these Subclass 1(a) members
who qualify for refund; and the number of these
Subclass 1(a) members who do not qualify for refund;
iii) The number of Subclass 2(a) members who have registered
for a refund for use of Pondimin(R) and/or Redux(TM);
the number of these Subclass 2(a) members who qualify
for refund; and the number of these Subclass 2(a)
members who do not qualify for refund; and
iv) Amounts paid from Fund A for refund benefits.
(e) Screening Program Benefits.
i) The number of Class Members who register for Screening
Program benefits;
ii) The number of Subclass 1(a) members who qualify for a
Transthoracic Echocardiogram and association
interpretative physician visit for compassionate and/or
humanitarian reasons;
iii) The amounts paid from Fund A for Transthoracic
Echocardiograms and associated interpretative physician
visits for compassionate and/or humanitarian reasons;
iv) The number of Subclass 1(b) members who have registered
for Screening Program benefits; the number of these
Subclass 1(b) members who qualify for Screening Program
benefits; and the number of these Subclass 1(b) members
who do not qualify for Screening Program benefits; and
v) The number of Subclass 1(b) members who actually
participate in the Screening Program.
(f) Independent Echocardiogram And Associated Interpretive
Physician Visit.
i) The number of Subclass 1(a) members who have obtained
an independent FDA Positive Echocardiogram, and have
registered pursuant to Section IV.A.2.b.(2) to obtain
the lesser of (i) the Trust's direct cost of providing
such an Echocardiogram and an associated interpretive
physician visit under the Screening Program, and (ii)
the actual amount paid by the Class Member for the
Echocardiogam and associated interpretive physician
visit, less amounts paid or reimbursed by an insurance
carrier or other third-party payor; and the amounts
paid from Fund A therefor.
ii) The number of Diet Drug Recipients or Representative
Claimants who have applied pursuant to Section IV.A.3.d
to obtain the lesser of (i) the Trust's direct cost of
providing such an Echocardiogram and an associated
interpretive physician visit under the Screening
Program, and (ii) the actual amount paid by the Class
Member for the Echocardiogram and associated
interpretive physician visit, less amounts paid or
reimbursed by an insurance carrier or other third-party
payor; and the amounts paid from Fund A therefor.
iii) The number of Subclass 1(b) members who have registered
pursuant to Section IV.A.1.b to obtain the lesser of
(i) the Trust's direct cost of providing such an
Echocardiogram and an associated interpretive physician
visit under the Screening Program, and (ii) the actual
amount paid by the Class Member for the Echocardiogram
and associated interpretive physician visit, less
amounts paid or reimbursed by an insurance carrier or
other third-party payor; and the amounts paid from Fund
A therefor.
(g) Valve-Related Medical Services or $6,000 In Cash From
Fund A.
The number of Subclass 1(b) and 2(b) members who have
registered and have obtained an FDA Positive diagnosis by
the end of the Screening Period and have elected to receive
either (i) valve-related medical services up to $10,000 in
value to be provided by the Trust; or (ii) $6,000 in cash
from Fund A; the number electing each; and the amount paid
in cash from Fund A for such.
(h) Valve-Related Medical Services or $3,000 In Cash From Fund
A.
The number of Subclass 1(a) and 2(a) members who have
registered and have obtained an FDA Positive diagnosis by
the end of the Screening Period and have elected to receive
either (i) valve-related medical service up to $5,000 in
value to be provided by the Trust; or (ii) $3,000 in cash
from Fund A; the number electing each; and the amounts paid
in cash from Fund A for such.
(i) Credits To AHP Pursuant To Judgment Or Settlement Of Claims.
All credits to AHP against its Fund B obligations stemming
from payments by AHP, pursuant to judgment or settlement, of
the claims of Initial, Intermediate and/or Back-End
Opt-Outs.
(j) Subrogation Claims.
i) All subrogation claims asserted against the Trust;
identification of subrogation claims approved for
payment; identification of subrogation claims not
approved for payment; and amounts to be paid from Fund
B in resolution of such.
ii) All subrogation claims asserted against AHP and/or
Released Parties.
(k) Accelerated Implementation Option (AIO); Attorneys' Fees And
Costs.
All amounts deposited for individual attorneys' fees and
costs pursuant to the authorized deduction from Fund B
benefits paid to claimants accepting the AIO; the
applications for payment of individual attorneys' fees and
costs from such; and the payments for attorneys' fees and
costs being made from such monies.
(l) Matrix Level Claims.
i) The number of Matrix Level I claims; the number of
Matrix Level I claims approved; the number of Matrix I
claims rejected; and the total amount of Matrix I
claims paid;
ii) The number of Matrix Level II claims; the number of
Matrix Level II claims approved; the number of Matrix
II claims rejected; and the total amount of Matrix II
claims paid;
iii) The number of Matrix Level III claims; the number of
Matrix Level III claims approved; the number of Matrix
III claims rejected; and the total amount of Matrix III
claims paid;
iv) The number of Matrix Level IV claims; the number of
Matrix Level IV claims approved; the number of Matrix
IV claims rejected; and the total amount of Matrix IV
claims paid; and
v) the number of Matrix Level V claims; the number of
Matrix Level V claims approved; the number of Matrix V
claims rejected; and the total amount of Matrix V
claims paid.
(m) Assignment Of Indemnity Rights.
The indemnity rights of AHP against Class Members assigned
by AHP to the Trustees for which AHP receives a credit
against its Fund B obligations, including the amount
thereof.
c. Periodic Reporting Obligations.
(1) The Trustees and/or Claims Administrator(s) shall
report within five (5) Business Days all AHP payments
into the Settlement Trust, including but not limited
to:
(a) All AHP payments deposited into Fund A;
(b) All AHP payments deposited into Fund B; and
(c) All requests for additional cash deposits into Fund B
and payments deposited in accordance with each request.
(2) The Trustees and/or Claims Administrator(s) shall
report within five (5) Business Days an Uncured Failure
To Make Payment by AHP.
(3) At the conclusion of the Initial Opt-Out Period, the
Trustees and/or Claims Administrator(s) shall report
within fifteen (15) Business Days the number and
identities of Class Members exercising an Initial
Opt-Out.
11. The Trustees shall have the duty to administer and resolve
all Claims according to the terms of this Agreement, while
minimizing the costs of administration of the Trust
associated with the processing and resolution of Claims and
the operations of the Trust.
B. NOTICE.
1. Within ten (10) days of the execution of this Settlement
Agreement, the parties shall apply to the Court for an Order
in the form appended hereto as Exhibit "11":
a. Granting Preliminary Approval of the Settlement;
b. Approving the appointment of Interim Claims
Administrator(s) and an Interim Escrow Agent pursuant
to Section VI.A.2 and Section VI. A.1;
c. Approving a written notification to the Settlement
Class which shall contain A Class Member's Guide to
Settlement Benefits (Exhibit "12"), an Official Court
Notice Package (Exhibit "13"), and a Matrix
Compensation Benefits Guide for Physicians, Attorneys
and Class Member (Exhibit "14");
d. Approving a summary publication notice to the
Settlement Class in the form appended hereto as Exhibit
"15";
e. Approving the establishment of and maintenance of a
"1-800" telephone number and website to receive
requests from Class Members for written notice;
f. Directing written notice to all those Class Members
whose names and addresses are known or presently
knowable to the Parties as a result of:
(1) The filing of legal claims by Class Members against
AHP;
(2) The creation and maintenance of a database of Class
Members who registered to receive benefits pursuant to
a proposed limited fund Class Action Settlement with
Interneuron Pharmaceuticals, Inc. in Sharyn Wish v.
Interneuron Pharmaceuticals, Inc., Civil Action No.
98-CV-20594 (E.D. Pa.);
(3) The establishment and operation of the "1-800-386-2070"
telephone number and www.settlementdietdrugs.com
website incident to the publication of the Memorandum
of Understanding which was executed among the Parties
on October 7, 1999;
(4) Any database within the possession, custody, or control
of AHP which reflects the names and addresses of Class
Members;
(5) Any database which is readily obtainable from any
pharmacy chain which reflects the names and addresses
of Class Members;
g. Directing that the person or entity who will mail the
individual notices shall have access to the names and
addresses of individuals who requested the mailing of
individual notices to them by contacting
"1-800-386-2070" and www.settlementdietdrugs.com;
h Directing that all names and addresses of Class Members
collected for the purpose of providing notice shall be
kept strictly confidential and shall not be disclosed
to any person or used for any purpose other than for
issuance of notice to Class Members upon prior order of
the Court;
i. Authorizing Publication Notice in the form appended
hereto as Exhibit "15" in accordance with the Plan of
Media Notice appended hereto as Exhibit "16";
j. Authorizing television notice in accordance with the
Script of Television Notice appended hereto as Exhibit
"17," and in accordance with the Plan of Media Notice
appended hereto as Exhibit "16";
k. Authorizing the distribution of Summary Notice to
Physicians in the form appended hereto as Exhibit "18,"
to physicians for display to their patients; and
l. Authorizing the distribution of Summary Notice to
Pharmacists in the form appended hereto as Exhibit "5,"
to pharmacists for display to their customers.
2. The Claims Administrator(s) and/or the Interim Claims
Administrator(s) shall maintain a list of the names and addresses
of each person to whom written notice was transmitted in
accordance with any order entered by the Court pursuant to the
preceding paragraph of this Settlement Agreement (hereinafter
"the Notice List"). These names and addresses shall be kept
strictly confidential and shall be used only by appropriate
persons for administrative purposes of the Trust, except on prior
order of the Court.
3. Within forty-five (45) days after Final Judicial Approval, the
Trustees and/or Claims Administrator(s) shall transmit a written
notice to all individuals whose names and addresses are contained
in the Notice List advising all recipients of the notice that the
Settlement has received Final Judicial Approval, advising all
Class Members of the day on which Date 1 falls, advising the
recipients of the notice that Class Members in Subclasses 1(a)
and 1(b) must Register to receive Refund and/or Screening Program
benefits from Fund A by Date 1 and that Class Members in
Subclasses 2(a) and 2(b) must register to receive Refund Benefits
from Fund A by Date 1, advising all recipients of the notice of
the period of time in which Date 2 may fall, and advising all
recipients of the notice that if they wish to receive Matrix
Compensation Benefits in the future they must be registered as
having Mild Mitral Regurgitation or an FDA Positive level of
valvular regurgitation by Date 2. This notice shall also contain
information concerning the rights of certain Class Members to
exercise Intermediate and Back-End Opt-Outs. It shall contain the
BLUE FORM, GREEN FORM and Intermediate and Back-End Opt-Out forms
as described below, which will allow Class Members the
opportunity to register for settlement benefits or exercise
Intermediate or Back-End Opt-Out rights. In addition, it will
advise members of Subclass 1(a) of their right to obtain payment
of the net cost of any FDA Positive Echocardiogram which they may
have had during the Screening Period but independent of the
Screening Program pursuant to the terms and conditions of
Sections IV.A.2.b(2) and shall provide Class Members with the
WHITE FORM appended hereto as Exhibit "19" in order to make a
claim for such benefits. It will also advise members of Subclass
1(b) of their right to obtain payment of the net cost of a
Transthoracic Echocardiogram obtained independent of the
Screening Program performed after the end of the Initial Opt-Out
Period but before the Final Judicial Approval Date, pursuant to
the terms and conditions of Section IV.A.1.b and shall provide
Class Members with the WHITE FORM appended hereto as Exhibit "19"
in order to make a claim for such benefits. It will also advise
Diet Drug Recipients who had an Echocardiogram and associated
interpretive visit after the commencement of Diet Drug use, or
their Representative Claimants, of their right to seek
reimbursement of the net cost of the Echocardiogram and
associated interpretive visit, pursuant to and subject to the
limitations of, the terms and conditions of Section IV.A.3.d, and
shall provide Class Members with the WHITE FORM appended to the
Settlement Agreement as Exhibit "19" in order to make a claim for
such benefits. The Parties shall prepare this class notice for
Court approval. The notice shall reflect the fact that the
Settlement Agreement has been approved, that there are no further
rights to object to the Settlement, and that there is no longer
any Initial Opt-Out right in effect.
4. Three (3) months prior to Date 2, the Trustees and/or Claims
Administrator(s) shall transmit a written notice to all
individuals whose names and addresses are contained in the Notice
List advising all recipients of the notice of the day on which
Date 2 falls and advising all recipients of the notice, that if
they wish to receive Matrix Compensation Benefits in the future
they must be registered as having Mild Mitral Regurgitation or an
FDA Positive level of valvular regurgitation by Date 2. This
notice shall also contain information concerning the rights of
certain Class Members to exercise Intermediate and Back-End
Opt-Outs. It shall contain the BLUE FORM, the GREEN FORM and
Intermediate and Back-End Opt-Out forms, as described below,
which will allow Class Members the opportunity to register for
settlement benefits or exercise Intermediate or Back-End Opt-Out
rights. In addition, it will advise members of Subclass 1(a) of
their right to obtain payment of the net cost of any FDA Positive
Echocardiogram which they may have had during the Screening
Period but independent of the Screening Program pursuant to the
terms and conditions of Section IV.A.2.b(2) and shall provide
Class Members with the WHITE FORM appended hereto as Exhibit "19"
in order to make a claim for such benefits. It will also advise
members of Subclass 1(b) of their right to obtain a limited
refund of the net cost of any Transthoracic Echocardiogram
obtained independent of the Screening Program after the end of
the Initial Opt-Out Period but before the Final Judicial Approval
Date, pursuant to the terms and conditions of Section IV.A.1.b
and shall provide Class Members with the WHITE FORM appended
hereto as Exhibit "19" in order to make a claim for such
benefits. The Parties shall prepare this class notice for court
approval. The notice shall reflect the fact that the Settlement
has been approved, that there are no further rights to object to
the Settlement, and that there is no longer any Initial Opt-Out
right in effect, and that the time to register for the Screening
Program has been completed.
C. CLAIMS ADMINISTRATION AND CRITERIA FOR BENEFITS DETERMINATIONS.
1. ECHOCARDIOGRAM CRITERIA.
a. Where a Diet Drug Recipient has had an Echocardiogram
between the commencement of Diet Drug use and September 30,
1999, the results of that Echocardiogram as contained in the
written report issued by a Qualified Physician shall be used
by the Trustees/Claims Administrator(s) to determine the
level of mitral and/or aortic valvular regurgitation for
that Diet Drug Recipient as of the date of the
Echocardiogram for purposes of Fund A benefits
determinations under the Settlement Agreement, except (i)
where the report of the Echocardiogram does not clearly
state the level of valvular regurgitation for the mitral
and/or aortic valves or (ii) where in an audit conducted
pursuant to Section VI.E, it is determined that the
conclusions of the written report are not supported by the
videotape or disk of the Echocardiogram or a Board-Certified
Cardiothoracic Surgeon.
Such an Echocardiogram shall not be used to qualify a Diet
Drug Recipient for Matrix Compensation Benefits unless, upon
re-reading, it is determined (i) that prior to the end of
the Screening Period, the Diet Drug Recipient met the
definition for "FDA Positive" set forth in Section I.22.b
and (ii) the Echocardiogram met the criteria set forth in
Section VI.C.1.b below. Such a determination may be made by
the Trustees and/or Claims Administrator(s) upon submission
of a GRAY FORM (appended hereto as Exhibit "20") which has
been completed by a Board-Certified Cardiologist.
b. Each Echocardiogram performed after September 30, 1999,
which is used to determine whether the condition of a Diet
Drug Recipient qualifies a Class Member for Fund A or Fund B
(Matrix) settlement benefits, shall be one which was:
(1) conducted in accordance with the standards and criteria
as outlined in Feigenbaum (1994)39 or Weyman (1994);40
(2) evaluated following the grading system of valvular
regurgitation defined in Singh (1999);41
(3) conducted by a Diagnostic Cardiac Sonographer who is
able to produce and evaluate ultrasound images and
related data used by physicians to render a medical
diagnosis; and
(4) conducted under the supervision of, and read and
interpreted by, a Board-Certified Cardiologist or
Board-Certified Cardiothoracic Surgeon with level 2
training in echocardiography as specified in the
Recommendations of the American Society of
Echocardiography Committee on Physician Training in
Echocardiography.42
c. A Diet Drug Recipient who demonstrates to the Trustees and/or
Claims Administrator(s) that he or she had an Echocardiogram
conducted between September 30, 1999 and the date of commencement
of Class Notice which a Qualified Physician reported as showing
that he or she had FDA Positive regurgitation shall not be
disqualified from receiving settlement benefits if the
Echocardiogram does not meet all of the requirements of Section
VI.C.1.b above.
d. A claimant who qualifies for a particular Matrix payment, by
virtue of a properly interpreted Echocardiogram showing the
required levels of regurgitation and/or complicating factors,
after exposure to fenfluramine and/or dexfenfluramine, shall not
be disqualified from receiving that Matrix payment in the event
that a subsequent Echocardiogram shows that the required levels
of regurgitation and/or complicating factors are no longer
present.
2. CLAIMS INFORMATION.
a. Each Claim for Benefits under the Settlement Agreement shall be
made on one of two forms signed and submitted to the Trustees
and/or Claims Administrator(s), as follows:
(1) The "PINK FORM" appended to the Settlement Agreement as
Exhibit "9" shall be used by Class Members who want to elect
the AIO; and
(2) The "BLUE FORM" appended to the Settlement Agreement as
Exhibit "21" shall be used by all other Class Members who
wish to make a claim for the benefits available under the
Settlement Agreement.
b. Submission of a PINK FORM or BLUE FORM that has not been fully
completed shall be sufficient to "register" the Class Member for
benefits, provided, however, that the missing information must be
submitted in order for the Class Member to receive any benefits
under this Settlement Agreement.
c. In addition, each person who wants to make a claim for Matrix
Compensation Benefits under Section IV.B of the Settlement
Agreement or pursuant to the AIO must complete and submit to the
Trustees and/or Claims Administrator(s) the "GREEN FORM" which is
appended to this Settlement Agreement as Exhibit "22."
d. In order to complete the submission of a Claim and to qualify for
any benefits under the Settlement Agreement, each Class Member
must submit documentary proof to the Trustees and/or Claims
Administrator(s) of the period of time for which the Diet Drugs
Pondimin(R) and/or Redux(TM) were prescribed and dispensed to the
Diet Drug Recipient who is the subject of the Claim. This proof
must include one of the following:
(1) If the diet drug was dispensed by a pharmacy, the identity
of each pharmacy that dispensed Diet Drugs to the Diet Drug
Recipient, including its name, address, and telephone
number, and a copy of the prescription dispensing record(s)
from each pharmacy, which should include the medication
name, quantity, frequency, dosage and number of refills
prescribed, prescribing physician's name, assigned
prescription number, original fill date and each subsequent
refill date; or,
(2) If the diet drug was dispensed directly by a physician or
weight loss clinic, or the pharmacy record(s) is
unobtainable, the identity of each prescribing physician,
including the prescribing physician's name, address, and
telephone number and a copy of the medical record(s)
prescribing or dispensing the diet drug(s). The medical
record(s) must include records which identify the Diet Drug
Recipient, the Diet Drug name, the date(s) prescribed, the
dosage, and duration the drug was prescribed or dispensed;
(3) If the pharmacy records and medical records are
unobtainable, an affidavit under penalty of perjury from the
prescribing physician or dispensing pharmacy identifying the
Diet Drug Recipient, the drug(s) prescribed or dispensed,
the date(s), quantity, frequency, dosage and number of
prescriptions or refills of the Diet Drug(s).
e. In order to complete the submission of a Claim and qualify for
Fund A benefits under the Settlement Agreement, where a Class
Member relies on a result of an Echocardiogram to establish that
a Diet Drug Recipient had FDA Positive levels of regurgitation by
the end of the Screening Period and where that Echocardiogram
took place between the commencement of Diet Drug use and
September 30, 1999, the Class Member must provide the Trustees
and/or Claims Administrator(s) with a copy of the report of the
results of the Echocardiogram and the videotape or disk of the
Echocardiogram. In order to complete the submission of a Claim
and qualify for Matrix Compensation Benefits under the Settlement
Agreement, where a Class Member relies on a result of an
Echocardiogram to establish that a Diet Drug Recipient had FDA
Positive levels of regurgitation or Mild Mitral Regurgitation by
the end of the Screening Period and where that Echocardiogram
took place between the commencement of Diet Drug use and
September 30, 1999, the Class Member must provide the Trustees
and/or Claims Administrator(s) with a copy of the report of the
results of the Echocardiogram and the videotape or disk of the
Echocardiogram and a certification from a Qualified Physician on
the GRAY FORM which is appended to the Settlement Agreement as
Exhibit "20" or a certification regarding the results of the
Echocardiogram on the GREEN FORM which is appended to the
Settlement Agreement as Exhibit "22.". If the Class Member does
not have custody of such videotape or disk, the Class Member must
submit an executed authorization which will allow the Trustees
and/or Claims Administrator(s) to obtain a videotape or disk of
the Echocardiogram from the physician or health care provider who
has custody of such videotape or disk as a condition to
considering the Class Member's Claims for Benefits. If the
videotape or disk is no longer in existence, the Class Member
must supply an affidavit under penalty of perjury from the person
who last had custody of the videotape or disk stating that the
videotape or disk is no longer in existence and describing the
circumstances under which it came to be misplaced or destroyed.
f. In order to complete the submission of a Claim and qualify for
benefits under the Settlement Agreement, where a Class Member
relies on the results of an Echocardiogram to establish that a
Diet Drug Recipient had FDA Positive regurgitation levels of
regurgitation or Mild Mitral Regurgitation by the end of the
Screening Period and where that Echocardiogram took place after
September 30, 1999, and where that Echocardiogram took place
outside of the Screening Program, the Class Member must report
the results of the Echocardiogram to the Trustees and/or Claims
Administrator(s) in the form of a certification from a
Board-Certified Cardiologist on the GRAY FORM which is appended
to the Settlement Agreement as Exhibit "20," or a certification
regarding the results of the Echocardiogram on the GREEN FORM
which is appended to the Settlement Agreement as Exhibit "22,"
and provide the Trustees and/or Claims Administrator(s) with a
copy of the videotape or disk which reflects the results of the
Echocardiogram. If the Class Member does not have custody of such
videotape or disk, the Class Member must submit an executed
authorization which will allow the Trustees and/or Claims
Administrator(s) to obtain a videotape or disk of the
Echocardiogram from the physician or health care provider who has
custody of such videotape or disk as a condition to considering
the Class Member's Claim for Benefits. If the videotape or disk
is no longer in existence, the Class Member must supply an
affidavit under penalty of perjury from the person who last had
custody of the videotape or disk stating that the videotape or
disk is no longer in existence and describing the circumstances
under which it came to be misplaced or destroyed.
g. Each Cardiologist who is responsible for performing
Echocardiograms pursuant to the Screening Program provisions of
the Settlement Agreement shall report the results of those
Echocardiograms to the Trustees and/or Claims Administrator(s) on
the "GRAY FORM" which is appended to the Settlement Agreement as
Exhibit "20" and shall supply a copy of the videotape or disk of
the results of the Echocardiogram to the Claims Administrator(s)
and/or Trustees. If a Class Member submits to the Trustees and/or
Claims Administrators a GREEN FORM with the Doctor's Evaluation
Form in Part II of such Form (or the equivalent section of the
GREEN FORM in any subsequent printing of such forms) properly
completed and signed by a Board-Certified Cardiologist or
Cardiothoracic Surgeon, that Class Member and Board-Certified
Cardiologist or Cardiothoracic Surgeon are not required to submit
a GRAY FORM to report on the same Echocardiogram referenced in
such GREEN FORM. If, however, a Cardiologist submits a GRAY FORM
reporting on an Echocardiogram performed on a Class Member, in
order to seek Matrix Compensation Benefits, such Class Member
must submit a complete GREEN FORM, including the Doctor's
Evaluation Form in Part II (or its equivalent in any subsequent
printings) completed and signed by a Board-Certified Cardiologist
or Cardiothoracic Surgeon.
h. In order to complete the submission of a claim and qualify for
benefits under the Settlement Agreement, each Class Member who
submits a claim as a Representative Claimant must supply the
Trustees and/or Claims Administrator(s) with written proof that
such person has legal authority to act in a representative
capacity.
i. In order to complete submission of a Claim for reimbursement of
the actual amount paid for an Echocardiogram by a Class Member
pursuant to Sections IV.A.1.b, IV.A.2.b.(2), or IV.A.3.d above, a
Class Member must submit the following documents:
(1) A copy of the report of the Echocardiogram;
(2) A copy of the bill or invoice reflecting the charges for the
Echocardiogram; and
(3) A copy of the cancelled check or other documentary evidence
of the amount actually paid by the Class Member for the
Echocardiogram.
j. In order to complete the submission of a Claim by a Class Member
who has ingested Pondimin(R) and/or Redux(TM) for 60 days or less
to receive an Echocardiogram and interpretive physician visit for
compassionate and humanitarian reasons pursuant to the provisions
of Section IV.A.2.b(3), the Class Member must submit documentary
proof supporting the Claim that there are compassionate and
humanitarian reasons which would justify the Trustees and/or
Claims Administrator(s) to exercise their discretion to provide
the Diet Drug Recipient with the benefit of a Transthoracic
Echocardiogram and associated interpretive physician visit.
k. In order to complete the submission of a claim and qualify to
receive an Echocardiogram after Trial Court Approval but prior to
Final Judicial Approval by reason of "true financial hardship"
pursuant to Section IV.A.3.c of the Settlement Agreement, a Diet
Drug Recipient must provide the Trustees and/or Claims
Administrator(s) with documentary proof of the Diet Drug
Recipient's financial situation including a copy of the Diet Drug
Recipient's most recent federal income tax return or other
documentary proof of the Diet Drug Recipient's income where the
Diet Drug Recipient submits a sworn declaration, under oath, that
he or she has not filed such tax returns.
3. GENERAL CLAIMS PROCESSING PROCEDURES AND THE REGISTRY.
a. Within thirty (30) days of the date on which the Trustees and/or
Claims Administrator(s) receive a Claim for Benefits from a Class
Member, the Claims Administrator(s) shall:
(1) assign a unique identifying number to the Claim;
(2) review the Claim which has been submitted, together with
supporting documentation, and determine whether the Claim is
complete or requires a submission of additional information
to make it complete;
(3) confirm that any required physician certification submitted
in support of a claim for Matrix Compensation Benefits was
submitted by a physician who actually is a Board-Certified
Cardiologist, Cardiothoracic Surgeon, Pathologist,
Neurologist or Neurosurgeon; and
(4) inform the Class Member, in writing, of the unique
identifying number assigned to the Class Member's Claim and
the information which the Class Member must submit to the
Trustees and/or Claims Administrator(s), if any, in order
for the claim to be completed and ready for processing.
During the first full twelve (12) calendar months following
the AIO Start Date, the Trustees and/or Claims
Administrator(s) shall take these actions within sixty (60)
days of the date on which they receive a Claim for Benefits
from a Class Member, rather than the thirty-day period
stated above.
b. With respect to each Claim submitted by a Class Member as part of
the claims administration process, the Trustees and/or Claims
Administrator(s) shall afford each Class Member at least three
(3) separate opportunities to supply any missing or omitted
information and documentation which are necessary to support a
Claim for Benefits under the Settlement Agreement.
c. All information submitted by Class Members to the Trustees and/or
Claims Administrator(s) shall be recorded in a computerized
database suitable for use with standard medical research software
such as SAS and for all purposes of claims administration. This
database, throughout the duration of its use, shall be kept in a
form that can be accessed and read, which may in the future
involve, as evolving technology warrants, placing the information
in a more modern database.
d. The database created pursuant to the preceding paragraph shall be
maintained as a "Registry" for purposes of administering the
Settlement and for purposes of medical education and research.
After taking appropriate steps to maintain the confidentiality of
Class Members, the Trustees and/or Claims Administrator(s) shall
make the database, or any portion thereof, available to qualified
scientists, physicians, and other researchers subject to the
following conditions:
(1) First, the Trustees and/or Claims Administrator(s) shall
make the deidentified43 database available only to such
persons who:
(a) provide the Trustees and/or Claims Administrator(s)
with written proof of their training, qualifications,
and experience to conduct medical or scientific
research;
(b) provide a research protocol setting forth the purposes
for which they seek access to the Registry/database,
their research methodology, source of funding, a
description of how the proposed research will benefit
the Settlement Class and any other information that may
be requested by the Trustees and/or Claims
Administrator(s);
(c) undertake, in writing, to use the information which
they receive from the Registry/database solely for
medical, scientific, and educational purposes and not
to disclose confidential information concerning any
Class Member in the event that they should
inadvertently come into possession of such confidential
information through their access to the database;
(d) undertake, in writing, to provide, upon completion of
the research, the Trustees and/or Claims
Administrator(s), the Court, AHP, and Class Counsel
with a copy of any published or unpublished abstract,
article, or report which is based, in whole or in part,
on the information contained in the Registry/ database;
and
(e) undertake, in writing, not to testify at any time on
behalf of any party in any lawsuit relating to the use
of Pondimin(R)and/or Redux(TM).
(2) Second, the Trustees and/or Claims Administrator(s) shall
make the deidentified database, or any portion thereof,
available to qualified scientists, physicians, and other
researchers only when, considering the training,
qualifications and experience of such persons and the
purposes for which they seek access to the
Registry/database, the Trustees and/or Claims
Administrator(s) form a reasoned opinion that disclosure of
database information to any given scientist, physician, or
other researcher will be beneficial to the Settlement Class.
e. Copies of all videotapes and disks of Echocardiograms submitted
by or on behalf of Diet Drug Recipients to the Trustees and/or
Claims Administrator(s) shall be preserved and maintained. Copies
of these videotapes and disks shall be available to qualified
scientists, physicians, and other researchers subject to the
conditions stated in Section VI.C.3.d above, and subject to the
following additional conditions:
(1) In making copies of videotapes and disks to be provided to
qualified scientists, physicians and other researchers for
purposes of medical and scientific research, the Trustees
and/or Claims Administrator(s) shall redact all information
identifying the Diet Drug Recipient who was the subject of
the Echocardiogram; and
(2) The Trustees and/or Claims Administrator(s) shall require
that the scientists, physicians, and/or other researchers
requesting a copy of the videotapes pay all costs reasonably
incurred by the Trustees and/or Claims Administrator(s) in
making copies of the videotapes and in redacting patient
identifying information from the videotapes as a condition
to receiving copies thereof.
f. In making arrangements for the disclosure of information
contained in the Medical Registry/database, the Trustees and/or
Claims Administrator(s) shall assure that an alpha-numeric
designation is used for each claimant and that the name, address,
telephone number, social security number, e-mail address, and
other personal identifying information pertaining to the Diet
Drug Recipient and/or Class Member is not disclosed.
g. PROCESSING CLAIMS FOR SCREENING PROGRAM BENEFITS FOR SUBCLASS
1(B) MEMBERS:
(1) Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a completed
Claim which adequately documents that a Diet Drug Recipient
is a member of Subclass 1(b), the Trustees and/or Claims
Administrator(s) shall certify that the Diet Drug Recipient
is eligible for a Transthoracic Echocardiogram and
associated interpretive physician visit in the Screening
Program pursuant to Section IV.A.1.a. or Section IV.A.3.c of
this Settlement Agreement and shall furnish to the Diet Drug
Recipient the appropriate documentation and information to
receive such benefits and will provide those benefits in
accordance with the timetable set forth in Section VI.C.3.m,
below.
(2) Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a completed
Claim which adequately documents that a Diet Drug Recipient
is a member of Subclass 1(b) and which requests payment of
the net cost of an Echocardiogram pursuant to Section
IV.A.1.b, the Trustees and/or Claims Administrator(s) shall
determine whether the Diet Drug Recipient is entitled to
such payment, and if so, the amount of such payment. The
Trustees and/or Claims Administrator(s) shall provide such
payments in accordance with the timetable set forth in
Section VI.C.3.m, below. If the Trustees and/or Claims
Administrator(s) deny such a claim, they shall send the Diet
Drug Recipient written notification of that decision and the
reasons therefor within this forty-five (45) day period.
h. PROCESSING CLAIMS FOR SCREENING PROGRAM BENEFITS FOR SUBCLASS
1(A) MEMBERS:
(1) Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a completed
Claim which adequately documents that a Diet Drug Recipient
is a member of Subclass 1(a) and requests a Transthoracic
Echocardiogram and associated interpretive physician visit
pursuant to Section IV.A.2.b or Section IV.A.3.c of the
Settlement Agreement, the Trustees and/or Claims
Administrator(s) shall promptly transmit to each such person
the BROWN FORM, appended to the Settlement Agreement as
Exhibit "23." The BROWN FORM explains the circumstances
under which such Diet Drug Recipients may receive a
Transthoracic Echocardiogram and associated interpretive
physician visit and allows them to make a request for that
benefit by completing, signing and submitting the form,
together with supporting documentation, to the Trustees
and/or Claims Administrator(s). Within forty-five (45) days
after receiving a completed BROWN FORM, the Trustees and/or
Claims Administrator(s) shall make a determination
concerning whether the Diet Drug Recipient will receive a
Transthoracic Echocardiogram and associated interpretive
physician visit and will either reject the request for such
benefits or shall furnish to the Diet Drug Recipient the
appropriate documentation and information to receive such
benefits and will provide those benefits in accordance with
the timetable set forth in Section VI.C.3.m, below.
(2) Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a completed
Claim which adequately documents that a Diet Drug Recipient
is a member of Subclass 1(a) and which requests payment of
the net cost of an Echocardiogram pursuant to Section
IV.A.2.b.(2)., the Trustees and/or Claims Administrator(s)
shall determine whether the Diet Drug Recipient is entitled
to such payment, and if so, the amount of such payment. The
Trustees and/or Claims Administrator(s) shall provide such
payments in accordance with the timetable set forth in
Section VI.C.3.m, below. If the Trustee(s) and/or Claims
Administrator(s) deny such a claim, they shall send the Diet
Drug Recipient written notification of that decision and the
reasons therefor within this forty-five (45) day period.
i. PROCESSING CLAIMS FOR ADDITIONAL MEDICAL SERVICES OR CASH FOR
SUBCLASS 1(B) AND 2(B) MEMBERS:
Within forty-five (45) days of the date on which the Trustees
and/or Claims Administrator(s) receive a completed Claim which
adequately documents that a Diet Drug Recipient is a member of
Subclass 2(b), or is a member of Subclass 1(b) and obtained an
FDA Positive diagnosis by a Qualified Physician after Pondimin(R)
and/or Redux(TM) use but by the end of the Screening Period, the
Trustees and/or Claims Administrator(s) shall, in accordance with
the Diet Drug Recipient's election, certify that the Diet Drug
Recipient is entitled to either $6,000 in cash or $10,000 in
valve-related medical services and shall either make payment to
the Diet Drug Recipient or furnish to the Diet Drug Recipient the
appropriate documentation and information to receive such
valve-related services and will provide those benefits in
accordance with the timetable set forth in Section VI.C.3.m,
below.
j. PROCESSING CLAIMS FOR ADDITIONAL MEDICAL SERVICES OR CASH FOR
SUBCLASS 1(A) AND 2(A) MEMBERS:
Within forty-five (45) days of the date on which the Trustees
and/or Claims Administrator(s) receive a completed Claim which
adequately documents that a Diet Drug Recipient is a member of
Subclass 2(a), or is a member of Subclass 1(a) and obtained an
FDA Positive diagnosis by a Qualified Physician after Pondimin(R)
and/or Redux(TM) use but by the end of the Screening Period, the
Trustees and/or Claims Administrator(s) shall in accordance with
the Diet Drug Recipient's election certify that the Diet Drug
Recipient is entitled to $3,000 in cash or $5,000 in
valve-related medical services and shall either make payment to
the Diet Drug Recipient or furnish to the Diet Drug Recipient the
appropriate documentation and information to receive such
valve-related services and will provide those benefits in
accordance with the timetable set forth in Section VI.C.3.m,
below.
k. PROCESSING CLAIMS FOR REFUNDS FOR SUBCLASS 1(A) AND 2(A) MEMBERS:
Within forty-five (45) days of the date on which the Trustees
and/or Claims Administrator receive a completed Claim which
adequately documents that the Diet Drug Recipient is a member of
Subclass 1(a) or 2(a) and which adequately documents the duration
of his or her Diet Drug use for which a refund is sought, the
Trustees and/or Claims Administrator(s) shall certify the amount
of the refund to which that Diet Drug Recipient or the
Representative Claimant for that Diet Drug Recipient is entitled
and shall make payment to the Diet Recipient or Representative
Claimant in accordance with the timetable set forth in Section
VI.C.3.m, below.
l. PROCESSING CLAIMS FOR REFUNDS FOR SUBCLASS 1(B) AND 2(B) MEMBERS:
Within ninety (90) days after Date 2, the Trustees and/or Claims
Administrator(s) shall determine, pursuant to Section IV.A.1.d,
the amount, if any, of the refunds to which Diet Drug Recipients
who are members of Subclasses 1(b) or 2(b) or the Representative
Claimants for those Diet Drug Recipients are entitled. Within 45
days of such time, the Trustees and/or Claims Administrator shall
pay all Diet Drug Recipients or Representative Claimants who have
adequately documented membership in Subclasses 1(b) or 2(b), the
refund amounts to which they are entitled, if any. In the event
that it is determined that the Settlement Agreement will not
receive Final Judicial Approval or in the event that the
Settlement Agreement is terminated for any reason, the Trustees
and/or Claims Administrator(s) shall determine within 90 days
after the conclusion of the period for providing Echocardiograms
and associated physician visits to Diet Drug Recipients who have
elected the AIO whether there are sufficient assets to make
refund payments to Subclass 1(b) or 2(b) members who have entered
into Individual Agreements pursuant to the AIO. Within 45 days of
making such determination, the Trustees and/or Claims
Administrator(s) shall pay to all Diet Drug Recipients or
Representative Claimants who have adequately documented
membership in Subclass 1(b) or 2(b) and have entered into
Individual Agreements pursuant to the AIO, the amounts to which
they are entitled, if any.
m. The timetable for the benefits described in Sections VI.C.3. g-k
above shall be as follows:
(1) For Class Members who have elected the AIO, such benefits
cannot be provided until after the AIO Start Date;
(2) For Class Members who qualify for benefits under Section
IV.A.3.c, such benefits cannot be provided until after the
Trial Court Approval Date;
(3) For all other Class Members, such benefits cannot be
provided until after the Final Judicial Approval Date.
During the first full twelve (12) calendar months following the
AIO Start Date, the time periods for the actions required within
forty-five (45) days in Sections VI.C.3.g (1) and (2), Sections
VI.C.3.h (1) and (2), Section VI.C.3.i, Section VI.C.3.j, Section
VI.C.3.k, and Section VI.C.3.l, are extended to sixty (60) days.
n. PROCESSING CLAIMS FOR REIMBURSEMENT FOR CERTAIN
PRIVATELY-OBTAINED ECHOCARDIOGRAMS
Within ninety (90) days after Date 2, the Trustees and/or Claims
Administrator(s) shall determine whether a Diet Drug Recipient or
Representative Claimant who has submitted a claim requesting
reimbursement pursuant to Section IV.A.3.d is entitled to such
reimbursement and, if so, the amount of reimbursement. Within 45
days of such time, the Trustees and/or Claims Administrators
shall pay all such Class Members the reimbursement amounts to
which they are entitled, if any, subject to the limitation of
Section IV.A.3.d that said reimbursement benefits will be paid
only if, and to the extent that, Fund A possesses sufficient
assets to pay such benefits after paying or creating a reserve
for payment of all other authorized expenses and benefits to be
provided by Fund A, except for the refund benefits described in
Section IV.A.1.d hereof, which shall be subordinate to this
reimbursement benefit. In the event that it is determined that
the Settlement Agreement will not receive Final Judicial Approval
or in the event that the Settlement Agreement is terminated for
any reason, the Trustees and/or Claims Administrator(s) shall
determine within 90 days after the conclusion of the period for
providing Echocardiograms and associated physician visits to Diet
Drug Recipients who have elected the AIO whether there are
sufficient assets to make reimbursement payments pursuant to
Section IV.A.3.d to Class Members who have entered into
Individual Agreements pursuant to the AIO. Within 45 days of
making such determination, the Trustees and/or Claims
Administrator(s) shall pay to all such Class Members who have
entered into Individual Agreements pursuant to the AIO, the
reimbursement amounts to which they are entitled, if any.
4. ADMINISTRATION OF MATRIX COMPENSATION BENEFIT CLAIMS.
a. To receive Matrix benefits, the Class Member must provide the
Trustees and/or Claims Administrator(s) with appropriate
documentation of the condition of the Diet Drug Recipient that
forms the basis for the claim. As set forth in the "GREEN FORM,"
attached as Exhibit "22", such documentation shall include:
(1) all hospital reports of the admitting history and physical
examination of the Diet Drug Recipient, operative reports,
pathology reports, Echocardiogram reports, cardiac
catheterization reports, and discharge summaries which
relate to the condition of the Diet Drug Recipient that
forms the basis of the Claim;
(2) a copy of the videotape or disk of the Echocardiogram
results which, in whole or in part, forms the basis for the
Claim for Matrix Compensation Benefits;
(3) a declaration under penalty of perjury from the Diet Drug
Recipient that, to the best of his/her knowledge, such
condition was not present prior to usage of Pondimin(R)
and/or Redux(TM);
(4) a declaration under penalty of perjury from a
Board-Certified Cardiologist or Cardiothoracic Surgeon
setting forth an opinion to a reasonable degree of medical
certainty that (a) the Diet Drug Recipient has the condition
which qualifies the Class Member for a particular Matrix
payment, including, where applicable, that the causation
requirements applicable to conditions (b)(v) and (c) of
Matrix-Level V, as defined in Section IV.B.2.c.(5) either
are or are not present; (b) to the best of such physician's
knowledge after reasonable inquiry, such condition which
qualifies the Class Member for a particular Matrix payment
was not present prior to usage of Pondimin(R) and/or
Redux(TM); and (c) all the conditions set forth in Section
IV.B.2.d. which determine whether Matrix A-1 or B-1 is
applicable, either are present or are not present;
(5) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic Surgeon,
Neurologist or Neurosurgeon with regard to the functional
outcome which the patient has had six months after a stroke,
if applicable;
(6) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic Surgeon or
Pathologist regarding the existence of the pathological
criteria for Endocardial Fibrosis defined in Section I.21,
if applicable;
(7) any other documentation which the Trustees and/or Claims
Administrator(s) are otherwise authorized to request under
this Settlement Agreement; and
(8) for an Echocardiogram that took place outside of the
Screening Program, and if not previously submitted in a
GREEN FORM, a certification from a Qualified Physician on
the GRAY FORM which is appended to the Settlement Agreement
as Exhibit "20" that the Diet Drug Recipient met the
criteria for having FDA Positive regurgitation as defined in
Section I.22 or Mild Mitral Regurgitation as defined in
Section I.38 prior to the end of the Screening Period.
The records and information described in (1) through (8),
inclusive, together with, if applicable, the information
described in Section VI.C.4.b below, are referred to as the
"Medical Information." Subject to the provisions of Section
VI.C.4.b, a Claim for Matrix Compensation Benefits shall not be
considered completed within the meaning of Section VI.C.2 and
Section VI.C.4 and ready for determination until the Trustees
and/or Claims Administrator(s) have received, either from the
Class Member or the healthcare provider or applicable records
custodian, all Medical Information and a properly and fully
completed GREEN FORM (and GRAY FORM, if applicable) relating to
such Claim.
b. If the Class Member seeking a Matrix payment is unable to obtain
the documentation described above through the exercise of
reasonable efforts, the Trustees and/or Claims Administrator
shall have the right to consider other supporting documentation
including but not limited to declarations of other Qualified
Physician(s) under penalty of perjury setting forth opinion(s) to
a reasonable degree of medical certainty to support the claim
that the Class Member's condition entitles him or her to a Matrix
payment, subject to review by the Court as set forth in Section
VIII.D. If this evidence establishes the Class Member's condition
to the satisfaction of the Trustees and/or Claims
Administrator(s), the Class Member shall be entitled to receive
the appropriate Matrix Compensation Benefits.
c. Upon receiving a claim for Matrix Compensation Benefits, the
Trustees and/or Claims Administrator(s) shall obtain the
following information from the Class Member:
(1) A copy of any fee agreement between the Class Member and the
attorney representing that Class Member which shall be
submitted and maintained in confidence;
(2) A verified statement of the out-of-pocket costs incurred by
the Class Member's individual attorney, which shall be
submitted and maintained in confidence;
(3) A written representation by the Class Member or the Class
Member's attorney, made subject to penalties of perjury, as
to whether or not a subrogation lien or claim has been
asserted with respect to the Class Member's right to receive
benefits under the Settlement and, if so, the name of the
subrogee; and
(4) If the Class Member is a Representative Claimant, such court
approvals or authorizations as may be necessary to authorize
that person to consummate a Settlement in a representative
capacity.
Until the submission of all of the information referred to in
Section VI.C.2, a Claim for Matrix Compensation Benefits shall
not be considered "completed" and ready for determination.
d. Subject to the audit provisions of this Settlement Agreement,
Section VI.E and Section VI.F, the Trustees and/or Claims
Administrator(s) shall make Matrix Benefits Determinations based
upon the Medical Information provided to them by an appropriate
Board-Certified physician on or with a properly and fully
completed GREEN FORM. In making Matrix Benefits Determinations,
if the Trustees and/or Claims Administrator(s) determine any
inconsistency in the information provided in a Claim Form, the
Trustees and/or Claims Administrator(s) shall review the Medical
Information relating to such Claim to determine if the Medical
Information resolves such inconsistency.
e. No earlier than thirty (30) days after AHP receives access to the
documents provided to AHP by the Trustees and/or Claims
Administrator(s) pursuant to Section VI.F.1, and no later than
sixty (60) days after receiving a completed Claim for Matrix
Compensation Benefits, the Trustees and/or Claims
Administrator(s) shall make a tentative determination:
(1) As to whether the Class Member(s) is entitled to
compensation under the Matrices, and if so, the amount of
compensation to which the individual is entitled, including
an apportionment among Derivative and Representative
Claimants to the extent necessary;
(2) The amount of counsel fees to which the attorney
representing the Class Member is entitled, making the
appropriate deduction of 9% to account for the fees paid to
Class Counsel as required by Section VIII.E.1.b or Section
VIII.E.3 of this Agreement, whichever is applicable;
(3) The amount of reasonable out-of-pocket expenditures which
should be reimbursed to the individual attorney representing
the Class Member;
(4) The amount to which any subrogee is entitled in accordance
with the provisions of Section VII.D.2 hereof; and
(5) The net amount to which the Class Member is entitled after
making appropriate deductions for counsel fees,
reimbursement of litigation expenses, and payment of all
appropriate subrogation liens.
f. Immediately upon making the determination required by the
preceding paragraph, the Trustees and/or Claims Administrator(s)
shall notify the Class Members; the attorneys for the Class
Members, if any; and the subrogrees if any, of the determination
and provide them with a period of thirty (30) days in which to
contest the tentative determination by the Trustees and/or Claims
Administrator(s), and to provide additional information
concerning the level of Matrix Compensation Benefits which should
be paid as well as the distribution and apportionment of those
benefits. At the same time as this notice, the Trustees and/or
Claims Administrators shall also notify AHP of the determination
required by the preceding paragraph.
g. Within sixty (60) days of receiving any explanatory or supporting
information pursuant to the preceding paragraph or within ninety
(90) days of receiving a completed Claim for Matrix Compensation
Benefits, whichever is later, the Trustees and/or Claims
Administrator(s) shall make a final determination:
(1) As to whether the Class Member is entitled to compensation
under the Matrices, and, if so, the amount of compensation
to which the Class Member is entitled, including an
apportionment among Derivative and Representative Claimants
to the extent necessary;
(2) The amount of counsel fees to which the attorney
representing the Class Member is entitled, making the
appropriate deduction of 9% to account for the fees paid to
Class Counsel as required by Section VIII.E.3 or Section
VIII.E.1.b of this Agreement, whichever is applicable;
(3) The amount of reasonable out-of-pocket expenditures which
should be reimbursed to the individual attorney representing
the Class Member;
(4) The amount to which any subrogee is entitled in accordance
with the provisions in Section VII.D hereof; and
(5) The net amount to which the Class Member is entitled after
making appropriate deductions for counsel fees,
reimbursement of litigation expenses, and payment of all
appropriate subrogation liens.
At the same time as notice is given to the affected Class
Member(s), attorney(s), and/or subrogees of the final
determination under Section VI.C.4.g, the Trustees and/or Claims
Administrators shall also notify AHP of such final determination.
During the first full twelve (12) calendar months following the
AIO Start Date, the Trustees and/or Claims Administrator(s) shall
make this final determination within sixty (60) days of receiving
any explanatory or supporting information pursuant to Section
VI.C.4.f above or within 105 days of receiving a completed Claim
for Matrix Compensation Benefits, whichever is later, rather than
the sixty and ninety day periods stated above.
h. Within fifteen (15) days of receiving notice of the
Trustees/Claims Administrators' final determination, the affected
Class Member(s), attorney(s), and/or subrogee(s) may appeal the
determination by filing a Notice of Appeal in the form appended
hereto as Exhibit "24" with the Trial Court and serving a copy on
the Trustees and/or Claims Administrator(s).
i. In the event of such an appeal, the Court shall refer the matter
to Arbitration by a single Arbitrator appointed by the Court from
a panel of arbitrators appointed by the Court for that purpose.
With respect to an appeal by a Class Member relating to the
determination of the gross amount of Matrix Compensation Benefits
to which the Class Member is entitled, the Arbitrator shall
determine whether the Trustees and/or Claims Administrator(s)
have properly applied the criteria set forth in the Settlement
Agreement to the information submitted by the Class Member in
support of the claim and shall enter a report and award which
either affirms the decision of the Trustees and/or Claims
Administrator(s) or directs a different payment than that which
was determined by the Trustees and/or Claims Administrator(s).
With respect to an appeal relating to the distribution of counsel
fees and costs, the Arbitrator shall determine the amount of the
attorneys fees to which the attorney is entitled under the
provisions of the applicable state law after deducting 9% as
required by Section VIII.E.1.b of this Agreement and the extent
to which the attorney should receive reimbursement for
out-of-pocket costs from the Class Member's recovery under
applicable state law. In the case of an appeal relating to a
subrogation issue, the Arbitrator shall determine the amount to
which the subrogee is entitled to under applicable law to
consistent with the provisions of Section VII.D.2 of this
Agreement.
The costs of such Arbitration, including the fees of the
Arbitrator, shall be taxed by the Arbitrator in favor of the
party who substantially prevails in the Arbitration if the
Arbitrator finds that the appeal was taken or maintained in
violation of the standards set forth in Fed.R.Civ.P.11(b).
Otherwise, the costs of such Arbitration shall be paid by the
Trust. Any party may appeal from the report and award of the
Arbitrator to the Court.
j. If there is no appeal initiating an Arbitration process, then the
decision of the Trustees and/or Claims Administrator(s) with
respect to the gross amount to be paid on account of a Claim for
Matrix Compensation Benefits shall be final, unless there is a
documented change in the physical condition of the Diet Drug
Recipient after submission of the claim which justifies
consideration for a greater level of Matrix Compensation Benefits
than previously applied for or justifies consideration for
payment at the same level as previously applied for by reason of
a different physical condition than that which was the subject of
the prior Claim for Benefits by the Class Member.
k. If there is no appeal initiating an Arbitration process, then the
decision of the Trustees and/or Claims Administrator(s) with
respect to the distribution of any portion of any amount paid on
account of a Claim for Matrix Compensation Benefits to any
attorney or subrogee shall be final.
l. If an appeal initiating arbitration is taken, the decision of the
Arbitrator or, if an appeal from the report and award of the
Arbitrator is taken, the decision of the Court shall be final and
binding with respect to: (a) The gross amount to be paid on
account of a Claim for Matrix Compensation Benefits unless there
is a documented change in the physical condition of the Diet Drug
Recipient after the submission of the claim which justifies
consideration for a greater level of Matrix Compensation Benefits
than that previously applied for or for payment at the same level
as previously applied for by reason of a different physical
condition than that which was the subject of the prior Claim for
Benefits by the Class Member; and (b) the distribution of any
portion of the gross amount to be paid for Matrix Compensation
Benefits to any attorney or subrogee for attorneys' fees,
reimbursement of litigation expenses, or subrogation claims.
m. Within forty-five (45) days after the end of each calendar
quarter or AIO Fiscal Quarter, whichever is applicable, after the
AIO Start Date and prior to Final Judicial Approval, the Trustees
and/or Claims Administrator(s) shall pay the Matrix Compensation
Benefit claims of all Class Members who:
(1) have completed Claims for Matrix Compensation Benefits
during the period prior to the commencement of the
above-referenced calendar quarter or AIO Fiscal Quarter,
whichever is applicable, which have not been previously
paid; and
(2) have executed Individual Agreements pursuant to the AIO; and
(3) whose rights to Matrix Compensation Benefits have become
final during the above-referenced calendar quarter or AIO
Fiscal Quarter, whichever is applicable under this Section
and are not then the subject of an audit under the terms of
the Settlement Agreement.
In distributing the amount due with respect to a claim for Matrix
Compensation Benefits, the Trustees and/or Settlement
Administrator(s) shall pay all sums due to the individual
attorney for the Class Member for payment of counsel fees and
reimbursement of litigation expenses, and all sums due to any
subrogee as determined by the above procedures. The net amount
remaining after deducting such payments from the gross amount of
the Matrix Compensation Benefits to which a Class Member is
determined to be entitled, shall be distributed to the Class
Member.
n. Upon Final Judicial Approval, the preceding paragraph will cease
to be effective and the following schedule will apply to the
payment of all claims for Matrix Compensation Benefits. Within 45
days after the close of each Fiscal Quarter, the Trustees and/or
Claims Administrator(s) shall pay all Claims for the Matrix
Compensation Benefits of all Class Members who:
(1) have completed Claims for Matrix Compensation Benefits
during the period prior to the commencement of the above-
referenced 45-day time period which have not been previously
paid; and
(2) whose rights to Matrix Compensation Benefits have become
final during the above-referenced Fiscal Quarter under
Section VI.C.5, and are not then the subject of an audit
under the terms of the Settlement Agreement.
In distributing the amount due with respect to a claim for Matrix
Compensation Benefits, the Trustees and/or Settlement
Administrator(s) shall pay all sums due to the individual
attorney for the Class Member for payment of counsel fees and
reimbursement of litigation expenses, and all sums due to any
subrogee as determined by the above procedures. The net amount
remaining after deducting such payments from the gross amount of
the Matrix Compensation Benefits to which a Class Member is
determined to be entitled, shall be distributed to the Class
Member.
o. The payment obligations in paragraphs (m) and (n) above are
subject to the provisions of Section III.C.
5. Beginning on the Preliminary Approval Date, the Trustees and/or Claims
Administrators shall take the steps reasonably necessary to receive
and process Claims for Benefits according to the terms of this
Agreement, but the time periods provided in Section VI.C for the
processing of Claims by Class Members and for any actions by the
Trustees and/or Claims Administrator(s) relating to such Claims shall
not apply to any Claim until the later of September 30, 2000, or the
AIO Start Date. Further, such time periods shall not apply to the
Claims of Class Members who have submitted BLUE FORMS until the
earlier of the Final Judicial Approval Date or February 1, 2001;
provided, however, that the Trustees and/or Claims Administrator(s)
shall have the authority to process the Claims of Class Members who
have submitted BLUE FORMS before such time if warranted to achieve
cost savings in the processing of Claims. At any time, the Court may
extend any time period in Section VI.C for good cause shown upon
application by the Parties, Trustees, Claims Administrator(s), and/or
Interim Claims Administrators, after notice to AHP and Class Counsel.
D. PROCEDURE FOR RECOGNITION OF CREDITS.
1. AHP shall receive Credits in accordance with Section VII.A of
this Settlement Agreement pursuant to the following procedure:
a. With respect to each Class Member who has opted out of the
Settlement and who has received a payment from AHP for which
AHP seeks a Credit under Section VII.A (a "Request for
Credit"), AHP shall supply the Trustees and/or Claims
Administrator(s) with the following documents and
information:
(1) a copy of the form through which the Class Member(s)
exercised an Opt-Out right;
(2) a copy of the report of the Echocardiogram, if any,
showing the degree of mitral and/or aortic valvular
regurgitation in the Diet Drug Recipient whose
condition is at issue prior to September 30, 1999
and/or as of the close of the Screening Period;
(3) a copy of the check(s) evidencing payment or other
evidence of payment to the Class Member(s) for which
AHP seeks credit;
(4) a copy of the release(s) executed by the Class
Member(s) in favor of AHP;
(5) a "RED FORM" for an Initial or Back-End Opt-Out which
is appended to this Settlement Agreement as Exhibit
"25" completed and signed subject to penalties of
perjury by a knowledgeable representative of AHP and a
Board-Certified Cardiologist or Board-Certified
Cardiothoracic Surgeon;
(6) all hospital reports of the admitting history and
physical examination of the Diet Drug Recipient,
medical histories, operative reports, pathology
reports, Echocardiogram reports, cardiac
catheterization reports and discharge summaries which
relate to the condition of the Diet Drug Recipient that
forms the basis of the Request for Credit;
(7) a copy of the videotape or disk of the Echocardiogram
results which, in whole or in part, form the basis for
the Request for Credit;
(8) a declaration under penalty of perjury from a
Board-Certified Cardiologist or Cardiothoracic Surgeon,
regardless of whether that Cardiologist was originally
retained by AHP, the plaintiff or neither, setting
forth an opinion to a reasonable degree of medical
certainty that (1) the Diet Drug Recipient has the
condition which would otherwise qualify a Class Member
for a particular Matrix payment, including, where
applicable, that the causation requirements applicable
to conditions (b)(v) and (c) of Matrix-Level V, either
are or are not present; (2) to the best of such
physician's knowledge after reasonable inquiry, such
condition which would otherwise qualify the Class
Member for a particular Matrix payment was not present
prior to usage of Pondimin(R) and/or Redux(TM); and (3)
all the conditions which determine whether Matrix A-1
or B-1 are applicable, either are present or are not
present;
(9) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic Surgeon,
Neurologist or Neurosurgeon with regard to the
functional outcome which the patient has had six months
after a stroke, if applicable;
(10) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic Surgeon,
or Pathologist regarding the existence of the
pathological criteria for Endocardial Fibrosis defined
in Section I.21 if applicable; and,
(11) any other documentation which the Trustees and/or
Claims Administrators(s) are otherwise authorized to
request under this Settlement Agreement.
The records and information described in (1) through (11),
inclusive, and/or the information described in Section
VI.D.1.b. below are referred to as the "Credit Information."
Subject to the provisions of Section VI.D.1.b, a Request for
Credit shall not be considered completed within the meaning
of Section VI.D.1.c. and ready for determination until the
Trustees and/or Claims Administrator(s) have received all
Credit Information and a properly and fully completed RED
FORM relating to such Request for Credit.
b. If AHP is unable to obtain the documentation described above
through the exercise of reasonable efforts, the Trustees
and/or Claims Administrator(s) shall have the right to
consider other supporting documentation including but not
limited to declaration(s) of other Qualified Physician(s)
under penalty of perjury setting forth opinion(s) to a
reasonable degree of medical certainty to support the claim
that the Class Members' condition would have otherwise
entitled him or her to a Matrix payment for which AHP would
be entitled to a Credit, subject to review by the Court as
set forth in Section VI.D.1.g. If this evidence establishes
the Class Member's condition to the satisfaction of the
Trustees and/or Claims Administrator(s), AHP shall be
entitled to receive the appropriate credit.
c. Within forty-five (45) days of receiving a completed Request
for Credit from AHP, the Trustees and/or Claims
Administrator(s) shall make a preliminary determination as
to whether AHP is entitled to a Credit, and, if so, the
amount of the Credit to which AHP is entitled, and shall
advise AHP and Class Counsel, in writing, of this
determination.
d. AHP and Class Counsel shall have forty-five (45) days from
the date of receiving such a preliminary determination to
submit additional information concerning the question of
whether and to what extent a Credit should be given to AHP.
e. Within sixty (60) days of receiving any additional
information which is submitted pursuant to the preceding
paragraph or within ninety (90) days of receiving a
completed Request for Credit from AHP, whichever is later,
the Trustees and/or Claims Administrators shall make a final
determination as to whether AHP is entitled to a Credit and,
if so, the amount of Credit to which AHP is entitled, and
shall advise AHP and Class Counsel in writing of this
determination.
f. Within fifteen (15) days of receiving notice of the
Trustees' determination, AHP may appeal the determination by
filing a notice of the appeal in the form appended hereto as
Exhibit "24" with the Trial Court and serving a copy on
Class Counsel, and the Trustees and/or Claims
Administrator(s).
g. In the event of such an appeal, the Court shall refer the
matter to Arbitration by a single Arbitrator appointed by
the Court for that purpose. The Arbitrator shall determine
whether the Trustees have properly applied the criteria set
forth in the Settlement Agreement to the information
supplied by AHP in support of the Request for Credit and
shall enter a report and award, which either affirms the
decision of the Trustees, directs a different Credit than
that which was determined by the Trustees, or directs that
no Credit shall be given to AHP. If the Arbitrator affirms
the decision of the Trustees or awards a lower Credit than
had been awarded by the Trustees and finds that the appeal
was taken or maintained by AHP in violation of the standards
set forth in Fed.R.Civ.P. 11(b), the cost of this
Arbitration shall be borne by AHP. Otherwise, the costs of
such Arbitration shall be paid by the Trust. Any party may
appeal from the report and award of the Arbitrator to the
Court.
h. If there is no appeal initiating an Arbitration process,
then the decision of the Trustees with respect to a claim
for a Credit shall be final. If an appeal initiating
Arbitration is taken, the decision of the Arbitrator or, if
an appeal from the report and award of the Arbitrator is
taken, the decision of the Court, shall be final and
binding.
2. Beginning on the Preliminary Approval Date, the Trustees and/or
Claims Administrators shall take the steps reasonably necessary
to receive and process Requests for Credits according to the
terms of this Agreement, but the time periods provided in Section
VI.D for the processing of Requests for Credits by AHP and for
any actions by AHP and the Trustees and/or Claims
Administrators(s) relating to such Requests for Credits shall not
apply until the later of September 30, 2000, or the AIO Start
Date. At any time, the Court may extend any time period in
Section VI.D for good cause shown upon application by the
Parties, Trustees, Claims Administrator(s), and/or Interim Claims
Administrators, after notice to AHP and Class Counsel.
E. AUDITS OF CLAIMS BY TRUSTEES AND/OR CLAIMS ADMINISTRATOR(S)
1. After the AIO Start Date, on a quarterly basis the Trustees
and/or Claims Administrator(s) shall audit five percent (5%) of
the total Claims for Matrix Compensation Benefits completed
(within the meaning of Section VI.C.2 and Section VI.C.4) by
Class Members during the prior quarter, and ten percent (10%) of
the total Requests for Credits made by AHP during the prior
quarter. Claims for Matrix Compensation Benefits and Requests for
Credits shall be selected for audit pursuant to this Section of
the Settlement Agreement as follows:
a. The Trustees and/or Claims Administrator(s) shall retain one
or more Board-Certified Cardiologists, who have successfully
completed level three training in echocardiography, for
purposes of reviewing claims for Matrix Compensation
Benefits made by Class Members and Requests for Credits made
by AHP (hereinafter "the Reviewing Cardiologist"). The
Reviewing Cardiologist shall review a total of ten percent
(10%) of the total Claims for Matrix Compensation Benefits
completed (within the meaning of Section VI.C.2 and Section
VI.C.4) by Class Members during the prior quarter, and ten
percent (10%) of the total Requests for Credits made by AHP
during the prior quarter. This review shall consist of a
comparison between the Medical Information and the
information on the GREEN FORM submitted by a Class Member
(in the case of a Claim for Matrix Compensation Benefits) or
a comparison between the Credit Information and the
information on the RED FORM submitted by AHP (in the case of
a Request for Credit) for purposes of determining whether
there is a material discrepancy between the Medical or
Credit Information submitted in connection with a Claim or
Request for Credit and the information on the GREEN FORM
submitted by a Class Member or the RED FORM submitted by
AHP. In the event that the Reviewing Cardiologist determines
that there is such a material discrepancy, then the Claim or
Request for Credit shall be referred for audit pursuant to
this section of the Settlement Agreement.
b. In addition to the procedure provided in Section VI.E.1.a,
the Trustees and/or Claims Administrator(s) shall select
additional Claims for Matrix Compensation Benefits by Class
Members and Requests for Credits by AHP during the prior
quarter for audit pursuant to an audit plan which shall take
into account, among other things:
(1) The fact that certain Class Members are represented by
attorneys who represent what the Trustees and/or Claims
Administrator(s) determine to be a disproportionate
number of Class Members;
(2) The fact that certain Class Members or AHP rely on the
certifications of doctors who have provided
certifications for what the Trustees and/or Claims
Administrator(s) determine to be a disproportionate
number of Class Members or Requests for Credits; and
(3) The need to incorporate random sampling into the Audit
Plan;
provided however, that under this Section VI.E.1.b and
Section VI.E.1.a combined the Trustees shall not audit more
than five percent (5%) of the total Claims for Matrix
Compensation Benefits completed by Class Members during the
prior quarter and ten percent (10%) of the total Request for
Credits made by AHP during the prior quarter, subject to the
provisions of Section VI.F.
2. A Claim may not be paid and a Credit may not be allowed while
that Claim or Credit is subject of an audit or a request for an
audit. If a Claim of a Diet Drug Recipient or Representative
Claimant is subject to audit or a request for audit, then the
Claims of all Derivative Claimant(s) based on that Claim shall
also be subject to the audit or audit request, but shall not be
considered as part of the percentage of Claims to be audited by
the Trustees and/or Claims Administrator(s) in that quarter.
3. With respect to Claims which are selected for audit, the Trustees
and/or Claims Administrator(s) may require that the Class
Member(s) provide them with the following information as a
condition to consideration of the Claim:
a. Identification of all general practitioners, family
physicians, primary care providers, internists or
sub-specialists in internal medicine, surgeons or
sub-specialists in surgery, and obstetricians or
gynecologists who, at any time during the 10-year period
prior to the filing of the Claim subject to audit, rendered
any medical care to and/or were consulted by the Diet Drug
Recipient whose Claim forms the basis of the Claim subject
to audit;
b. Fully completed and executed authorizations which will allow
the Trustees and/or Claims Administrator(s) to obtain copies
of the Class Member's medical records; and
c. Such other relevant documents or information within the
Class Member's custody, possession, or control as may
reasonably be requested by the Trustees and/or Claims
Administrator(s).
If the Class Member unreasonably fails or refuses to provide
any material documents or information after being afforded
an adequate opportunity to do so, the Class Member's Claim
shall be denied.
4. With respect to requests for Credit which are selected for audit,
the Trustees and/or Claims Administrator(s) may require that AHP
provide them with the following information as a condition to
consideration of a Request for Credit:
a. All medical records relating to the Diet Drug Recipient
whose condition is the subject of the Request for Credit,
which are in the custody, possession, or control of AHP and
its counsel;
b. All depositions, interrogatories, fact sheets, and like
documents relating to the condition and circumstances of the
Diet Drug Recipient whose condition is the subject of the
Request for Credit, which are in the custody, possession or
control of AHP and its counsel;
c. Such other relevant documents or information within AHP's or
its counsel's custody, possession or control as may
reasonably be requested by the Trustees and/or Claims
Administrator(s).
5. If AHP unreasonably fails or refuses to provide any material
documents or information after being afforded an opportunity to
do so, its Request for Credit shall be denied.
6. In conducting an audit of those Claims and Requests for Credit
selected for audit, the Trustees and/or Claims Administrator(s)
shall follow the following procedure: All Accelerated
Implementation Option acceptance form(s) ("PINK FORM"),
registration form(s) ("BLUE FORM"), videotapes or disks of
Echocardiograms, medical reports, and other information submitted
by AHP in support of a Request for Credit or by a Class Member in
support of a Claim, together with a copy of the claimant's
medical records, and Echocardiogram videotapes or disks obtained
by the Trustees/Claims Administrator(s) shall be forwarded to a
highly- qualified, independent, Board-Certified Cardiologist
(hereinafter referred to as the "Auditing Cardiologist") selected
by the Trustees/Claims Administrator(s). After thoroughly
reviewing these materials, the Auditing Cardiologist shall make a
determination as to whether or not there was a reasonable medical
basis for the representations made by any physician in support of
the Claim or Request for Credit.
7. If the Auditing Cardiologist makes the determination that there
was a reasonable medical basis to support the Class Member's
Claim or AHP's Request for Credit and if there is no substantial
evidence that the Class Member or AHP intentionally made a
material misrepresentation of fact in connection with a Claim or
a Request for Credit, then the Claim or Credit shall be allowed.
If, on the other hand, the Auditing Cardiologist makes the
determination that there was no reasonable medical basis to
support any of the material representations made by any physician
in support of the Class Member's Claim or AHP's Request for
Credit, or if the Trustees and/or Claims Administrator(s)
determine that the Class Member or AHP intentionally made a
material misrepresentation of fact, the Trustees and/or Claims
Administrator(s) shall not pay the Claim or allow the Credit and
shall apply to the Court for an order to show cause why the Claim
should be paid or the Credit should be allowed, and for an order
to show cause as to why other Claims or Credits involving the
same attorney and/or physician should not be subject to an audit.
8. If the Court determines that there was no reasonable medical
basis to support a material representation made by a physician in
support of a Claim or Request for Credit or that the Class Member
or AHP intentionally made a material misrepresentation of fact in
connection with Claim or Request for Credit, after the entry of a
show cause order and a hearing pursuant to the preceding
paragraph, the Court may grant such relief as may be appropriate,
including any of the following:
a. an order disallowing the Claim or Credit;
b. an order directing an additional audit of other Claims or
credits involving the same attorneys and/or physicians who
were involved in the Claim or Request for Credit which was
the subject of the show cause order;
c. an order directing such other additional audits as may be
appropriate in light of the Court's findings;
d. an order imposing penalties including the payment of the
Trustees' and/or Claims Administrators' costs and attorneys'
fees to the extent permitted by law; and/or
e. an order making a referral of the matter to the United
States Attorney or other appropriate law enforcement
officials for possible criminal prosecution if there is
probable cause to believe that the Claim was submitted
fraudulently.
For good cause shown, including without limitation the results of
audits conducted on any one or more Claims, groups of Claims,
and/or requests for Credits made by AHP, the Court at any time,
upon its own motion after notice to AHP and Class Counsel, or
upon motion by any party and after such notice and hearing as the
Court may direct, may order the Trustees and/or Claims
Administrators to perform such additional audits and/or adopt
such additional claims administration procedures as the Court
deems appropriate.
F. AHP-INITIATED AUDITS OF CLAIMS
1. AHP may have access to all Claim Forms for Fund A or Fund B
benefits submitted to the Trustees and/or Claims Administrator(s)
and to all medical records, videotapes or disks of
Echocardiograms, forms submitted by Class Members, pharmacy
records and all other documents submitted by Class Members in
support of their Claims, upon reasonable request to the Trustees.
Access to such documents shall be provided to AHP by the Trustees
and/or Claim Administrator(s) no later than five (5) days after a
Claim is completed (within the meaning of Section VI.C.2 and
Section VI.C.4).
2. AHP shall have no right to participate in the claims
determination process for a particular Class Member as described
in Section VI.C above; provided, however, that AHP shall have the
right to submit particular Claims or groups of Claims to the
Trustees and/or Claims Administrator(s) for audit, up to a total
per quarter of 10% of the total Claims for Matrix Compensation
Benefits and 10% of the total claims for Fund A Benefits
completed by Class Members during the prior quarter. Along with
such submissions, AHP shall identify to or provide the Trustees
and/or Claims Administrator(s) information or documentation in
its possession that it believes establishes either that there was
no reasonable medical basis to support the Class Member's Claim
or that the Class Member made a material misrepresentation of
fact in connection with a Claim.
3. The Trustees and/or Claims Administrator(s) shall audit all
Claims properly submitted by AHP for audit under Section VI.F.2
above in a particular quarter. Such Claims shall be in addition
to and different from the 5% of Claims audited by the Trustees
and/or Claims Administrators per quarter pursuant to Section
VI.E.1. Should any of the Claims submitted for audit by AHP
include those selected by the Trustees and/or Claims
Administrators for audit in the same quarter, then the Trustees
and/or Claims Administrators shall select other Claims for audit
to ensure their audit of 5% of Claims per quarter as required by
Section VI.E.1 in addition to the Claims submitted by AHP for
audit.
4. If Class Counsel or AHP has a good faith belief that an Auditing
Cardiologist employed by the Trustees has failed to perform
his/her duties in accordance with accepted standards of medical
practice, they may apply to the Court for appropriate relief,
including an order disqualifying the Auditing Cardiololgist from
any further participation in any audits and requiring a re-audit
of those Claims or Requests for Credit for which the Auditing
Cardiologist made a determination.
5. In connection with any audit initiated by AHP under Section
VI.F.2, AHP shall have the right to obtain, at its expense, an
independent Transthoracic Echocardiogram of a Diet Drug Recipient
who has made a claim for Matrix Benefits under the following
circumstances:
a. where AHP presents evidence to the Trustees and/or Claims
Administrator(s) that the center or physician from which the
Echocardiogram was obtained has a disproportionate number of
FDA Positive or Matrix-Level Claims; or
b. where AHP submits a certification from a Board-Certified
Cardiologist under penalty of perjury that the report of the
Echocardiogram and/or the videotape or disk deviate
materially from accepted standards of practice in the fields
of Cardiology or Echocardiography; or
c. where AHP submits to the Trustees and/or Claims
Administrator(s) evidence that the Class Member or any
physician making representations in support of a Class
Member's Claim made material misrepresentations of fact; or
d. where AHP submits a certification from a Board-Certified
Cardiologist under penalty of perjury that the videotape or
disk of the Echocardiogram cannot properly be read for any
reason, including, but not limited to, poor quality, or
improper setting.
6. Independent AHP Echocardiograms conducted pursuant to Section
VI.F.5 above, shall be subject to the following conditions:
a. the affected Class Member will be afforded at least ninety
(90) days within which to schedule the Echocardiogram at a
time convenient to the Class Member;
b. the Echocardiogram shall take place not more than
twenty-five (25) miles from the Class Member's place of
residence unless AHP provides transportation, but, in no
event, more than 100 miles;
c. AHP shall pay for the Echocardiogram;
d. Echocardiogram shall be conducted pursuant to the procedures
set forth in Section I.54.
e. a report of the Echocardiogram together with a copy of the
videotape and/or disk of the Echocardiogram results shall be
submitted to the Trustees and/or Claims Administrator(s) and
to the Diet Drug Recipient who was the subject of the
Echocardiogram.
If the results of the report of the Independent AHP
Echocardiogram obtained by AHP pursuant to this paragraph
differ materially and significantly from the results or
report of the Echocardiogram submitted by the Class Member
in support of the Class Member's Claim for Benefits, then
the Trustees and/or Claims Administrator(s) may in their
discretion take the results into consideration in connection
with their audit.
VII. AHP RIGHTS AND BENEFITS
A. CREDITS
1. If a Class Member timely and properly exercises an Initial or
Back-End Opt-Out right pursuant to Section IV.D.2 or Section
IV.D.4 hereof, asserts a claim and obtains any payment from AHP
as a result of such claim (whether pursuant to a pre-Judgment or
post-Judgment settlement of such claim or pursuant to a judgment
on such claim), AHP shall receive Credits against its Fund B
obligations to the extent set forth in this Section VII.A
("Credits").
2. With respect to an Initial Opt-Out, if (a) a Diet Drug Recipient
(or his or her Representative Claimants) timely and properly opts
out of this Settlement as an Initial Opt-Out during the Initial
Opt-Out Period and the Diet Drug Recipient has a Matrix-Level
Condition at the time of such Initial Opt-Out or payment by AHP,
and/or (b) a Derivative Claimant of such Diet Drug Recipient is
deemed to have opted out of this Settlement pursuant to Section
IV.D.2, then AHP shall receive a Full Credit with respect to any
amounts paid by AHP to such Diet Drug Recipient (or his or her
Representative Claimants) and/or to the Derivative Claimant
("Initial Opt-Out Credits"), regardless of whether such payments
were made pursuant to a Judgment or pre-Judgment or post-Judgment
settlement, subject to the following:
a. Initial Opt-Out Credits shall not exceed the sum of
$300,000,000, in the aggregate.
b. Initial Opt-Out Credits shall be applied to reduce the
Adjusted Maximum Available Fund B Amount upon the later of:
(i) the date that is five calendar years after the Final
Judicial Approval Date; or (ii) the date on which the
determination of the Initial Opt-Out Credit becomes final
under Section VI.D.1.
c. Even though the application of Initial Opt-Out Credits to
reduce the Adjusted Maximum Available Fund B Amount is
deferred pursuant to Section VII.A.2.b above, there shall be
no accretions on Initial Opt-Out Credits (or any other
Credits due AHP) under this Agreement.
3. With respect to a Back-End Opt-Out, if (a) a Diet Drug Recipient
(or his or her Representative Claimants) timely and properly
exercises a Back-End Opt-Out under this Agreement, and the Diet
Drug Recipient has a Matrix-Level Condition at the time of the
exercise of such Back-End Opt-Out, and/or (b) a Derivative
Claimant of such Diet Drug Recipient is deemed to have opted out
of this Agreement pursuant to Section IV.D.4 or otherwise, then
AHP shall receive a Full Credit ("Back-End Opt-Out Credit") with
respect to any amounts paid by AHP to such Diet Drug Recipient
(or his or her Representative Claimants) and/or to the Derivative
Claimant, regardless of whether such payments were made pursuant
to a Judgment or pre-Judgment or post-Judgment settlement.
Back-End Opt-Out Credits shall be applied to reduce the Adjusted
Maximum Available Fund B Amount as of the date on which the
determination of the Back-End Opt-Out Credit becomes final under
Section VI.D.1.
4. For purposes of this Section VII.A:
"Judgment" shall mean any decision by a court of law or any other
authorized tribunal.
"Full Credit" shall mean a Credit in the amount of the lesser of:
(a) the amount of payment to the Diet Drug Recipient (or his or
her Representative Claimant) and/or Derivative Claimant; or
(b) the Matrix payment for which such Diet Drug Recipient (or
his or her representative Claimant) and/or Derivative
Claimant would have qualified (as determined at the time
such individual opted out of this Agreement or at the time
of payment of such amount, whichever is higher), less Common
Benefit Attorney's fees (such fees not to exceed nine
percent (9%) of such Matrix payment).
"Back-End Opt-Out" includes any Class Member who has exercised or
purported to exercise any opt-out right under the terms of this
Agreement where: (i) the opt-out right was exercised after the
end of the Initial Opt-Out Period; (ii) the relevant Diet Drug
Recipient was first diagnosed with a Matrix-Level Condition after
September 30, 1999, and before the Matrix Payment Cut-Off Date;
and (iii) the Class Member meets the eligibility criteria for a
Back-End Opt-Out under Section IV.D.4.a of this Agreement,
regardless of the manner in which the Class Member characterized
the opt-out.
5. In order to qualify for any of these Credits, AHP must provide
the Trustees and/or Claims Administrator(s) with the appropriate
Credit Information described in Section VI.D.1.a above.
B. EFFECT ON CLAIMS
1. Effective upon Final Judicial Approval, every Settled Claim of
each Class Member against AHP or any other Released Party shall
be conclusively compromised, settled and released, and each such
Class Member shall be barred from initiating, asserting or
prosecuting any Settled Claim against AHP or any other Released
Party, except to the extent permitted by this Settlement
Agreement for any Class Member who has timely and properly
exercised any applicable opt-out right.
2. To confirm the provisions set forth in Section VII.B.1, above,
within five days after Final Judicial Approval, the Class
Representatives, individually and on behalf of the Settlement
Class and all of the Subclasses, shall deliver to AHP a fully
executed Release and Covenant Not to Sue in the form attached as
Exhibit "27" .
3. Each Class Member shall be required to execute an individual
Release and Covenant Not to Sue as part of the forms required to
be submitted by Class Members in order to seek to participate in
the benefits of the Settlement. Such individual releases shall
become ineffective, null and void in the event that the
Settlement fails to obtain Final Judicial Approval or in the
event that AHP terminates this Agreement for any reason, other
than as to persons entering into AIO Individual Agreements. Such
individual releases shall furthermore be ineffective, null and
void as to all Settled Claims except those set forth in I.53(e)
and (g) above, with respect to any Class Member who timely and
properly exercises any applicable opt-out right granted by this
Agreement subsequent to the execution of the releases.
4. For purposes of any statute of limitations or similar time bar,
the AHP Released Parties shall not assert that a Class Member
actually had PPH unless and until the condition of the Class
Member meets the definition of PPH set forth in Section I.46.
5. In the event that a Class Member initiates a claim based on PPH,
the AHP Released Parties shall not assert a defense based on
"splitting" of claims, causes of action and/or parties by virtue
of the fact that the Class Member is included in the Settlement,
but the claim based on PPH is not a Settled Claim.
6. The forms of release necessary to effectuate this Settlement and
the Accelerated Implementation Option set forth in Section V are
set forth in the PINK FORM (for Class Members accepting the AIO)
and the BLUE FORM (for all other Class Members) appended hereto
as Exhibits "9" and "21" respectively.
7. The amended complaint in Sheila Brown, et al. v. American Home
Products Corporation, Civil Action No. 99-20593 (E.D. Pa.), and
all Settled Claims which were or could have been asserted,
including claims for punitive damages, on behalf of the
Settlement Class or any subclass against AHP and/or any Released
Parties shall be dismissed with prejudice upon Trial Court
Approval. Such dismissal will be vacated in the event that the
Settlement does not receive Final Judicial Approval.
8. After Date 2, the following persons shall have no further right
to any benefits under the Settlement and shall have no right to
pursue any Settled Claims against AHP or any Released Party,
except to the extent such persons timely and properly exercise,
or have exercised, an Initial, Intermediate, Back-End or
Financial Insecurity Opt-Out:
a. with respect to all Settled Claims against AHP or any
Released Party other than those based on Endocardial
Fibrosis, any Class Member asserting a claim based on a Diet
Drug Recipient who: (a) has not been diagnosed by a
Qualified Physician as FDA Positive nor as having Mild
Mitral Regurgitation by an Echocardiogram performed between
the commencement of Diet Drug use and the end of the
Screening Period, or (b) has been diagnosed by a Qualified
Physician as FDA Positive or as having Mild Mitral
Regurgitation by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the Screening
Period, but the Class Member has not registered or been
deemed to have registered for settlement benefits by Date 2.
b. with respect to Settled Claims against AHP or any Released
Party based on Endocardial Fibrosis, any Class Member
asserting a claim based on a Diet Drug Recipient who: (a)
has not been diagnosed by a Qualified Physician as having
Endocardial Fibrosis by September 30, 2005, or (b) has been
diagnosed by a Qualified Physician as having Endocardial
Fibrosis by September 30, 2005, but the Class Member has not
registered or been deemed to have registered for settlement
benefits by January 31, 2006.
C. PROTECTION OF AHP FROM CLAIMS BY NON-SETTLING DEFENDANTS
1. It is the intent of this Settlement Agreement that no Settlement
Class Member shall recover, directly or indirectly, any sums for
Settled Claims from AHP or any Released Party other than those
received under the Settlement Agreement and that AHP shall make
no payments to any third party defined herein as a Non-Settling
Defendant for any amounts arising out of a Settled Claim brought
by a Class Member against such Non-Settling Defendant, except to
the extent that Class Members timely and properly exercise an
Initial, Intermediate, or Back-End Opt-Out right provided by the
Settlement Agreement. It is the further intent of this Settlement
Agreement that Settlement Class Members agree to reduce any
judgments against Non-Settling Defendants to the extent
necessary, under applicable law, to relieve AHP and the Released
Parties of liability for contribution or non-contractual
indemnity to any Non-Settling Defendant. In particular:
a. The Parties shall seek an order from the Court, which shall
be a condition to AHP's obligations under this Agreement as
set forth in Section VIII.D hereof, enjoining and barring
all Non-Settling Defendants from commencing or prosecuting
any claim against AHP or any other Released Party for
contribution and/or non-contractual indemnity, arising out
of a claim against such Non-Settling Defendant on behalf of
any Class Member asserting Settled Claims in any present or
future litigation, other than any Class Member who has
timely and properly exercised an Initial, Intermediate or
Back-End Opt-Out right provided by this Agreement and
subject to the provisions of Section VII.C.2 below.
b. Nothing in this Agreement is intended to adversely affect
any Non-Settling Defendant's right, if any, to set-off or
judgment reduction under any state contribution among
tortfeasors act or other applicable law. Non-Settling
Defendants will be entitled, at a minimum, to whatever
set-off or judgment reduction is afforded them by operation
of applicable law. Settlement Class Members who do not
timely and properly exercise Initial, Intermediate or
Back-End Opt-Out rights agree that all defendants are joint
tortfeasors in cases in which Settlement Class Members have
joined Non-Settling Defendants, AHP, and/or the Released
Parties or in any other case in which a Settled Claim is
asserted.
c. The Parties recognize that, under the law of some states,
claims for contribution or non-contractual indemnity against
a settling defendant survive a Settlement unless the
Settlement provides set-off or judgment reduction rights
that go beyond those that would otherwise exist by operation
of applicable law. In those cases, the Parties intend that
Non-Settling Defendants shall be entitled to the additional
set-off or judgment reduction necessary under applicable law
to extinguish Non-Settling Defendants' claims, if any, for
contribution or non-contractual indemnity against AHP and
the Released Parties arising from Settled Claims only.
Settlement Class Members, however, reserve their right to
contend that, due to the nature of the theories of liability
alleged or presented against the Non-Settling Defendants
(i.e., conspiracy or concert of action), Non-Settling
Defendants have no right to contribution or non-contractual
indemnity from AHP or the Released Parties as a matter of
law even though they are joint tortfeasors.
d. In the event that any claim that a Non-Settling Defendant
would have for contribution or non-contractual indemnity
against AHP or the Released Parties in the absence of this
Settlement Agreement with respect to a Settled Claim would
not be extinguished under applicable law by the set-off or
judgment reduction to which the Non-Settling Defendant would
be entitled by operation of law, any Settlement Class Member
who recovers a judgment against any Non-Settling Defendant
with respect to a Settled Claim for which AHP and/or any
Released Party would be liable by a claim for contribution
or non-contractual indemnity but for the provisions of this
Settlement Agreement, shall reduce his judgment against the
Non-Settling Defendant by the amount, percentage, or share
of such judgment necessary, under applicable law, to relieve
AHP and the Released Parties of liability for contribution
or non-contractual indemnity. By way of example, under a
statute modeled on the 1939 version of the Uniform
Contribution Among Tortfeasors Act, Settlement Class Members
would reduce their judgments against Non-Settling Defendants
in the situation described in this Section to the extent of
the pro rata shares (as determined under applicable law) of
AHP and any relevant Released Party. In the absence of a
statute, Settlement Class Members would reduce their
judgments against Non-Settling Defendants in the situation
described in this Section by the amount, percentage, or
share of such judgment that would lawfully be attributable
to AHP and/or the Released Party or Parties but for the
provisions of this Settlement Agreement.
e. To avoid inconvenience and expense to AHP, the other
Released Parties, and the Settlement Class Members, and to
eliminate the objection that certain states' law requires
that AHP and the Released Parties remain as parties in a
lawsuit to facilitate the adjudication of Non-Settling
Defendants' set-off or judgment reduction rights with
respect to a Settled Claim, the releases provided under this
Settlement Agreement shall incorporate, to the extent
required by applicable law, what is known in Pennsylvania as
a "Griffin release" and/or what is known in Wisconsin and
elsewhere as a "Pierringer release." By this provision,
Settlement Class Members and Class Counsel acting on behalf
of Settlement Class Members agree that the lack of a
judicial determination that the settling defendant is a
joint tortfeasor does not preclude Non-Settling Defendants
from obtaining set-off or judgment reduction rights they
would otherwise have under applicable law in the absence of
this Agreement. See Griffin v. United States, 500 F.2d 1059
(3d Cir. 1974); Pierringer v. Hoger, 124 N.W.2d 106 (Wis.
1963). By this provision, Settlement Class Members and Class
Counsel acting on behalf of Settlement Class Members further
agree to waive any rights that they might have against
Non-Settling Defendants, the assertion of which would, under
applicable law, allow Non-Settling Defendants to add or
retain AHP and/or the Released Parties as defendants in
actions brought by Settlement Class Members against
Non-Settling Defendants with respect to Settled Claims for
the purpose of adjudicating Non-Settling Defendants' rights,
if any, to set-off or judgment reduction. This provision is
intended to obviate the necessity and expense of having AHP
and the Released Parties added or remain as parties on the
record and obliged to participate in a trial merely for the
purpose of determining if in fact they were tortfeasors so
as to entitle other tortfeasors to a reduction of any
verdict. This provision, however, in no way constitutes an
admission of liability by AHP and the Released Parties or an
admission by Settlement Class Members that any Non-Settling
Defendant is entitled to contribution or non-contractual
indemnity from AHP or a Released Party.
f. The Parties intend that this Settlement Agreement result in
the termination or bar of all claims for contribution and/or
non-contractual indemnity against AHP and the Released
Parties with respect to Settled Claims. To the extent that
the Parties' intent is not fully realized, and a
Non-Settling Defendant obtains a judgment for contribution
or non-contractual indemnity against AHP and/or a Released
Party with respect to Settled Claims, Settlement Class
Members agree to reduce their judgments against Non-Settling
Defendants by the amount, percentage, or share of such
judgment necessary to satisfy any such judgment or
non-contractual indemnity for the benefit of AHP and/or the
Released Party. If, despite the provisions of this section,
AHP or any Released Party incurs any judgments due to a
claim for contribution or non-contractual indemnification
arising out of a claim brought by a Settlement Class Member
against a Non-Settling Defendant, such Settlement Class
Member shall indemnify AHP and the Released Parties for such
amount, provided that AHP and the Released Parties shall
have made all reasonable efforts to avoid liability for
contribution and/or non-contractual indemnity to
Non-Settling Defendants under the Settlement Agreement. In
this regard, AHP shall have the right to recover indemnity
obligations from any unpaid Matrix payments that may be due
to the Class Member.
g. If, despite the provisions of this section, AHP or any
Released Party makes a payment of any judgment due to a
claim for contribution and/or non-contractual indemnity
arising out of a claim brought by a Settlement Class Member
against a Non-Settling Defendant with respect to a Settled
Claim, such Settlement Class Member shall indemnify AHP and
the Released Parties for such amount, and AHP shall make
reasonable efforts to reduce such indemnity obligations to
judgment in the underlying litigation involving the
Non-Settling Defendant. To the extent that, for any reason,
a Settlement Class Member has failed to satisfy an indemnity
obligation arising under this paragraph or the prior
paragraph (either directly or through recovery of payments
for Matrix-Level Conditions otherwise due the Class Member)
within 90 days after AHP makes any such payment, AHP may, at
any time thereafter, assign its indemnity rights against the
Class Member to the Trustees and, in such event, shall
receive a credit against its Fund B obligations in the
amount of the unsatisfied portion of the indemnity (a
"Cross-Claim Credit"). Cross-Claim Credits shall be applied
to reduce the Adjusted Maximum Available Fund B Amount as of
the date on which the determination of the Cross-Claim
Credit becomes final.
2. To protect further the Non-Settling Defendants' interests, the
Parties have agreed that the bar order shall incorporate the
following provisions:
a. If, despite the provisions of Section VII.C.1, (i)
applicable law precludes a Non-Settling Defendant from
obtaining a set-off or judgment reduction to which a
Non-Settling Defendant would otherwise be entitled under
applicable law in an individual case brought by a Settlement
Class Member with respect to a Settled Claim without naming
AHP or a Released Party as a party in the lawsuit, and (ii)
the Non-Settling Defendant and the Settlement Class Member
cannot reach agreement on this issue sufficient to eliminate
the Non-Settling Defendant's alleged need to name AHP or a
Released Party in the lawsuit, the Non-Settling Defendant
may apply to the Court for relief from the bar order.
b. The Non-Settling Defendant's application to the Court shall
set forth with specificity (i) the facts and law that would
give rise to a claim for contribution and/or non-contractual
indemnity but for the provisions of this Settlement
Agreement; (ii) the efforts that the Non-Settling Defendant
has made to reach an accommodation with the Settlement Class
Member with respect to the need to name AHP or a Released
Party as a defendant in the case; and (iii) the factual and
legal bases for the Non-Settling Defendant's claim that,
under the particular facts of the case and the particular
provisions of applicable law, the Non-Settling Defendant
must be permitted to name AHP or a Released Party in the
case despite the bar order.
c. A copy of the Non-Settling Defendant's application to the
Court shall be served on Class Counsel and on counsel for
AHP.
d. The Court shall modify the bar order to permit a
Non-Settling Defendant to name AHP or a Released Party in a
particular case brought against a Non-Settling Defendant by
a Settlement Class Member with respect to a Settled Claim,
only where doing so is essential to protect set-off or
judgment reduction rights to which the Non-Settling
Defendant would be entitled under applicable law but for the
provisions of this Settlement Agreement. Any order modifying
the bar order will contain provisions that protect the
interests of AHP and the Released Parties in finality under
this Settlement Agreement, including, among other things,
provisions affirming that the Settlement Class Member has
agreed (i) to forego any direct or indirect recovery from
AHP or the Released Parties of sums over and above those
received under this Settlement Agreement and (ii) to give up
any portion of any judgment obtained against a Non-Settling
Defendant that is attributed to AHP or any Released Party
with respect to a Settled Claim.
e. Applications made by Non-Settling Defendants for
modification of the bar order will be subject to the
provisions of Fed. R. Civ. P. 11.
3. For purposes of this Section VII.C of the Settlement Agreement:
a. "Non-Settling Defendant" shall mean any person or entity
that is not AHP or a Released Party as defined herein,
against whom or which a Settled Claim has been or is
hereafter made, asserted or commenced. A physician or other
Released Party may be a Non-Settling Defendant as to any
claim with respect to which he, she, or it is not a Released
Party. The term Non-Settling Defendant is not limited to
persons or entities who are sued in an action in which AHP
or another Released Party is also a party.
b. "Non-Contractual Indemnity" or "Non-Contractual
Indemnification" means a right of indemnity based upon the
relationship between or conduct of the parties. These terms
include, and the protections provided AHP and the Released
Parties herein apply to, a contractual obligation of
indemnification voluntarily assumed by AHP to the extent AHP
would have been liable to such claimant for indemnity in the
absence of such contractual indemnification.
c. "Settlement Class Member" shall mean any member of the
Settlement Class who has not timely and properly exercised
an Initial Opt-Out right, an Intermediate Opt-Out right, a
Back-End Opt-Out right, or a Financial Insecurity Opt-Out
right pursuant to the terms of this Agreement. Upon the
timely and proper exercise of any such opt-out rights, the
provisions of this Section VII.C shall become ineffective in
connection with any action brought by each Class Member who
has timely and properly exercised any such right of opt-out.
4. To implement the bar order provided for in this Section VII.C,
all claims pending against AHP or any other Released Party in any
court which are prohibited by such bar order shall be dismissed
with prejudice upon Trial Court Approval. Such dismissals will be
vacated in the event that the Settlement does not receive Final
Judicial Approval.
5. In the event any Class Member who has received a payment for a
Matrix-Level Condition under this Agreement subsequently obtains
a judgment or award against a Non-Settling Defendant, other than
a physician, and the Non-Settling Defendant successfully asserts
a contractual indemnity claim against AHP and/or a Released
Party, then, to the extent not already required by Sections
VII.C.1-4 above, the Class Member shall reduce the judgment or
award against the Non-Settling Defendant by the percentage of
fault, liability or other liability-producing conduct
attributable to AHP and/or a Released Party. In the event a Class
Member who has not received a payment for a Matrix-Level
Condition under this Agreement subsequently obtains a judgment or
award against a Non-Settling Defendant, other than a physician,
and the Non-Settling Defendant successfully asserts a contractual
indemnity claim against AHP and/or a Released Party, then, to the
extent not already required by Sections VII.C.1-4 above, the
Class Member shall reduce the judgment or award against the
Non-Settling Defendant by the percentage of fault, liability or
other liability-producing conduct attributable to AHP and/or a
Released Party or, in the alternative, shall waive any claim to
additional benefits under this Agreement, including payments for
a Matrix-Level Condition.
D. PROTECTION OF AHP FROM POSSIBLE SUBROGATION CLAIMS
1. To the extent that any person has rights of subrogation by virtue
of a payment or payments made to or for the benefit of any
specific Class Member who has not properly and timely exercised a
right of opt-out, such rights of subrogation may be asserted with
respect to the Trustees' obligation to make payments to that
Class Member from Fund B but shall not be asserted directly
against AHP and/or the Released Parties except to the extent
required by applicable Federal or State law. AHP will promptly
notify the Trustees and/or Claims Administrator(s), and the
affected Class Member of the assertion of such a subrogation
claim against AHP. The Parties shall move the Court, upon
granting Trial Court Approval, to enter a bar order to preclude
the assertion of such subrogation claims against AHP and/or the
Released Parties, except to the extent that it would be
impermissible to bar such claims under provisions of applicable
law.
2. The Trustees and/or Claims Administrator(s) shall provide notice
of subrogation claims received by the Trustees to affected Class
Members and afford them an opportunity to contest, otherwise
object to or compromise any such claims. In making distribution
of any amounts to which Class Members are entitled from Fund B,
the Trustees shall recognize and pay subrogation claims from the
amount otherwise payable to such Class Member, but only to the
extent that the subrogation claim is recognized by applicable
law. Unless the law clearly sets forth different principles, the
Trustees shall not recognize a subrogation claim unless: (1) it
is affirmatively brought to their attention prior to distribution
of Funds to a Class Member; (2) it is based on a positive
provision of law or a valid enforceable contract; (3) the
putative subrogee clearly establishes that the subrogee actually
made a payment or payments to or for the benefit of the Class
Member which is of a type that the putative subrogee would be
entitled to recover against AHP and/or the Released Parties, and
then (4) only to the extent of the actual payment made less an
equitable debit for attorneys' fees, and any other allowable or
appropriate charges against the putative subrogee.
E. WALKAWAY RIGHTS
1. AHP shall have the option to terminate and withdraw from the
Settlement Agreement, in its sole discretion, based upon the
number of persons who have timely and properly elected during the
Initial Opt-Out Period to be excluded from the Settlement Class.
If AHP elects to exercise this "walkaway right," it shall do so
by giving written notice to the Court and to Class Counsel within
30 days of the close of the Initial Opt-Out Period. AHP shall
seek to reach its decision with respect to exercise of its
"walkaway right"
2. The exercise of this "walkaway right" by AHP will not affect its
obligation to provide the benefits to those Class Members who
have accepted the Accelerated Implementation Option prior to
AHP's exercise of its "walkaway right" or during any subsequent
period in which AHP continues to offer the AIO.
F. LIMITATION ON FINANCIAL OBLIGATIONS
1. The maximum amount that AHP shall be obligated to pay under this
Settlement Agreement shall be AHP's obligation to make the
payments to Fund A and the Escrow Agent as specified in Section
III.B and AHP's obligation to make payments to Fund B in
accordance with Section III.C. These limitations shall also apply
to AHP's obligations under Individual Agreements entered into
pursuant to the Accelerated Implementation Option.
VIII. SETTLEMENT IMPLEMENTATION
A. GENERAL
1. In order to become effective, the Settlement must receive Final
Judicial Approval, except as to the Accelerated Implementation
Option and as otherwise expressly provided herein.
2. The Parties recommend that the Court establish an Advisory
Committee of Class Counsel, which would consist of counsel
actively involved in State and Federal Diet Drug Litigation. The
purpose of the Advisory Committee of Class Counsel would be to
advise the Trustees concerning the proper operation and
implementation of the Settlement Agreement.
B. JURISDICTION
1. The United States District Court for the Eastern District of
Pennsylvania will have original and exclusive jurisdiction over
all provisions of this Agreement, including the creation and
operation of the Settlement Trust and the award of attorneys'
fees and reimbursement of litigation expenses, subject to
appropriate participation by State Courts in the manner set forth
herein. The Parties agree and intend that the Court retain such
exclusive jurisdiction for all such purposes: (i) during the
pendency of any appeal taken from Trial Court Approval or the
denial of Trial Court Approval; and (ii) if Final Judicial
Approval is not obtained, subject to Section V.H of this
Agreement.
2. In order to become effective as to Class Members who do not
exercise the Accelerated Implementation Option, the Settlement
contemplated by this Settlement Agreement must receive Final
Judicial Approval within the federal judicial system.
3. A State Court Judicial Advisory Committee will be established
within 15 days of Preliminary Approval and will consist of the
judges from the State Courts which, as of October 7, 1999, had
issued any order certifying state-wide class actions in relation
to the effects of Pondimin(R) and/or Redux(TM).
4. The State Court Judicial Advisory Committee shall provide advice
and counsel to the Federal District Court on all matters
pertinent to the Settlement, including approval of the
Settlement, which affect Class Members residing in the States of
each committee member. In addition, prior to making any award of
counsel fees and reimbursement of litigation expenses, the
Federal District Court shall consult with and give substantial
deference to the views of the State Court Judicial Advisory
Committee concerning the actual contribution which was made to
the overall resolution of the litigation by the attorneys with
whom the members of the committee are familiar.
5. The costs incurred by members of the State Court Judicial
Advisory Committee in fulfillment of their obligations, such as
expenses for travel, shall be reimbursed as administrative
expenses of the Settlement Trust.
6. During the period of time from the date on which the Trust is
established until December 31, 2004, the majority of the Trustees
or Administrators shall be approved by the State Court Judicial
Advisory Committee.
C. APPROVAL PROCESS AND NOTICE PROVISIONS
1. Within 10 days after executing this Agreement, the Parties shall
jointly move the Court, by filing a motion for the entry of an
order granting Preliminary Approval, in the form attached as
Exhibit "11". Such Order shall preliminarily and conditionally
appoint the Plaintiffs in Sheila Brown, et al. v. American Home
Products Corporation as the Class Representatives of the
Settlement Class and of each of Subclasses 1(a), 1(b), 2(a), 2(b)
and 3; preliminarily and conditionally appoint counsel for such
plaintiffs as Class Counsel for the Settlement Class;
preliminarily and conditionally certify the Settlement Class, for
Settlement purposes only; grant Preliminary Approval of this
Agreement; approve the appointment of the Interim Escrow Agent
and Interim Claims Administrator(s); authorize the dissemination
of the Settlement notice in accordance with Section VI.B. hereof;
designate the Initial Opt-Out Period to terminate 90 days after
the date on which publication and/or mailing of the Settlement
notice commences in accordance with the Order granting
Preliminary Approval; schedule the date for filing objections to
the Settlement; and schedule a formal fairness hearing to review
comments concerning this Agreement, to consider its fairness,
reasonableness and adequacy under Fed. R. Civ. P. 23(e) and to
determine whether an Order should be entered granting Trial Court
Approval.
2. Fund A will pay 50%, and Fund B will pay 50% of the total costs
of printing, publishing and otherwise disseminating the notice.
In the event that the Settlement does not receive Final Judicial
Approval, the costs of printing, publishing or otherwise
disseminating notice shall be borne by AHP, and the Settlement
Trust will therefore have no obligation to return or refund such
costs to AHP.
3. AHP shall retain its right to contest class certification for
litigation purposes.
4. The Parties shall cooperate and assist in all of the filings and
proceedings relating to the obtaining of Preliminary Approval as
well as Trial Court Approval and in any further filings and
proceedings necessary to obtain Final Judicial Approval of the
Settlement, and in any related appeals.
5. Upon Final Judicial Approval, the Class Counsel and all Class
Members shall cooperate with AHP and any other Released Party to
cause the dismissal, with prejudice and without costs, of any
action against AHP or any Released Party asserting a Settled
Claim brought by or on behalf of any Class Member who has not
timely and properly exercised an Initial Opt-Out right, including
but not limited to class actions, whether or not certified as
such, which are pending in any state, federal or territorial
court. Upon Trial Court Approval, the Class Counsel and all such
Class Members shall cooperate with AHP and any other Released
Party to cause further proceedings in all such settled actions in
which the Class Members did not timely and properly opt out to be
stayed pending Final Judicial Approval.
D. CONDITIONS
1. AHP's obligations under this Agreement, other than its
obligations to Class Members who accept the AIO during the period
in which it is available for acceptance, will be subject to the
following conditions:
a. Trial Court Approval of the Settlement, which approval order
or orders shall:
(1) Confirm the certification of the Settlement Class and
the creation of Subclasses 1(a), 1(b), 2(a), 2(b), and
(3), under Fed. R. Civ. P. 23(a), 23(b)(2), 23(b)(3),
23(c)(1) and 23(e), for Settlement purposes only;
(2) Confirm the appointment of the plaintiffs in Sheila
Brown, et al. v. American Home Products Corporation as
the representatives of the Settlement Class and of each
of Subclasses 1(a), 1(b), 2(a), 2(b) and 3;
(3) Approve this Agreement in its entirety pursuant to Fed.
R. Civ. P. 23(e) as fair, reasonable, adequate, and
non-collusive;
(4) Dismiss with prejudice and without costs the Amended
Complaint in Sheila Brown, et al. v. American Home
Products Corporation, as well as all other claims or
actions asserting Settled Claims against AHP pending
before the Court, with the condition that such
complaints may be reinstated in the event that Final
Judicial Approval is not obtained;
(5) Bar and enjoin all Class Members who have not timely
and properly exercised an Initial Intermediate,
Back-End, or Financial Insecurity Opt-Out right from
asserting and/or continuing to prosecute against AHP or
any other Released Party any and all Settled Claims
which the Class Member had, has, or may have in the
future in any federal, state or territorial court;
(6) Bar and enjoin the commencement and/or prosecution of
any claim for contribution and/or non-contractual
indemnity, pursuant to Section VII.C hereof and subject
to the provisions of Section VII.C.2, in any federal,
state or territorial court against AHP or any other
Released Party by any Non-Settling Defendant arising
from or relating to any Settled Claim asserted by any
Class Member;
(7) Bar and enjoin the commencement and/or prosecution of
any claim or action against AHP in any federal, state
or territorial court based on rights of subrogation by
virtue of a payment or payments made to or for the
benefit of a Class Member arising out of or in relation
to any Settled Claims, except to the extent that it
would be impermissible to bar such claims under
provisions of applicable law;
(8) Reserve the Court's continuing and exclusive
jurisdiction over the Parties, including AHP and the
Class Members, to administer, supervise, interpret, and
enforce this Agreement in accordance with its terms and
to supervise the operation of the Settlement Trust; and
(9) Enter such other orders as are needed to effectuate the
terms of the Settlement;
b. Final Judicial Approval of this Agreement.
2. AHP may at its election terminate this Settlement Agreement if
the Final Judicial Approval does not meet all the conditions set
forth in Section VIII.D.1.a above.
E. ATTORNEYS' FEES
1. In the event that the Settlement receives Final Judicial
Approval, the Court shall award counsel fees and litigation
expenses from the Settlement funds to those attorneys who
actually contributed to the creation of the Settlement funds
through work devoted to the "common benefit" of Class Members,
including any attorney who actually conferred benefits upon the
class through State Court litigation ("Common Benefit Attorneys")
and may award Class Action Representative Incentive Fees to the
certified State and Federal Court Class Representatives in
accordance with applicable principles of law and subject to the
following provisions.
a. As provided in this Section, AHP agrees to pay to Class
Counsel, Common Benefit Attorneys and the certified State
and Federal Class Action Representatives fees in an
aggregate amount of up to $200,000,000, together with any
accrued interest thereon from the date of deposit into the
Fund A Escrow Account, for the services related to Fund A,
subject to approval by the Court. To the extent that such
fees are awarded by the Court, they shall be paid by the
Escrow Agent from the escrow account into which AHP is
required to deposit said amounts for that purpose, as set
forth above in Section III.B.3 (Fund A Escrow Account)
b. Attorneys' fees relating to Fund B shall be paid from Fund
B. For purposes of awarding attorneys' fees from Fund B, AHP
agrees that attorneys' fees should be awarded and paid as a
percentage of or otherwise based on the net present value,
as of the Final Judicial Approval Date, of the maximum
amounts which AHP may be legally obligated to pay to Fund B
for the benefit of the Settlement Class, regardless of the
amount of claims actually paid at any given point in time,
pursuant to the principle expressed in the case law, see
Boeing v. Van Gemert, 444 U.S. 472 (1980). The Parties
stipulate that, only for purposes of calculating payment of
attorneys' fees, the net present value, as of the Final
Judicial Approval Date, of the maximum amounts which AHP may
be legally obligated to pay to Fund B for the benefit of the
class is $2,550,000,000. The Parties further agree that the
attorneys' fees payable from Fund B to counsel for the
Settlement Class ("Class Counsel") and Common Benefit
Attorneys from Fund B shall not exceed $229 million, which
is 9% of the $2,550,000,000 dollar amount, and that the
actual amount of attorneys' fees shall be as determined by
the Court. An amount shall be deducted from each payment
made to a Class Member from Fund B in an amount equal to 9%
of the total Matrix payment due the Class Member before any
deductions. Individual Class Members who are represented by
attorneys entitled to a contingent fee under any valid
written contingent fee agreement with such Class Member
shall be subject to a further reduction for attorneys' fees
due to their attorney. The amount to be paid to the Class
Member's attorney shall be the total attorneys' fee due
under the terms of the contingency fee arrangement less 9%
of the total Matrix payment due to the Class Member before
any deductions. Fund B payments to any such
individually-represented Class Members shall also be reduced
by the amount of reasonable out-of-pocket costs of such
Class Member's attorney to the extent authorized in the
document evidencing such attorney's retention and the
individual attorneys' agreement with the Class Member and to
the extent permitted or allowed by applicable law in which
the agreement was entered. It is expected that the Trustees
will not honor contingent fee agreements with private
counsel which were entered into in violation of applicable
law. In the event that the Trial Court has not entered any
order with respect to the payment of attorneys' fees from
Fund B by the end of the first Fiscal Quarter, then within
five business days after the end of the first Fiscal
Quarter, AHP shall establish and thereafter maintain an
interest-bearing escrow account (the "Fund B Attorneys' Fees
Account") in the amount of $229 million, for payment of the
maximum attorneys' fees payable under this section. The
establishment and funding of such Fund B Attorneys' Fees
Account shall reduce the Adjusted Maximum Available Fund B
Amount as of that time in the same fashion as a Fund B
Deposit Amount. All income earned by the Fund B Attorneys'
Fees Account shall remain in and be added to the Fund B
Attorneys' Fees Account, except that any taxes payable on
such income shall be paid out of such income. The amount in
the Fund B Attorneys' Fees Account shall be available to be
distributed as attorneys' fees as directed by the Trial
Court or by a court with appellate jurisdiction over such
ruling. Any portion of the total balance in the Fund B
Attorneys' Fees Account not finally awarded as attorneys'
fees shall be paid to AHP within five business days after
the order regarding such fees becomes final and the Adjusted
Maximum Available Fund B Amount shall be increased as of the
date of such payment by the total amount paid to AHP.
c. If the Court awards less than 9% of the present value amount
stated above as payment for the attorneys' fees of Class
Counsel and Common Benefit Attorneys from Fund B, the Court
shall direct that appropriate adjustments be made in the
distribution of Fund B amounts to Class Members and their
individual attorneys, including, if necessary, additional
payments to Class Members and individual attorneys who
received Fund B distributions prior to the Court's decision
concerning the award of counsel fees to Class Counsel and
Common Benefit Attorneys.
2. In the event that the Settlement does not receive Final Judicial
Approval or is terminated by AHP for any reason, AHP shall make a
payment for attorneys' fees for Fund A benefits paid or provided
under the AIO to an account to be established, subject to the
supervision of the Court. The first such payment shall be in the
amount of 20% of the dollar value of all Fund A benefits paid or
provided to individuals under the AIO as of the date of such fee
payment. At quarterly intervals thereafter, AHP shall pay into
the account an amount equal to 20% of the dollar value of all
Fund A benefits paid or provided to individuals under the AIO
during the preceding quarter. Any amounts paid into this account
which are not awarded in attorneys' fees shall be returned to AHP
by order of the Court. Any attorney who reasonably believes that
he or she actually conferred benefits upon individuals electing
the AIO through State Court litigation, may apply to the Court
for a portion of the amount deposited in such account and may
receive payment of such common benefit fees in accordance with
applicable provisions of law. Those accepting the AIO must
expressly agree to this provision regarding fees as a condition
to exercising the option. This paragraph shall not be construed
to require AHP to make any payment for attorneys' fees for Fund A
benefits prior to Final Judicial Approval unless this Agreement
is terminated prior to that date.
3. Prior to the time that the Settlement receives Final Judicial
Approval or in the event that the Settlement does not receive
Final Judicial Approval or is terminated by AHP for any reason,
AHP shall deduct from any Fund B benefits paid to those accepting
the AIO an amount equal to 9% of the total Matrix payment due to
the Class Member before any deductions and shall deposit such
amounts in the account to be established pursuant to Section
VIII.E.2 above. At such time as the Settlement fails to receive
Final Judicial Approval or is terminated by AHP for any reason,
any attorney who reasonably believes that he or she actually
conferred benefits upon individuals electing the AIO through
State Court litigation, may apply to the Court for a portion of
the amount deposited in such account and may receive payment of
such common benefit fees and costs in accordance with applicable
provisions of law. Individual Class Members who are represented
by attorneys entitled to a contingent fee under any valid written
contingent fee agreement with such Class Member shall be subject
to a further reduction for attorneys' fees due to their attorney.
The amount to be paid to the Class Member's attorney shall be the
total attorneys' fee due under the terms of the contingency fee
arrangement less 9% of the total Matrix payment due to the Class
Member before any deductions. Payment of Fund B benefits to any
such individually-represented Class Member shall also be reduced
by the amount of reasonable out-of-pocket costs of such Class
Member's attorney to the extent authorized in the document
evidencing such attorney's retention and individual attorney's
agreement with the Class Member and to the extent permitted or
allowed by law. Those accepting the AIO must expressly agree to
this provision regarding fees as a condition to exercising the
option. If the Court awards less than 9% of the amount stated
above as payment for the attorneys' fees of Class Counsel and
Common Benefit Attorneys from the amount paid to individuals
accepting the AIO, the Court shall direct that appropriate
adjustments be made in the distribution of these fund amounts to
individuals accepting the AIO and their individual attorneys,
including, if necessary, additional payments to individuals who
accepted the AIO and their individual attorneys who received
payment prior to the Court's decision concerning the award of
counsel fees to Class Counsel and Common Benefit Attorneys.
4. In the event that the Settlement receives Final Judicial
Approval, no additional attorneys' fees or litigation expenses
shall be paid for benefits conferred on those individuals who
accepted the AIO.
5. The Parties shall recommend that the Court enter an Order
precluding a Class Member's individual attorney from recovering a
fee in connection with the recovery of the $3,000 cash benefit
provided by Section IV.A.2.c or the $6,000 cash benefit provided
by Section IV.A.1.c, which is greater than 20% of such amounts.
This 20% fee for a Class Member's individual attorney shall not
be affected by fees paid to Class Counsel or Common Benefit
Attorneys, pursuant to the Court's order.
F. OTHER PROVISIONS
1. Any information provided by or regarding a Class Member or
otherwise obtained pursuant to this Agreement shall be kept
confidential and shall not be disclosed except to appropriate
persons to the extent necessary to process Claims or provide
benefits under this Agreement or as otherwise expressly provided
in this Agreement. All Class Members shall be deemed to have
consented to the disclosure of this information for these
purposes.
2. This Settlement Agreement shall be binding on the successors and
assigns of the Parties.
3. The Parties to the Settlement, including AHP, the Released
Parties, or any Class Member, shall not seek to introduce and/or
offer the terms of the Settlement Agreement, any statement,
transaction or proceeding in connection with the negotiation,
execution or implementation of this Settlement Agreement, any
statements in the notice documents appended to this Settlement
Agreement, stipulations, agreements, or admissions made or
entered into in connection with the fairness hearing or any
finding of fact or conclusion of law made by the Trial Court, or
otherwise rely on the terms of this Settlement, in any judicial
proceeding, except insofar as it is necessary to enforce the
terms of the Settlement. If a Class Member who has timely and
properly exercised an Opt-Out right seeks to introduce and/or
offer any of the matters described herein in any proceeding, the
restrictions of this Section shall not be applicable to AHP and
the Released Parties with respect to that Class Member.
4. Neither this Agreement nor any exhibit, document or instrument
delivered hereunder nor any of the statements in the notice
documents appended to this Settlement Agreement or in connection
herewith, nor any statement, transaction or proceeding in
connection with the negotiation, execution or implementation of
this Agreement, is intended to be or shall be construed as or
deemed to be evidence of an admission or concession by AHP or the
Released Parties of any liability or wrongdoing or of the truth
of any allegations asserted by any plaintiff against it or them,
or as an admission by the Class Representatives or members of the
Settlement Class of any lack of merit in their claims, and no
such statement, transaction or proceeding shall be admissible in
evidence for any such purpose except for purposes of obtaining
approval of this Settlement Agreement in this or any other
proceeding.
5. The headings of the sections and paragraphs of this Agreement are
included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect its construction.
6. As soon as practicable after the execution of the Settlement
Agreement, the Parties shall take all steps which are reasonably
necessary to enable the Trustees and/or Claims Administrator(s)
promptly to provide Fund A benefits upon Final Judicial Approval
to all Class Members not exercising Initial Opt-Out rights. This
includes reasonable and necessary steps to establish the
Settlement Trust; to establish a mechanism to operate the
Settlement Trust and administer claims; to solicit, receive and
process claims from Class Members which will be necessary to
provide benefits to Class Members; to establish a mechanism to
provide medical screening, services and cash to members of the
class; to communicate with Class Members and like activities.
These expenses shall not exceed $45 million, or such higher
amount as may be requested in writing by the Interim Claims
Administrators and/or Trustees, agreed upon by the Parties, and
approved by the Court. In the event that the Settlement is not
approved, AHP will not be entitled to a refund of any of the
money spent for these purposes.
7. Any notice, request, instruction or other document to be given by
AHP to Class Counsel or Class Counsel to AHP shall be in writing
and delivered personally or sent by Federal Express or facsimile
as follows, or as otherwise instructed by a notice delivered to
the other Party pursuant to this subsection:
a. If to AHP:
Louis L. Hoynes, Jr., Esquire
Senior Vice President and General Counsel
American Home Products Corporation
5 Giralda Farms
Madison, NJ 07940-0874
b. If to the Class Representatives or Class Counsel:
Arnold Levin, Esquire
Levin, Fishbein, Sedran & Berman
510 Walnut Street
Suite 500
Philadelphia, PA 19106
Gene Locks, Esquire
Greitzer & Locks
1500 Walnut Street
20th Floor
Philadelphia, PA 19102
8. Any form or other documentation required to be submitted under
this Agreement shall be deemed timely if postmarked on or before
the date by which it is required to be submitted under this
Settlement Agreement. Subject to other provisions for
eligibility, a properly completed and executed AIO Individual
Agreement or Opt-Out Form will be effective on the date it is
postmarked.
9. No provision of this Settlement Agreement or any Exhibit thereto
is intended to create any third-party beneficiary to this
Settlement Agreement.
10. Upon execution of the Memorandum of Understanding dated October
7, 1999 ("MOU"), AHP and Class Counsel jointly established a
toll-free telephone number and website for persons requesting
additional information regarding the Settlement. This number and
website has been and shall continue to be used to record the
names and addresses of such individuals and other information, so
that individual notice concerning the Settlement may be provided
to them. These names and addresses shall be kept strictly
confidential and shall not be disclosed to any person or used for
any purpose other than for issuance of settlement notice upon
prior order of the Court pursuant to Section VI.B.1.f(3). AHP
shall pay all costs relating to the toll-free telephone line and
website. In the event that the settlement receives Final Judicial
Approval, all expenditures made by AHP in relation to the
toll-free telephone line and website shall be considered
administrative expenses of Fund A, and AHP shall receive a credit
in the amount of all such expenditures in calculating its next
payment to Fund A.
11. This Agreement contains the entire Agreement between the Parties
with respect to the subject matter hereof and supersedes and
cancels all previous Agreements, negotiations, and commitments in
writings between the Parties hereto with respect to the subject
matter hereof, including without limitation the MOU. This
Agreement may not be changed or modified in any manner unless in
writing and signed by a duly authorized officer of AHP and by a
duly authorized representative of the Class Representatives.
IN WITNESS WHEREOF, the Parties have duly executed this Nationwide Class Action
Settlement Agreement between American Home Products Corporation and the Class
Representatives, by their respective counsel as set forth below, on this _____
day of November, 1999.
AMERICAN HOME PRODUCTS CORPORATION
BY:__________________________________
LOUIS L. HOYNES, JR., ESQUIRE
GENERAL COUNSEL
<PAGE>
CLASS COUNSEL
--------------------------------- ---------------------------------
ARNOLD LEVIN, ESQUIRE GENE LOCKS, ESQUIRE
LEVIN, FISHBEIN, SEDRAN & BERMAN GREITZER & LOCKS
510 WALNUT STREET, SUITE 500 1500 WALNUT STREET, 20TH FLOOR
PHILADELPHIA, PA 19106 PHILADELPHIA, PA 19102
215-592-1500 800-828-3489
--------------------------------- ---------------------------------
MICHAEL D. FISHBEIN, ESQUIRE SOL H. WEISS, ESQUIRE
LEVIN, FISHBEIN, SEDRAN & BERMAN ANAPOL, SCHWARTZ, WEISS, COHAN,
510 WALNUT STREET, SUITE 500 FELDMAN & SMALLEY, P.C.
PHILADELPHIA, PA 19106 1900 DELANCEY PLACE
215-592-1500 PHILADELPHIA, PA 19103
215-735-2098
--------------------------------- ---------------------------------
STANLEY CHESLEY, ESQUIRE CHARLES R. PARKER, ESQUIRE
WAITE, SCHNEIDER, BAYLESS & CHESLEY HILL & PARKER
1513 CENTRAL TRUST TOWER 5300 MEMORIAL, SUITE 700
FOURTH & VINE STREETS HOUTON, TX 77007-8292
CINCINNATI, OH 45202 713-868-5581
513-621-0267
---------------------------------
JOHN J. CUMMINGS, ESQUIRE
CUMMINGS, CUMMINGS & DUDENHEFER
416 GRAVIER STREET
NEW ORLEANS, LA 70130
504-586-0000
FOR THE PLAINTIFFS' MANAGEMENT COMMITTEE
FOR SUBCLASS 1(a):
---------------------------------
DIANNE NAST, ESQUIRE
RODA & NAST
801 ESTELLE DRIVE
LANCASTER, PA 17601
717-892-3000
FOR SUBCLASS 1(b):
---------------------------------
RICHARD LEWIS, ESQUIRE
COHEN, MILSTEIN, HAUSFELD & TOLL
1100 NEW YORK AVENUE, N.W.
SUITE 500, WEST TOWER
WASHINGTON, DC 20005-3934
202-408-4600
FOR SUBCLASS 2(a):
---------------------------------
MARK W. TANNER, ESQUIRE
FELDMAN, SHEPHERD & WOHLGELERNTER
1845 WALNUT STREET, 25TH FLOOR
PHILADELPHIA, PA 19103
215-567-8300
<PAGE>
FOR SUBCLASS 2(b):
---------------------------------
R. ERIC KENNEDY, ESQUIRE
WEISMAN, GOLDBERG, WEISMAN & KAUFMAN
1600 MIDLAND BUILDING
101 PROSPECT AVENUE WEST
CLEVELAND, OH 44115
216-781-1111
FOR SUBCLASS 3:
---------------------------------
RICHARD WAYNE, ESQUIRE
STRAUSS & TROY
THE FEDERAL RESERVE BUILDING
150 EAST 4TH
CINCINNATI, OH 45202-4018
513-621-2120
<PAGE>
1 Heart Disease: A Textbook of Cardiovascular Medicine 1433-34 (Eugene
Braunwald ed., 5th ed. 1997) [hereinafter "Braunwald I"].
2 J. P. Singh, et al., Prevalence of Clinical Determinants of Mitral,
Tricuspid and Aortic Regurgitation (The Framingham Heart Study), 83 Am. J.
Cardiology 897, 898 (1999) [hereinafter "Singh"].
3 Harvey Feigenbaum, Echocardiography 68-133 (5th ed. 1994) [hereinafter
"Feigenbaum"].
4 Arthur E. Weyman, Principles and Practice of Echocardiography 75-97 (2d ed.
1994) [hereinafter "Weyman"].
5 Singh, supra note 2.
6 Feigenbaum, supra note 3.
7 Weyman, supra note 4.
8 See Lisa A. Freed, et al., Prevalence and Clinical Outcomes of Mitral Valve
Prolapse, 341 New Eng. J. Med. 1, 2 (1999) [hereinafter "Freed"].
9 See, L. J. Rubin & S. Rich, 99 Primary Pulmonary Hypertension (1997)
[hereinafter "Rubin & Rich"].
10 See Eugene Braunwald, Essential Atlas of Heart Diseases, Current Med. For
Atty's 10-9 (1997) [hereinafter "Braunwald II"].
11 See, Rubin & Rich, supra note 9.
12 See Braunwald I, supra note 1 at 796-798.
13 Stuart Rich, Executive Summary from the Symposium on Primary Pulmonary
Hypertension, Evian, France, co-sponsored by the World Health Organization,
September 6-10, 1998, http://www.who.int/ncd/cvd/pph.html.
14 See Centers for Disease Control and Prevention, U.S. Dep't of Health and
Human Services, Cardiac Valvulopathy Associated with Exposure to
Fenfluramine or Dexfenfluramine: US Department of Health and Human Services
Interim Public Health Recommendations, 46 Morbidity & Mortality Weekly Rep.
1061, 1061-1066 (1997).
15 See Braunwald I, supra note 1 at 796-98.
16 See Feigenbaum, supra note 3 at 201-03.
17 See Kwan-Leung Chan, et al., Comparison of Three Doppler Ultrasound Methods
in the Prediction of Pulmonary Artery Disease, 9 J. Am. C. Cardiology 549,
550 (1987) [hereinafter "Chan"].
18 See Robert O. Bonow, et al., Guidelines for the Management of Patients With
Valvular Heart Disease: A Report of the American College of
Cardiology/American Heart Association Task Force on Practice Guidelines
(Committee on Management of Patients With Valvular Heart Disease), 32 J.
Am. C. Cardiology 1486, 1511 (1998) [hereinafter "Bonow"].
19 See id.
20 See id. at 1512
21 See Singh, supra note 2.
22 See id.
23 See Braunwald I, supra note 1 at 796-98.
24 See Weyman, supra note 4 at 1290-92.
25 See Walter L. Henry, et al., Report of the American Society of
Echocardiography Committee on Nomenclature and Standards in Two-dimensional
Echocardiography, 62 Circulation 212, 212-13 (1980) [hereinafter "Henry"].
26 See Bonow, supra note 23 at 1533-35.
27 See id.
28 See id. at 1510.
29 See id. at 1533-35.
30 See Margaret Kelley-Hayes, et al., The American Heart Association Stroke
Outcome Classification, 29 Stroke 1274, 1275 (1998). It should be noted
that this classification was approved by the American Heart Association
Science Advisory and Coordinating Committee [hereinafter "Kelley-Hayes"].
31 See id.
32 See id.
33 See Braunwald I, supra note 1 at 1433-34.
34 See Kelley-Hayes, supra note 35.
35 See Braunwald I, supra note 1 at 796-98.
36 See Encyclopedia of Neuroscience 268 (George Adelman ed., 1987).
37 See Harrison's Principles of Internal Medicine 1878, 1885 (14th ed. 1998).
38 See C. Otto, The Practice of Clinical Echocardiography 589-93 (1997)
[hereinafter "Otto"].
39 See Feigenbaum, supra note 3.
40 See Weyman, supra note 4.
41 See Singh, supra note 2.
42 See A.S. Pearlman et al., Guidelines for Optimal Physician Training in
Echocardiography: Recommendations of the American Society of
Echocardiography Committee on Physician Training in Echocardiography, 60 Am
J. Cardiol 158-163 (1987).
43 As set forth in Section VI.C.3.f. below, "deidentified" shall mean
redaction of all patient identifying information, including but not limited
to patient name, address , telephone number, e-mail address, social
security number and other personal identifiying information.
