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Dismissal of Diet Drug Settlement Trustees Sought
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Attorneys from 90 law firms in 29 states have joined a motion filed by three firms to discharge the trustees of the $3.75 billion American Home Products national diet drug settlement. They said the trust has failed throughout its existence to function according to the requirements of the settlement agreement.

"Notwithstanding the language of the Settlement Agreement . . . about the deadlines imposed on the trust for paying matrix claims, as well as other statements by this Court about the timely payment of claims and the unbiased and independent opinions of trust auditors, the trustees have consistently failed to follow this directive," the joinder motion filed yesterday on behalf of 116 attorneys in the U.S. District Court for the Eastern District of Pennsylvania said. "Moreover, the trustees have wholly failed to implement a system that will ensure timely payment of claims."

The joinder reiterates many of the points alleged in the original July 18 motion to discharge filed by Napoli Bern and Hariton & D'Angelo, both in Great River, N.Y., and Fleming & Associates in Houston.

"The trustees are deemed, according to the governing documents, fiduciaries with a duty to protect the interests of the claimants herein," they said in the original motion. "Given the wholly ineffectual administration of the claims process thus far, with repeated audits of claims, waffling auditors' opinions, non-payment of legitimate claims and refusal of the trust to comply with the clear directives of this Court, the trustees have breached those fiduciary duties time and time again.

"Perhaps the best demonstration of the trust's inability of unwillingness to meet its obligations is the fact that, since September of 2002, the trust has paid matrix compensation to only 203 claimants," they said. "This appalling record is further underscored by the fact that over 100,000 matrix claims remain to be processed."

They list alleged failures to perform a claims forecast, which they say would have allowed the trust to predict and prepare for the number of claims coming in; to meet processing deadlines; to implement court-ordered audits of all claims; to distribute settlement funds on a timely basis; and to notify the class of the risk that the trust will run out of money before all claims are paid.

The trust's inability to keep pace with its workload has been the subject of repeated criticism by U.S. Judge Harvey Bartle III of the Eastern District of Pennsylvania, who has approved two extensions of the trust's processing deadlines.

The trustees earn $75,000 per year plus $2,500 for each official meeting and $250 per hour for other meetings, they said.

The Napoli Kaiser and Hariton D'Angelo firms have also filed a motion to remove three auditors and to reconsider any cases denied by the auditors, alleging that they have displayed bias or have impermissible conflicts of interest.

08/05/03

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