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                Wednesday, May 9, 2001, Vol. 3, No. 91


BREAST IMPLANT: Minnesota Mining Faces 847 Suits; Assesses Liabilities
BRIDGEPORT MACHINES: 7th Cir Says Nationwide Class of Buyers Unnecessary
CALICO COMMERCE: Levy and Levy Announces Securities Suit Filed in N.Y.
CALIFORNIA: Activisits Wage Suit over Blackouts, Urge for Safety Net
COMPUTER ASSOCIATES: Market Punishes CA After Earnings 'Typo'

ECONOMY SYNDROME: AAP Newsfeed Says British Victims to Sue for STG 7 Mil
FEN-PHEN: Court Denies Fed's Request to Delay Paying Claimants
HIP IMPLANTS: Sulzer Opposes Consolidation, Could Live with C.D. Cal.
HMOs: Fd Judge Hears Arguments on Cert. of Racketeering Suit in Miami Ct
HMOs: Plaintiffs Say Claims against Insurers Would Unravel Without Cert.

HOLOCAUST VICTIMS: Lawsuit Cites Army Brass In Vanished Hungarian Loot
MANORCARE INC: Hagens Berman Announces Suit over Systemic Negligence
PENN TREATY: Decries Merit of Securities Suits; Capital Raising to Go on
PRUDENTIAL DISCOVERY: Reports to SEC on Lawsuits over Sales Practices
TAISHUN TUNNEL: Farmers in China Sue for Damages in Lung Disease

TOBACCO LITIGATION: Cigarette Makers Agree to Pay FL Smokers $710 Mil
TOBACCO LITIGATION: FL Ruling Delays Payments To Smokers Pending Appeals
TOBACCO LITIGATION: Tobacco Groups Post $ 2 Bil Bond
U.K. HOSPITALS: Parents to Sue over Removal of Kids' Organs after Death


BREAST IMPLANT: Minnesota Mining Faces 847 Suits; Assesses Liabilities
Minnesota Mining & Manufacturing Co and certain other companies have been
named as defendants in a number of claims and lawsuits alleging damages
for personal injuries of various types resulting from breast implants
formerly manufactured by the company or a related company.

The company entered the business of manufacturing breast implants in 1977
by purchasing McGhan Medical Corporation. In 1984, the company sold the
business to a corporation that also was named McGhan Medical Corporation.

As of March 31, 2001, the company is currently named as a defendant,
often with multiple co-defendants, in 847 lawsuits and 27 claims in
various courts, all seeking damages for personal injuries from allegedly
defective breast implants. These lawsuits and claims purport to represent
2,228 individual claimants.

3M has confirmed that 35 of the 2,228 claimants have opted out of the
Revised Settlement Program (discussed below) and have 3M implants. Most
of the claimants in these confirmed cases have alleged an unspecified
amount of damages above the jurisdictional limit of the courts in which
the cases were filed.

The company believes that most of the remaining 2,228 claimants will be
dismissed either because the claimants did not have 3M implants or the
claimants accepted benefits under the Revised Settlement Program. Most of
these claimants have filed lawsuits that either do not allege a specific
amount of damages or allege an unspecified amount of damages above the
jurisdictional limit of the court. The rest of these claimants allege
damages, including both actual and punitive damages, aggregating
approximately $100 million in their lawsuits. Approximately 150 claimants
have filed lawsuits in state and federal courts in New York alleging
damages in excess of $20 million each. 3M expects that virtually all of
these New York cases will be dismissed without payment for the reasons
stated above. The company continues to work to clarify the status of
these lawsuits and claims.

Based on 3M's experience in resolving thousands of these lawsuits, 3M
believes that the amount of damages alleged in complaints is not a
reliable or meaningful measure of the potential liability that 3M may
incur in the breast implant litigation. Investors should place no
reliance on the amount of damages alleged in breast implant lawsuits
against 3M.

On December 22, 1995, the United States District Court for the Northern
District of Alabama approved a revised class action settlement program
for resolution of claims seeking damages for personal injuries from
allegedly defective breast implants (the "Revised Settlement Program").
The Court ordered that, beginning after November 30, 1995, members of the
plaintiff class may choose to participate in the Revised Settlement
Program or opt out, which would then allow them to proceed with separate
product liability actions.

The company believes that approximately 90 percent of the registrants,
including those claimants who filed current claims, have elected to
participate in the Revised Settlement Program. It is still unknown as to
what disease criteria all claimants have satisfied, and what options they
have chosen. As a result, the total amount and timing of the company's
prospective payments under the Revised Settlement Program cannot be
determined with precision at this time. As of March 31, 2001, the company
had paid $302 million into the court-administered fund as a reserve
against costs of claims payable by the company under the Revised
Settlement Program (including a $5 million administrative assessment).
Additional payments will be made as necessary. Payments to date have been
consistent with the company's estimates of the total liability for claims
under the Revised Settlement Program.

Under the Revised Settlement Program, additional opt outs are expected to
be minimal since the opt-out deadline has passed for virtually all U.S.
class members. The company's remaining obligations under the Revised
Settlement Program are limited since (i) most payments to current
claimants have already been made, (ii) no additional current claims may
be filed without court approval, and (iii) late registrants are limited
by the terms of the Revised Settlement Program.

The company's current best estimate of the amount to cover the cost and
expense of the Revised Settlement Program and the cost and expense of
resolving opt-out claims and recovering insurance proceeds (from
inception of the litigation through March 31, 2001) is $1.2 billion.
After subtracting cumulative payments of $1.187 billion as of March 31,
2001, for defense and other costs and settlements with litigants and
claimants, the company had remaining liabilities for the breast implant
litigation of $13 million.

The company's insurers initiated a declaratory judgment action in Ramsey
County Minnesota against the company seeking adjudication of certain
coverage and allocation issues. The jury trial phase of this action
finished on February 24, 2000. The jury returned a verdict favorable to
the company by rejecting all of the insurers' remaining defenses to
coverage for breast implant liabilities and costs. The court has
considered additional remedies requested by the company and the insurers
including eliminating, limiting or extending allocation among the
insurers providing occurrence-based coverage (before 1986), pre- and
post-judgment interest, attorneys' fees and further equitable relief.

The court's rulings in post verdict motions are considered to be
generally favorable to the company. The court awarded the company
prejudgment interest on amounts owing by insurers including reasonable
attorney fees. However, the court has yet to determine the amount of
attorneys' fees recoverable by the company. The court has indicated a
formula to be used for this calculation that would result in the company
being reimbursed for less than all of its fees. Exact amounts cannot yet
be determined. The court filed the judgment on April 16, 2001 and the
company expects entry of that judgment to occur during the second quarter
of 2001.

As of March 31, 2001, the company had receivables for insurance
recoveries of $502 million, representing settled but yet to be received
amounts as well as amounts contested by the insurance carriers. During
the first quarter of 2001, the company received payments from its
occurrence carriers. Various factors could affect the timing and amount
of proceeds to be received under the company's various insurance
policies, including (i) the timing of payments made in settlement of
claims; (ii) the outcome of occurrence insurance litigation in the courts
of Minnesota (as discussed above) and Texas; (iii) potential arbitration
with claims-made insurers; (iv) delays in payment by insurers; and (v)
the extent to which insurers may become insolvent in the future. There
can be no absolute assurance that the company will collect all amounts
recorded as being probable of recovery from its insurers.

While the company currently believes that the ultimate outcome of these
proceedings and claims, individually and in the aggregate, will not have
a material adverse effect on the consolidated financial position, results
of operations, or cash flows of the company, there can be no absolute
certainty that the company may not ultimately incur charges for breast
implant claims in excess of presently recorded liabilities.

While the company currently believes that a material adverse impact on
its consolidated financial position, results of operations, or cash flows
from any such future charges is remote, due to the inherent uncertainty
of litigation, there exists the remote possibility that a future adverse
ruling could result in future charges that could have a material adverse
impact on the company. The current estimate of the potential impact on
the company's consolidated financial position for breast implant
litigation could change in the future.

BRIDGEPORT MACHINES: 7th Cir Says Nationwide Class of Buyers Unnecessary
7th Circuit short-circuits class action v. manufacturer

An Indiana man's bid to pursue his lawsuit against a manufacturer as a
nationwide class action appears to be doomed.

His chance of obtaining the certification of a smaller class doesn't look
too good either.

Citing "issues of choice of law, commonality and manageability," the 7th
U.S. Circuit Court of Appeals concluded Friday that it was unnecessary
for the judge presiding over the man's suit to certify a class of all
people in the United States who over the past five years bought machine
tools equipped with a DX-32 Control Unit.

The unit, manufactured by Bridgeport Machines Inc. of Connecticut, uses
computer hardware and software to direct machine tools in performing
complex tasks.

The 7th Circuit conceded that a class limited to purchasers in a single
state or customers of a single dealer might be appropriate -- but added
that such a group of buyers might be too small to justify class

The court vacated an order by Chief Judge William C. Lee of the Northern
District of Indiana certifying a nationwide class in a suit accusing
Bridgeport of fraud and breach of warranty.

The court sent the case back to Lee with instructions to make the factual
and legal inquiries required under Federal Rule of Civil Procedure 23.

Rule 23 requires a judge confronted with a request for class
certification to consider such matters as whether joinder is
impracticable because the proposed class has so many members and whether
those seeking to become named plaintiffs will fairly represent the
interests of the class.

Lee certified a nationwide class at the request of plaintiff John D.
Szabo, who claims all DX-32 units sold since the beginning of 1996 were

Szabo also claims that Bridgeport or its agents lied to customers about
the abilities and limitations of milling machines equipped with DX-32

Bridgeport filed a petition under Federal Rule of Appellate Procedure 5
and Federal Rule of Civil Procedure 23(f) seeking review of the
certification order.

The 7th Circuit said it granted Bridgeport's request for review in part
because "the class certification turns a $ 200,000 dispute the amount
that Szabo claims as damages into a $ 200 million dispute."

"Such a claim puts a bet-your-company decision to Bridgeport's managers
and may induce a substantial settlement even if the customers' position
is weak," Judge Frank H. Easterbrook wrote for a three-member panel of
the 7th Circuit. "This is a prime occasion for the use of Rule 23(f), not
only because of the pressure that class certification places on the
defendant but also because the ensuing settlement prevents resolution of
the underlying issues."

The panel said granting review also allowed it to consider whether Lee
and the other district judges whose decisions Lee cited "correctly
understood the applicable principles" of law involved with certification

They didn't, the panel concluded.

The panel held that Lee erred by certifying a class "without resolving
factual and legal disputes that strongly influence the wisdom of class

The panel acknowledged that a judge must assume that a lawsuit's claims
are true for the purposes of ruling on a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted.

But that approach is not appropriate when it comes to a motion for class
certification, the panel held.

"The reason why judges accept a complaint's factual allegations when
ruling on motions to dismiss under Rule 12(b)(6) is that a motion to
dismiss tests the legal sufficiency of a pleading," the panel said. "Its
factual sufficiency will be tested later -- by a motion for summary
judgment under Rule 56, and if necessary by a trial."

But the panel noted that an order certifying a class "usually is the
district judge's last word on the subject."

That means the judge must make some factual as well as legal
determinations in deciding whether the prerequisites of Rule 23 have been
met, according to the panel.

The panel said that if a judge in making that decision must consider
matters that touch on the merits of a complaint -- for example, if he
must determine which state's laws apply in order to determine if it would
be difficult to manage the case as a class action -- "then the judge must
make a preliminary inquiry into the merits."

Joining the opinion written by Easterbrook were Judges Richard A. Posner
and Anne Claire Williams. John D. Szabo, doing business as Zatron v.
Bridgeport Machines Inc., No. 01-8003. (Chicago Daily Law Bulletin, May
7, 2001)

CALICO COMMERCE: Levy and Levy Announces Securities Suit Filed in N.Y.
A class action lawsuit was filed in the United States District Court for
the Southern District of New York on behalf of all purchasers of the
common stock of Calico Commerce, Inc. (Nasdaq: CLIC) from October 6,
1999, through March 23, 2001, inclusive (the "Class Period").

The complaint charges Calico Commerce and certain officers and directors
with issuing a false and misleading registration statement and prospectus
(the "Offering Documents") in connection with the Company's October 6,
1999, initial public offering. The complaint alleges that the Offering
Documents were misleading because they failed to disclose to investors
that at least two of the lead underwriters and two of the other
underwriters had solicited and received excessive and undisclosed
commissions from certain investors.

No class has yet been certified in this action, and until a class is
certified an investor is not represented. If you purchased Calico
Commerce, Inc. securities during the Class Period, you have the right to
be represented by counsel and to participate in this action as a

Contact: Stephen G. Levy, Esq. of Levy and Levy, P.C., 866-338-3674, or
212-792-4343, or 203-622-7664, or LLNYCT@aol.com

CALIFORNIA: Activisits Wage Suit over Blackouts, Urge for Safety Net
As she monitored the news of possibly more rolling blackouts Monday, Lori
Gray braced for another tense day in the projected summer-long fallout
from the state's worsening energy crisis.

For the 39-year-old Berkeley woman--who is blind and suffers from
epilepsy, asthma and chronic pain from aching joints that restrict
movement--losing electricity is more than just an inconvenience.

It could kill her, she says.

Gray relies on electricity to run several life-saving machines that do
everything from dispensing her asthma medication and opening her door by
remote control to relaying her emergency telephone numbers in a
computerized voice.

Today, disability activists are calling on state officials and
California's utilities to do more to assist residents like Gray--disabled
people who are perilously vulnerable to any loss of electrical power.

In letters to Gov. Gray Davis, the California Public Utilities Commission
and Judge Dennis Montali, who is presiding over Pacific Gas & Electric's
recent bankruptcy filing, an Oakland-based disability watchdog is calling
for a comprehensive statewide system to ensure that disabled people do
not fall through the energy crisis safety net.

Lawyers from Disability Rights Advocates want a state-mandated emergency
plan that responds to the "disproportionate and life-threatening impact
of the energy crisis on people with disabilities."

Activists are calling for a statewide early-warning system; the creation
of charging stations on exempt circuits for recharging equipment during
blackouts; funds to buy backup batteries and generators and a toll-free
emergency hotline for the disabled.

They also seek a state investigation into remedies for the long-term
impacts--including rate increases.

Gray says the prospect of losing power and relying on unreliable
generators pervades even her dreams.

"I spend my days worrying," she says. "I worry over when the next
blackout will come. I worry about my friends who are in similar, if not
worse, predicaments than me--who rely on their respirators. Let me tell
you, this is no way to live."

At least two utilities said Monday they already employ an early-warning
system for many customers on life support, but were open to other
suggestions on how to improve services for the disabled. They added that
the burden also rests with state officials.

Activists, who called the letters a first attempt to open discussions of
the issues, say they have not ruled out a class-action lawsuit on behalf
of what they say are 3 million people with disabilities in California.

"The response should not be an ad hoc process--one utility doing this and
another that," said Shawna Parks, an attorney for the Oakland nonprofit.
"We want an organized system that addresses some very serious needs. And
as for any lawsuit if this doesn't happen, we're not closing any doors."

Disability Rights Advocates recently won major concessions in settling a
lawsuit it filed against health care giant Kaiser Permanente for failing
to address the needs of its wheelchair patients.

PUC Commissioner Carl Wood said Monday he would be open to any
suggestions to assist the sick, elderly and disabled in the event of
continued blackouts. "The energy crisis has put a huge burden on the most
vulnerable people in our society--people just trying to survive," he

But funding new programs presents problems.

"One utility faces bankruptcy and others could be close, so some might
question the wisdom of giving them new mandates when there may be no
money to fund them," Wood said. "The goals are reasonable. The question
is where the money comes from."

Dan Quigley, director of emergency communications for PG&E, said the
company contacts about 22,000 life-support customers before anticipated
blackouts. Another 48,000 are part of a medical baseline program in which
they receive reduced electrical rates.

"We didn't design the system to shut people off and cause them
inconvenience," he said. "We're eager to work with the PUC and disabled
advocates to figure out a system that reduces the disruption." Quigley
added, however, that some of the activists' suggestions--such as
community battery charging stations--would be better served by state
emergency response groups.

Anita Gore, a spokesperson for the state's massive health and human
services agency, said the suggestions will be considered. "This is all
relatively new," she said of the blackouts, "so we're gearing up to
address concerns of the disabled and everyone else."

Ed Van Herik, a spokesman for San Diego Gas & Electric, said the company
notifies 3,500 life-support customers of impending blackouts and "calls
those customers back later to make sure the power has come back on."

He echoed concerns about the suggestion of an emergency hotline. "Some of
those calls might be better handled by 911," he said.

Disability Rights Advocates has recently heard from dozens of disabled
residents from across the state, including a woman who uses a respirator
to breathe at night--who says she must stay awake during blackouts
because she cannot afford a generator.

A deaf man who uses visual alarms for the phone, doorbell, smoke detector
and baby monitor has lost them during blackouts and fears going without
power at night--saying his family will have difficulty communicating
because they use sign language.

Another disabled woman who uses a wheelchair told advocates she was
stranded in her apartment during a blackout because the elevator did not
work and she could not use the stairs.

Parks said activists want the utilities to expand services for the

"There are situations faced by the disabled that aren't defined as
critical by the utilities," she said. "There are many more definitions of
being disabled than to be on a respirator or life support."

Lori Gray knows how the system can fail the disabled.

She was expelled from PG&E's medical baseline program last summer after
failing to respond to a company letter requiring her to recertify.

"They sent a printed letter, but I'm blind and can't see," she said. "But
they bounced me anyway."

Now Gray must acquire new letters from her doctors to get readmitted into
the program. And when she asked utility officials to attach a staple to
the return address of future letters so she could distinguish them as
important mail, they refused--until she complained to PUC officials.

Gray says she would do anything to be included in the early warning
programs because notification could be a lifesaver.

"It would relieve the stress of worrying when the next blackout is
coming," she said. "I think the disabled deserve that much." (Los Angeles
Times, May 8, 2001)

COMPUTER ASSOCIATES: Market Punishes CA After Earnings 'Typo'
Investors lopped more than $1 billion in value from shares of Computer
Associates International Inc. yesterday, three days after the company
blamed a typographical error for overstating a preliminary earnings

CA last Friday reported that a chart in an April 16 preliminary earnings
release mistakenly put diluted operating earnings per share for the year
ended March 31, 2001, at 40 cents. CA on Friday said the correct figure
was 16 cents.

CA shares had already been under pressure, following a published report
last week that contended the company has for years used accounting
"tricks" to create a "mirage" of revenue growth. CA last October switched
to a new business model and a "pro forma, pro rata" accounting method,
which the report suggested further masks the declines. CA called the
allegations "misleading and at times false."

Despite attempts by Wall Street analysts to downplay the report in The
New York Times and the "typographical error," investors seemed worried by
the combined impact of the recent news. CA shares yesterday closed down
$2.50 to $ 28.20, a decline of around 8 percent.

"Investors are on edge-they're looking for any reason to sell," said
Brian Eisenbarth, who tracks CA for Collins & Co. LLC, in San Francisco.
He said he didn't believe the error will be a long-term issue for CA.
"These accounting issues pop up every once in a while" for many large
software firms, he said.

Others sought to downplay the error.

"It's a meaningless number," Prudential Securities Inc. analyst John
McPeake told Reuters.

One group that certainly is watching are law firms specializing in
shareholder lawsuits. David Rosenstein, a spokesman for Millberg Weiss,
which in 1998 filed a class-action suit against CA, declined to comment
on any possible new suit against CA.

But speaking generally about financial reporting, he said: "Obviously,
restatements are a major red flag. They are a major source for alerts
about irregularities."

"The typographical error was a human error," CA spokesman Bob Gordon said
in an e-mail yesterday. "The timing was terrible. There's nothing more to
say about that."

CA said the quarterly diluted operating earnings per share figure (a loss
of 29 cents) was reported correctly in the release, indicating that
analysts could have arrived at the 16-cent figure by adding the
fourth-quarter number to the previous three quarters.

While CA never put a dollar figure on the misstated and corrected
per-share amounts, published reports translated the error into an
overstatement of around $140 million, since the per-share figures are
multiplied by the number of shares CA has outstanding (around 575
million). While CA never said it, the incorrect 40-cent figure inflated
diluted operating earnings to around $230 million, compared with the $90
million that resulted from the 16-cent figure.

After weekend published reports extrapolated the error to its full-dollar
amounts, investors began dumping CA shares en masse when trading resumed
yesterday. Trading volume more than doubled average daily levels.

"We don't think that they have been fair in their reporting of the nature
of the error...no financial results were changed," CA's Gordon wrote.

How serious the error was remains debatable.

Securities and Exchange Commission spokesman John Heine declined to
characterize how common such errors are, or whether the SEC views
companies that make them with a more critical eye. (The SEC has inquired
about CA's accounting practices in the past, though it's uncertain
whether those inquiries have been completed, Newsday reported last week.)

"There are typos and there are typos," Heine said. "But we don't keep
statistics on them. We make too many of them ourselves. It would be a
painful number."

Gordon said CA has taken measures to make certain reporting errors don't
happen again.

"Someone without direct involvement in compiling the numbers for the
printed document will check the releases from now on before they are
issued," he said. (Newsday (New York, NY), May 8, 2001)

ECONOMY SYNDROME: AAP Newsfeed Says British Victims to Sue for STG 7 Mil
British victims of so-called economy class syndrome are reportedly
following their Australian counterparts and are preparing a class action
against major airlines.

Lawyers have begun talks with 14 bereaved families on the possibility of
STG 500,000 ($A1.4 million) payouts for each of the victims of deep vein
thrombosis (DVT), which can cause fatal blood clots, British newspaper
the Daily Express reported today.

The STG7 million ($A19.6 million) compensation claim will argue that the
airline industry was negligent and failed to warn passengers of the
dangers of DVT before flying.

The move follows the formation of a campaign group, Victims of
Air-Related DVT Association (VARDA), involving victims' families and
aviation experts.

The group is chaired by Ruth Christoffersen, whose daughter Emma, 28,
collapsed and died at Heathrow Airport after a flight from Australia.

It has held talks with Manchester-based legal firm Leigh Day over the
compensation case.

"We truly believe that Emma and countless others have died needlessly,"
Mrs Christoffersen said.

Australian lawyers are preparing cases on behalf of 800 alleged victims
of DVT, but the VARDA move is the first sign of large-scale actions by UK
victims, the paper said.

VARDA also wants a public inquiry into the deaths. (AAP Newsfeed, May 8,

FEN-PHEN: Court Denies Fed's Request to Delay Paying Claimants
The judge presiding over the diet drug multidistrict litigation has
refused the federal government's request to postpone the distribution of
millions of dollars in settlement funds to claimants until the government
can determine how much it is owed in reimbursements to Medicare and other
federally funded health insurance programs. In re Diet Drugs
(Phentermine, Fenfluramine, Dexfenfluramine) Products Liability
Litigation, MDL No. 1203 (E.D. Pa., Mar. 21, 2001).

U.S. District Judge Louis C. Bechtle in the Eastern District of
Pennsylvania held that the government may only recover from American Home
Products Corp., the chief defendant in thousands of diet drug cases
across the country, and not the plaintiffs or the settlement trust.

Since there is no evidence that AHP cannot satisfy the claims of both the
plaintiffs and the government, he said he saw no reason to delay
distribution of the payouts from the settlement trust. However, he
ordered AHP to set aside $7 million to pay the United States in
subrogation reimbursements once the government identifies those
plaintiffs whose diet-drug-related health-care costs were covered by a
government health plan.

AHP has entered into a $3.75 billion settlement agreement with thousands
of plaintiffs to pay for both medical monitoring and for injuries
allegedly resulting from using the diet drugs phentermine and
fenfluramine. The court approved the settlement last year and the first
payments amounting to $4.8 million are ready to go out. The drugs are
alleged to have caused serious heart valve damage and pulmonary
hypertension in some users, and several of those patients have died from
their illnesses.

The federal government sent the court a letter last July in which it
asserted that the U.S. Departments of Health and Human Services, and
Defense and Veterans Affairs, along with the Indian Health Service, are
entitled to reimbursements from the proceeds of the settlement for
payments made to individual class members for medical treatment paid for
by the government. The plaintiffs then moved to require the trust to
distribute the proceeds of the settlement without regard to the
government's claims. Judge Bechtle held a hearing on the motion March 13
at which the government did not put in an appearance.

The government has refused to inform the fund trustees of any specific
individuals to whose payments it asserts a claim or the estimated dollar
amounts of those claims, Judge Bechtle said. Instead, it is demanding
that the plaintiffs and AHP provide it with the names, addresses, Social
Security numbers and medical treatment histories of all class members so
that it can cull the list to identify those who are covered by government
insurance programs. The parties asserted that if they were forced to
acquiesce to the government's demands it would breach the trust's
obligations to distribute settlement proceeds promptly and maintain the
confidentiality of the class members' personal information, ultimately
resulting in significant delays in the processing of compensation
benefits. It might even cause the plaintiffs to rescind the agreement,
they warned.

Judge Bechtle analyzed the government's request as a motion for a
preliminary injunction and found that postponing distribution of the
settlement proceeds would cause irreparable harm to the claimants. On the
other hand, he said, proceeding with the payouts would not cause the
government any harm since it would still have an independent cause of
action to recover its costs under the terms of the settlement regardless
of when its insureds are paid by the fund.

He further concluded that the government would have little likelihood of
succeeding on the merits of its claims, either under the Medical Care
Recovery Act or the Medicare Secondary Payer Act.

On the issue of delays, Judge Bechtle noted that in the multidistrict
orthopedic bone screw litigation, over which he also presides, the
parties cooperated with the government by postponing distribution of
settlement funds and giving the government a complete list of claimants
from which to identify and quantify its claims.

The result, the judge said, was that the payouts from the bone screw
settlement fund were delayed for nearly two years from April 1999 until
December 2000 when the government made its first specific demand for
payment to settle Medicare claims.

In this case, the government has not offered to follow any timetable for
identifying the claimants in whom it has an interest, but the
government's lawyers did estimate that the whole process might take from
four to 18 months.

Under the Medical Care Recovery Act, the government may recover from a
third-party tortfeasor the reasonable costs of medical services rendered
to the tortfeasor's victims. Here, Judge Bechtle said, the government may
have a case against AHP. However, its interest does not extend to funds
held in trust for class members under the settlement agreement because
the MCRA makes no provision for recovery against an injured party or from
funds paid to the injured party by the tortfeasor.

In order to recover from AHP, the government will have to prove that the
company is liable, since it admits no liability in its settlement with
the class. " T his is an unavoidable burden for the Government to carry
and one as which, as of this point in time, it has not disclosed even a
hint of any real attempt to satisfy," Judge Bechtle said.

Similarly, under the provisions of the Medicare Secondary Payer Act, the
government may recover Medicare expenditures from a health insurer or
self- insured company for expenses covered under the insurer's plan that
were paid for by the government. In this case, the court said, the
government cannot claim the settlement trust is a self-insurance plan
merely because AHP funded the trust itself instead of getting the money
from its liability insurers. (Medical Devices Litigation Reporter, April
6, 2001)

HIP IMPLANTS: Sulzer Opposes Consolidation, Could Live with C.D. Cal.
If all the federal cases involving its defective hip implants must be
consolidated in one court, the manufacturer of those devices has asked
the Judicial Panel on Multidistrict Litigation to transfer the suits to
the Central District of California where one of the earliest cases is
already well under way. In re Inter-Op Hip Prosthesis Products Liability
Litigation, MDL No. 1401, response filed (J.P.M.L., Feb. 26, 2001).

Sulzer Orthopedics Inc. filed a response Feb. 26 to a plaintiff's motion
to transfer and consolidate the cases in the Northern District of Ohio.
Sulzer argues that it was not necessary to establish a multidistrict l
itigation court anywhere, but that if the JPML chooses to consolidate, it
should designate the Central District of California because more cases
have been filed in California's federal and state courts than any other

Sulzer recalled 25,000 of its Inter-Op hip implants on Dec. 8, 2000,
after it discovered that a small residue of oil left on the outside of
the shell that attaches to the pelvic bone was preventing the device from
bonding with the patient's bones. Some 17,500 of the devices have already
been implanted in patients, and more than 748 people have undergone
additional surgery to replace the defective prosthesis.

According to Sulzer's Feb. 26 response, more than 90 lawsuits involving
the Inter-Op acetabular shells have been filed in state and federal
courts around the nation. Most of the suits were filed in the South and
West, with the largest number of cases filed in California, Texas and
Florida. About 20 of the lawsuits are in federal court, and eight are
class actions, Sulzer said in the response.

The company now estimates that a total of 250 suits have been filed in
various state and federal courts. A survey by the Medical Devices
Litigation Reporter found at least 50 lawsuits have been filed in the
largest federal courts, and two or three new complaints are being filed
in federal district courts per day.

Sulzer argued that a federal MDL court is not necessary because it is
already coordinating pretrial discovery in the most advanced individual
cases. Conventional case-handling practices in each district should be
adequate to manage the litigation, Sulzer said. It is in the process of
culling documents related to the implants and establishing an electronic
document database and document depository that will be available to all
the litigants, it said.

In Texas, a Travis County judge ordered Sulzer to begin turning over
documents to the plaintiffs within 30 days after it filed objections to
each of the plaintiffs' 53 document requests. Sulzer, pleading it needed
more time, had said it would produce an estimated 160,000 documents by
June but under Texas court rules, defendants must begin submitting
discovery documents within 30 days.

If the JPML does choose to transfer and coordinate the cases, Sulzer
argued that the Central District of California would be the best venue
because at least 10 cases have already been filed there and because one
of those cases, Starkman v. Sulzer Medica, No. 01-CV-20, is already
further along in the discovery process than most of the other cases. The
judge in that case, Gary A. Fees, has set a case management conference
and the parties have met and conferred on a stipulated pretrial schedule,
including landmark dates for discovery and determination of class

The Central District of California has judges experienced in handing MDL
cases and is up to date on its docket. The court is located in Los
Angeles, which is one of the most accessible cities in the United States
for air travelers, Sulzer said.

The company noted that at least some discovery and depositions would
occur in Texas where it is headquartered, no matter where the cases are

Several plaintiffs also filed responses with the JPML. Most argued all
the federal cases should be consolidated in the court where they have
filed their own complaints. The JPML has not yet scheduled a hearing on
the motion to consolidate and transfer. (Medical Devices Litigation
Reporter, April 6, 2001)

HMOs: Fd Judge Hears Arguments on Cert. of Racketeering Suit in Miami Ct
More than 50 lawyers crammed into a Miami courtroom Monday as a federal
judge entertained arguments on whether a racketeering lawsuit against
nine managed care companies should be accorded class-action status.

If U.S. District Court Judge Federico Moreno sides with the estimated
600,000 doctors who filed the suit, it would open the case to all doctors
who believe they were denied reimbursement claims or subjected to
delaying tactics by HMOs.

"The only meaningful way to address it is through a nationwide remedy,"
said Harley Tropin of Miami, one of the lawyers representing doctors. "A
busy doctor cannot carry on one of these litigations against these
people. That's obvious."

The lawsuit is actually an amalgamation of doctor-vs.-lawyer lawsuits
filed across the country. The doctors accuse nine health maintenance
organizations of racketeering, fraud and extortion in cheating them out
of more than $ 1 billion.

Among the defendants are Aetna, Cigna, Humana, United HealthCare and

Lawyers for the HMOs countered that there was no premeditated,
computer-programmed swindling of doctors. Brian Boyle, representing
Humana, said doctors' claims are handled in varying ways, many manually.
He said certifying the case as a class action would require a "leap of
faith" by Moreno that any fraud or extortion on the HMOs' part was

"I think trying to resolve this case on a class-action basis would be
mind-numbing," Boyle said. "There's no need to try to stage a gargantuan,
epic trial trying to resolve every physician grievance ever uttered."

Boyle said the proper venue for the doctors' complaints would be through
individual lawsuits or arbitration hearings.

Moreno isn't expected to rule on the class-action request for months. The
judge struggled at times with the arcane terminology of medical claims
coding, which varies from one company to another. He seemed flustered
over the industry's use of "down-coding" or "right-coding" to deny or
lower doctors' reimbursement claims, if they merely translate into paying

"It doesn't matter how you do it, if you do it," Moreno said.

A parallel lawsuit pits health care consumers against HMOs. Plaintiffs
are seeking class-action status in that case, too. (The Miami Herald, May
8, 2001)

HMOs: Plaintiffs Say Claims against Insurers Would Unravel Without Cert.
The nation's biggest health insurers argued in a federal court here today
against consolidating the claims of 600,000 doctors into a single
class-action suit.

In March, the managed care companies won a partial victory from United
States District Judge Federico A. Moreno. He rejected racketeering and
other accusations by the doctors, who contended that the insurers cheated
on fees.

A lawyer for Aetna, Richard Doren, said the contentions by doctors and
other health care providers were too complex and varied to be lumped into
a single class action.

Aetna, he said, has 22,000 rates for medical services and Humana, another
big health insurer, has 24,000 rates. In addition, not all the disputed
claims were incorrectly handled by the insurers and were covered by
different contractual terms and as many as 50 state laws.

Most disputes between health care providers and the insurers are resolved
outside court, said John Harkins, a lawyer for Cigna. "Over 90 percent of
claims are paid as submitted," Mr. Harkins said. "Most of the time, the
problems get worked out."

Plaintiffs' lawyers representing the doctors and medical groups said the
claims against the insurers would probably unravel without class-action
status because the amounts sought by any single health care provider were
relatively small. A class action allows a handful of people to sue on
behalf of thousands of others similarly harmed by the wrongful actions of
a defendant.

"This case, if it's going to proceed, it has to be as a class," said Joe
Watley, a lawyer for the plaintiffs. "While we are arguing procedure, we
are really deciding the whole ballgame."

The lawsuits contend that the insurers are liable for violating contracts
and misrepresenting business practices to the doctors and organizations
that provide services to the insurers' clients.

The plaintiffs accuse the companies of lumping together itemized bills
from doctors and paying a single, substantially smaller fee.

Janet Humphreys, a member of a team of lawyers pressing the cases against
the managed care companies, said the insurers routinely and
systematically underpaid doctors.

It was not certain when Judge Moreno would rule on the class-action

Besides Aetna, Humana and Cigna, UnitedHealth Group and WellPoint Health
Networks are among the defendants. (The New York Times, May 8, 2001)

HOLOCAUST VICTIMS: Lawsuit Cites Army Brass In Vanished Hungarian Loot
A group of Hungarian survivors of Holocaust death camps sued the U.S.
government in federal court Monday in Miami, seeking compensation for
property seized from them by Nazis and eventually taken by the Army but
never returned.

The case stems from the Nazi seizure of more than $200 million in gold,
jewelry, Oriental rugs, clothing and artwork including paintings by
Rembrandt and Durer. The booty was loaded aboard a train that the Nazis
abandoned and which Army personnel took over. The treasure trove
ultimately vanished, a U.S. commission found.

"This is the first case of its type -- a class action brought on behalf
of Holocaust survivors that charges the U.S. government with improperly
disposing of assets," said Washington lawyer Jonathan Cuneo, one of the
plaintiffs attorneys.

Until now, the wave of Holocaust-related compensation lawsuits that
started in 1996 has primarily been directed against large corporations,
mostly banks, industries and insurance firms based in Europe.

Charles Miller, a Justice Department spokesman, said the government
wouldn't comment until it had seen the lawsuit.

The case, based partly on reports issued in October 1999 and December
2000 by the President's Advisory Commission on Holocaust Assets, dates to
late in World War II when the Nazis loaded a train in Hungary with loot
seized from Jews imprisoned in concentration camps.

The report said the 24-boxcar train never made it to Germany. The Nazis
abandoned it in Austria, where U.S. soldiers took control of it. Some of
the booty immediately vanished, with the remainder being sent to U.S.
military warehouses in Austria.

But the treasure continued to dwindle, much of it taken by senior Army
officers, according to the advisory commission reports.

Specifically, the report said Maj. Gen. Harry Collins, the chief U.S.
military official in western Austria at the end of the war, placed orders
from the warehouse for enough china and silver for 45 people, as well as
a dozen silver candlesticks, glassware, 30 sets of table linens, carpets
and furs for his villa and a personal railroad car. Collins commanded
that the material be "of the very best quality and workmanship available
in the land."

Collins, who married an Austrian woman, died in 1963 and is buried in
Salzburg. Cuneo said it remains a mystery as to what happened to the
goods Collins requisitioned.

The Hungarian Jewish community repeatedly asked that the property be
returned, to no avail, the report said. According to a 1994 book, "The
Spoils of War," by Kenneth . Alford, an American historian, the
approximate value of the property on the gold train was $206 million in
1945. Inflation would raise that value to about $1.95 billion today.

The material was wrongfully classified as "enemy property," as well as
unidentifiable property, enabling the Army to violate its own rules for
the return of property to rightful owners, the lawsuit asserts.

The United States allowed some of it to be sold or distributed through
outlets of the Army Exchange Service and transferred some of it to an
international relief agency, which auctioned it off in the United States
or Europe. (Chicago Tribune, May 8, 2001)

MANORCARE INC: Hagens Berman Announces Suit over Systemic Negligence
A lawsuit filed May 8 in California Superior Court accuses ManorCare Inc.
(NYSE:HCR), one of the nation's largest and most profitable nursing home
chains, of failing to meet state and federal minimum standards in
providing nursing care to thousands of elderly residents housed in nine
ManorCare facilities in California.

The suit was filed on behalf of the general public by Ila Swan, a
longtime activist for nursing home reform, and involves all ManorCare
nursing homes in California. ManorCare operates 300 nursing homes in 31
states nationwide.

The suit alleges that ManorCare systemically failed to meet the standards
of the Nursing Home Reform Act. Passed by Congress in 1987, the Nursing
Home Reform Act mandates that a nursing home "must provide services and
activities to attain or maintain the highest practicable physical, mental
and psychosocial well-being of each resident in accordance with a written
plan of care...."

Based in part on a sampling of complaints and violations confirmed by
state health authorities, the suit highlights cases of ManorCare staff
repeatedly failing to respond to call lights and forcing patients to sit
in their own waste for hours, as well as instances of patients developing
necrotic oozing bedsores from unsanitary conditions, lack of turning, and

"When you look at ManorCare's promotional material, you see an
organization that purports to deliver the highest quality of care," said
Steve Berman, the Seattle attorney representing the residents. "They use
the words 'best' and 'highest quality' when they lure the elderly in,"
observed Berman. "The allegations of the complaint paint a far different
picture -- one of abject neglect and callous disregard for the human

"The complaint alleges that ManorCare proudly promotes the fact that the
company's profit margins are well above the industry average," continued
Berman. "What our case asserts is that ManorCare delivered these profits
by instituting high patient-to-staff ratios and low quality of care."

According to the complaint, ManorCare has received dozens of California
Department of Health Services violations and deficiency notices, despite
knowing about inspections in advance. Two ManorCare facilities were cited
for poor nutrition that put residents in serious jeopardy, and five
ManorCare facilities had a higher degree of reported pressure sores than
the national average. Pressure sores are a strong indication of
neglectful care.

"The elderly are our heritage -- our mothers, our fathers and our
grandparents," said activist Swan. "ManorCare nursing homes have
purposely short-staffed their facilities and used our loved ones as
profit units. When you are dealing with human lives, you can't put
profits first. These elderly are living in pain and indignity and we must
do something to stop it."

Five of the nine ManorCare facilities named in the suit are located
outside the Los Angeles and San Diego areas, while the other four are
scattered throughout northern California. Thousands of elderly residents
live in the nine facilities identified in the complaint, and
approximately 120,000 elderly reside in California nursing homes.

The suit alleges ManorCare violated the California Business and
Professions Code by engaging in unfair and fraudulent business practices,
as well as untrue and misleading advertising.

The suit points out examples of ManorCare's false and deceptive
advertising. ManorCare advertises that "residents receive the best
nursing care available" although ManorCare's nursing staff and certified
nursing aides woefully lack proper training, according to the complaint.
ManorCare also advertises that patients are encouraged to "maintain the
highest degree of independence at all times" when in actuality ManorCare
does not provide adequate toileting assistance to keep residents
continent, the suit claims.

Ila Swan, a national advocate for nursing home reform, is filing the
suit. Swan became an advocate after witnessing her mother neglected and
mistreated at a Vacaville, Calif., nursing home. Since then Swan has
campaigned throughout the country for nursing home reform and assisted
the chairman of the Senate's Special Committee on Aging, Charles
Grassley, in an investigation of California nursing homes. Swan also has
created two documentaries, Untold Suffering and My Soul to Keep,
containing nursing home horror stories as described by family members.

The suit seeks a court injunction ordering ManorCare to fully comply with
the Nursing Home Reform Act, an order to stop deceptive advertising
campaigns, and restitution.

Contact: Hagens Berman, Seattle Steve Berman, 206/623-7292
steve@hagens-berman.com or Hagens Berman, Los Angeles Kevin Roddy,
213/861-7454 kevin@hagens-berman.com or Firmani & Associates Mark
Firmani, 206/443-9357 (media) mark@firmani.com URL:

PENN TREATY: Decries Merit of Securities Suits; Capital Raising to Go on
Treaty American Corporation (NYSE: PTA) commented on May 8 on the recent
filings by several law firms of securities class action lawsuits against
the Company.

"We consider these lawsuits to be entirely baseless and without merit,"
said Irving Levit, Chairman, President and CEO of Penn Treaty. "We are
working vigorously, along with our legal counsel, to preserve our
Company's good name and reputation in the face of this unwarranted
litigation. Unfortunately, it is all too common today for certain law
firms to file opportunistic 'strike suits' against companies whose share
prices have been adversely impacted by financial developments."

Mr. Levit added, "As previously announced, Penn Treaty is continuing to
take steps to raise additional statutory capital for our insurance
operations. The Company recently mailed documents for a shareholder
Rights Offering that, if completely subscribed, would generate net
proceeds of approximately $27 million. Penn Treaty also entered into a
letter of intent to sell a book of non-core business at a purchase price
of approximately $13 million."

PTA, through its wholly owned direct and indirect subsidiaries, Penn
Treaty Network America Insurance Company, American Network Insurance
Company, American Independent Network Insurance Company of New York, Penn
Treaty (Bermuda), Ltd., United Insurance Group Agency, Inc., Network
Insurance Senior Health Division and Senior Financial Consultants
Company, is primarily engaged in the underwriting, marketing and sale of
individual and group accident and health insurance products, principally
covering long term nursing home and home health care. PTA is licensed to
conduct business in 50 states and the District of Columbia.

PRUDENTIAL DISCOVERY: Reports to SEC on Lawsuits over Sales Practices
Prudential Discovery Permier Group reports to the SEC that, as of
December 31, 2000, Prudential and/or Pruco Life remained a party to
approximately 109 individual sales practices actions filed by
policyholders who "opted out" of the class action settlement relating to
permanent life insurance policies issued in the United States between
1982 and 1995. Some of these cases seek substantial damages while others
seek unspecified compensatory, punitive or treble damages. It is possible
that substantial punitive damages might be awarded in one or more of
these cases. Additional suits may also be filed by other individuals who
"opted out" of the settlements.

As of December 31, 2000 Prudential has paid or reserved for payment
$4.405 billion before tax, equivalent to $2.850 billion after tax to
provide for remediation costs, and additional sales practices costs
including related administrative costs, regulatory fines, penalties and
related payments, litigation costs and settlements, including settlements
associated with the resolution of claims of deceptive sales practices
asserted by policyholders who elected to "opt-out" of the class action
settlement and litigate their claims against Prudential separately, and
other fees and expenses associated with the resolution of sales practices

TAISHUN TUNNEL: Farmers in China Sue for Damages in Lung Disease
A group of 192 farmers in east China's Zhejiang Province have sued their
employers for 208.86 million yuan (about 26 million U.S. dollars) in
damages for the lung disease they said they developed when working as
tunnel diggers eight years ago.

The lawsuit, listing as plaintiffs 192 farmers from Taishun County, is
said to be China's first class-action case seeking compensation for
silicosis, a form of lung disease.

Among the defendants are the Taishun County Tunnel Engineering Company,
the Taishun County Local Civil Engineering Company and a man identified
as Chen Yixiao.

The farmers also sued the bureaus of Township Enterprises and Finance for
their liability in the case.

According to the farmers, they were employed by the defendants in 1993 to
dig the Wujialiang Tunnel on the highway linking Shenyang and Benxi
cities, both in northeast China's Liaoning Province.

They claimed that the quartzite in the tunnel has silicon dioxide content
as high as 97.6 percent, but the defendants took no preventive measures
to effectively protect them from silicosis, a disease resulting from the
chronic inhalation of silicon dust and leading to persistent coughs,
short breath and tuberculosis.

A report by the Zhejiang Provincial Committee for Diagnosis and Appraisal
of Occupational Diseases in September 2000 confirmed that 196 persons
working at the tunnel had acquired silicosis.

In November 2000, the labor authority of the county issued appraisal
reports which confirmed that the 196 persons were suffering from
second-to seventh-grade of disability.

To date, 10 of them have died.

Starting in October 2000, the patients had begun to file separate suits
in the local court.

Considering the complexity of the cases and the huge damages involved,
the cases were later transferred to the Intermediate People's Court of
Wenzhou City, where the judges decided to treat the cases as a class

Subsequent investigations have brought the judges to Liaoning, Beijing,
Jilin, Yunnan and other places, and led to the freezing of six million
yuan worth of property of the defendants, including 1.6 million yuan in
bank deposits.

The court has also ordered the defendants to pay 1.328 million yuan in
advance to the farmers, to cover their medication and funeral costs and
minimum living allowances.

The authority also arranged for five attorneys to provide free judicial
aid to the farmers, many of whom could not afford to pay lawyer fees

The court is expected to hear the case soon. (Xinhua General News
Service, May 8, 2001)

TOBACCO LITIGATION: Cigarette Makers Agree to Pay FL Smokers $710 Mil
Three cigarette makers who lost a record-setting dlrs 145 billion verdict
to sick Florida smokers agreed to pay them dlrs 710 million, no matter
how their appeals turn out, attorneys for both sides said.

''That amount of money is guaranteed to the class win, lose or draw,''
said Lorillard general counsel Ronald Milstein on Monday. ''We've decided
this is the surest path to (making) the appeals process unencumbered and

The guarantee represents the industry's first major financial commitment
directly to smokers in nearly four decades of hotly contested tobacco
litigation. The industry agreed in the late 1990s to pay dlrs 248 billion
over 25 years to settle state lawsuits.

''Obviously this is a milestone,'' said longtime industry critic Richard
Daynard. ''At least for a moment, the industry spin stopped long enough
for them to shell out dlrs 700 million.''

Philip Morris, Lorillard and Liggett chose for the agreement to keep the
sick smokers from challenging the constitutionality of a new state law
placing a dlrs 500 million cap on appeal bonds in the case.

Without the law, the companies would have been required to buy bonds
worth more than the dlrs 145 billion verdict to be able to get higher
court review an impossibly high requirement, in the industry's view.

''Even if we were to lose ultimately, which I hope and pray would not
happen, the class would be guaranteed dlrs 700 million,'' said smokers'
attorney Stanley Rosenblatt. ''This dlrs 700 million plus interest, the
class would keep.''

Under a 28-page order approved by Miami-Dade Circuit Judge Gerald
Hubbard, the three companies agreed to increase their current bond from
dlrs 203 million already on deposit with the trial court to dlrs 2
billion, including the nonrefundable dlrs 710 million.

''No money is going to change hands until all appeals are exhausted in
this case,'' said Philip Morris vice president William Ohlemeyer.

''That was the price we were willing to pay to remove this uncertainty
and get this appeal focused on the real issues,'' he said. ''We wanted to
eliminate any uncertainty or any distraction that might exist.''

Ohlemeyer said the money might not go to smokers if an appeals court
reverses a key decision on class-action status, which unites Florida
residents under a single lawsuit. The allocation then would be up to a
Miami-Dade Circuit judge.

Former smoker Frank Amodeo sat through the two-year trial and won a dlrs
5.8 million compensatory damage award from the same jury for his throat
cancer. He said he was aware the talks were going on but had little to
say other than, ''I'm very satisfied.''

R.J. Reynolds and Brown & Williamson have two weeks to decide whether to
join. If they do, the amount of the guarantee would increase. If they
don't and Rosenblatt appeals the bond cap, they take their chances. Both
companies were left out of the negotiations and said they learned of the
agreement Monday.

Reynolds issued a statement expressing confidence in the
constitutionality of the bond cap law.

Brown & Williamson spokesman Mark Smith said his company was evaluating
the agreement.

Daynard said he expects the other two companies to join the bond
agreement and bring the total reserved for smokers to about dlrs 1
billion. He said the alternative would be a bankruptcy risk if the bond
law enacted last year during trial were challenged and overturned.

The jury decision on punitive damages last July broke all records for
damages in a lawsuit. The industry responded by saying it wasn't an
amount any business could pay and confidently predicted an appellate

''It really flies in the face of the expressions of confidence that they
have made to date'' about appeals, said Martin Feldman, Salomon Smith
Barney's tobacco analyst. He said he was surprised by the agreement and
called it ''an expensive insurance policy.''

The financial split is dlrs 500 million by industry leader Philip Morris,
dlrs 200 million by No. 4 Lorillard and dlrs 10 million by No. 5 Liggett.
(AP Worldstream, May 8, 2001)

TOBACCO LITIGATION: FL Ruling Delays Payments To Smokers Pending Appeals
The Philip Morris Companies and other tobacco companies will not have to
pay damages to Florida smokers until appeals of a $145 billion jury
award, the largest in history, are resolved, a state judge ruled today.

In return for posting a $2 billion bond to cover the damages, three
tobacco companies, Philip Morris, Lorillard Inc. and Liggett Group Inc.,
agreed to pay at least $709 million in the case, no matter what the
outcome on appeal. Two other defendants, R. J. Reynolds Tobacco Holdings
Inc. and the Brown & Williamson Tobacco Corporation, are not part of the
agreement, but stand to benefit from it without posting bond.

The agreement shields the companies from the possibility that a court
would overturn a new Florida law that requires the companies to post only
$100 million to appeal the jury award. Lawyers for the plaintiffs have
threatened to challenge the law in an effort to force the companies to
post the full $145 billion in a bond.

Judge Gerald D. Hubbart of Miami-Dade County Circuit Court approved the
plan, letting the tobacco industry appeal the case as far as the United
States Supreme Court if necessary, said William S. Ohlemeyer, a lawyer
for Philip Morris. Mr. Ohlemeyer estimated that it might take three years
to resolve the case if it reached the nation's highest court.

Under today's agreement, the three companies will post about $2 billion
in bond, with some $1.3 billion refundable if the damage award is
overturned on appeal.

Stanley Rosenblatt, a lawyer for the smokers, said $709.7 million plus
interest "will be guaranteed" to the smokers "even if the class were to
lose in appellate court."

Mr. Ohlemeyer said it would be up to Judge Hubbart to decide what to do
with the money.

Some companies said they would be forced out of business if they had to
pay the full damages. Philip Morris's share would be $74 billion and R.
J. Reynolds's share $36.3 billion. Brown & Williamson, a unit of British
American Tobacco P.L.C., would have to pay $17.6 billion; Lorillard, a
unit of the Loews Corporation, $16.3 billion; and Liggett, a unit of
Vector Group, $790 million.

Representatives from R. J. Reynolds and Brown & Williamson said they were
evaluating the agreement. Unless they reach a similar pact with the
plaintiffs, Mr. Rosenblatt could still challenge the law imposing the
bond cap as it applies to them.

A Miami jury in July awarded $145 billion to thousands of sick smokers or
the families of dead smokers in what is known as the Engle lawsuit, named
for the lead plaintiff, Dr. Howard Engle.

The companies agreed in earlier settlements with the 50 states to pay
$246 billion over 25 years. Florida and other states have voiced concern
that the class-action verdict in Miami may jeopardize those payments.
(The New York Times, May 8, 2001)

TOBACCO LITIGATION: Tobacco Groups Post $ 2 Bil Bond
Three big tobacco companies yesterday agreed to post a bond of Dollars
2bn in an attempt to hedge their exposure during an appeal of last year's
record Engel court ruling in Florida.

Philip Morris, Loew's Lorillard and Vector Group's Liggett agreed to the
bond terms, which are related to the landmark class-action suit. That
decision required the five largest tobacco companies to pay Dollars 145bn
to Florida plaintiffs. The companies are appealing. R.J. Reynolds and
British American Tobacco, also defendants in the lawsuit, did not agree
to the bond.

In addition to the Dollars 2bn bond, the three companies also agreed
Dollars 709m of that amount would be non-refundable regardless of the
outcome of the case. (Financial Times (London), May 8, 2001)

U.K. HOSPITALS: Parents to Sue over Removal of Kids' Organs after Death
Families of British children whose organs were removed without consent
after they had died are planning a nationwide campaign for compensation.

Lawyers acting for the National Committee Relating to Organ Retention
(NACOR), an umbrella group for affected families, are set to make a High
Court application for a group litigation order-equivalent to a US class
action suit. If successful, the lawsuit could cost Britain's National
Health Service millions of pounds.

"This is the beginning of a court action that involves over 500
families," said Ruth Webster, NACOR's national coordinator. "It is
designed to pave the way for compensation claims relating to up to 134
hospitals across Britain."

The NACOR action is separate from the claims against Alder Hey Hospital
in Liverpool, where pathologist Dick van Velzen and his staff are accused
of removing organs from more that 800 dead children without consent. The
first hospital affected by NACOR's action is Leeds Teaching Hospitals NHS
Trust. Newspapers have reported that Alder Hey and Leeds hospitals
amassed a collection of 4,700 body parts, including over 650 baby hearts.
(Transplant News, April 30, 2001)


S U B S C R I P T I O N  I N F O R M A T I O N

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC. Theresa Cheuk, Managing Editor.

Copyright 1999.  All rights reserved.  ISSN 1525-2272.

This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to be
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