Opinion
MDL Docket No. 1203, Civil Action No. 99-20593.
April 7, 2004.
MEMORANDUM AND PRETRIAL ORDER NO.
Before the court is the motion of certain class members to discharge the Trustees of the AHP Settlement Trust (the "Trust").
AHP stands for American Home Products, Wyeth's former name.
The Nationwide Class Action Settlement Agreement with Wyeth ("Settlement Agreement"), approved by this court in Pretrial Order ("PTO") No. 1415 on August 28, 2000, established a settlement class consisting of all persons in the United States who ingested Pondimin and/or Redux and their derivative claimants. PTO No. 1415 also created the Trust to administer the payment of settlement benefits to class members. Under the Settlement Agreement, the Trust receives funds deposited by Wyeth and has the responsibility under court oversight for investing these funds, administering the trust, conducting audits of claims, and providing benefits to eligible class members. PTO No. 1415, at 60-61. Seven Trustees were appointed with the fiduciary obligation to administer the Trust. The Trustees are Ms. Alison Overseth, Senator Chris Harris, Dr. George Beller, Dr. Rosemarie Robertson, Mr. Joseph Castle, the Honorable Dean Trafelet, and the Honorable Richard Cohen.
In support of their motion to discharge the Trustees, the movants cite: (1) the delay in claims processing and payment; (2) the selection of Mr. Mitchell as the Executive Director of the Trust; and (3) the retention of Dr. B. Thomas Florence and the Analysis Research Planning Corporation ("ARPC") as experts to advise the Trust about the technical aspects of the processing and payment operations.
As a preliminary matter, the Trust challenges movants' standing to bring this motion before the court. The Trust points to its bylaws, attached to the Settlement Trust Agreement, which provide that "[o]ne or more of the Trustees may be removed for cause by the Court upon the Court's motion or upon the motion of AHP [Wyeth] or Class Counsel." Bylaws of AHP Settlement Trust § 4.1.See also Settlement Trust Agreement § 3.05(c); PTO No. 1419. The Trust argues that the Settlement Trust Agreement does not provide for the present motion by movants. Moreover, the movants are claimants who have opted out of the Settlement Agreement. The Trust maintains they have no right to seek redress against the Trustees because they have no stake in the outcome of the motion. Regardless of the movants' standing, this court has been charged with continuing oversight of the Settlement Agreement and of the Trust, and we will address the matters raised as if on our own motion. See Settlement Trust Agreement, §§ 2.05, 3.05(c); PTO No. 1419.
The Settlement Trust Agreement allows for the removal of a Trustee by the court for cause. Settlement Trust Agreement § 3.05(c); PTO No. 1419. The Trustees have an obligation as fiduciaries to use ordinary skill and prudence in the exercise of their discretionary powers. Restatement (First) of Trusts, § 174. Under the relevant provisions of Pennsylvania law, a court may exercise its power to remove a personal representative only when the representative "is wasting or mismanaging the estate, is or is likely to become insolvent, or has failed to perform any duty imposed by law," or "when, for any other reason, the interests of the estate are likely to be jeopardized by his continuance in office." 20 Pa. Cons. Stat. Ann. § 3182. See also 20 Pa. Cons. Stat. Ann. § 7121; In re White, 484 A.2d 763, 765 (Pa. 1984). Removal of a trustee is a "drastic action, and proof of the need for this remedy must be clear." In re Estate of Croessant, 393 A.2d 443, 446 (Pa. 1978). Such action should be taken only "when the estate is actually endangered and intervention is necessary to save trust property." In re Mathues' Estate, 185 A. 768 (Pa. 1936). Movants' burden is a heavy one. See In re White, 484 A.2d at 765; In re Estate of Croessant, 393 A.2d at 446; and In re Mathues' Estate, 185 A. 768.
We turn first to the delay in claims processing. Originally imposing audits of up to fifteen percent of Matrix claims submitted, the Settlement Agreement also allowed this court to order additional audits and adopt additional claims administration procedures upon a showing of good cause. Settlement Agreement § VI.E. As stated in PTO No. 1415, this court has "exclusive jurisdiction over this action and each of the Parties, including [Wyeth] and the class members, to administer, supervise, interpret and enforce this Settlement in accordance with its terms . . . and to enter such other further orders as are needed to effectuate the terms of the Settlement." PTO No. 1415, at ¶ 11; Settlement Agreement § VIII.B.
In November, 2002, after a hearing in which the court determined that there was no reasonable medical basis for seventy-eight claims attested to by certain doctors and submitted by certain law firms, the court found that good cause existed to permit audits of all pending and future attestations of two particular cardiologists and of all the Green Forms submitted on behalf of claimants by two New York law firms. See PTO No. 2640. The court also issued a preliminary injunction to halt payment of benefits on the claims at issue until additional audits had been completed. See id. Thereafter, based on the fact that tens of thousands more claims were being submitted than had been contemplated by anyone at the time of the Fairness Hearing in May, 2000, the court found good cause to order audits of 100 percent of the claims. See PTO No. 2662.
For each claimant, a physician completed a Green Form, a document upon which the physician certified whether a potential claimant did or did not have a given condition "to a reasonable degree of medical certainty." Green Form, at 7. The Green Form stated, "[y]ou may consider, rely upon and use the patient's echocardiograms, medical records and reports, hospital records or reports, the patient's medical history or other sources of information you regularly and routinely use in your practice."Id. Upon completion of the questions contained in the Green Form, physicians were directed to sign and date it with the understanding that the Green Form would be an official court document and that, under penalty of perjury, the information supplied by the physician was correct to the best of his or her "knowledge, information, and belief." Id. at 14.
While we are sympathetic to claimants awaiting rightful payment, delay up to the time in question was simply unavoidable due to the sheer number of claims submitted, compounded by the necessitation of the 100 percent audit. Id. The Trust cannot be charged with full responsibility for the delay. In addition, on previous occasions we have found good cause to extend processing deadlines, in part because of the unanticipated deluge of claims, a high number of which were deficient in some regard. See PTO Nos. 2663, 2881, 3185. In order to process these claims, the Trust was forced to hire and train more than fifty extra employees. The Trust is now processing claims at a significantly higher rate and recently has been meeting or exceeding its processing goals. While we strongly encourage the Trust to continue to move as expeditiously as possible in processing the remaining claims, we do not find that the delay in claims processing merits discharge of the Trustees. See In re Mathues' Estate, 185 A. at 768 (Pa. 1936).
Certain class members also challenge the Trustees' selection of Mr. Robert A. Mitchell as the Executive Director of the Trust. The Settlement Trust Agreement grants wide discretion to the Trustees in determining necessary employees for the Trust's operation. See Settlement Trust Agreement, § 6.02(e); PTO No. 1419. Formerly the Trust's outside counsel, Mr. Mitchell was appointed to the position of interim Claims Administrator based on his existing understanding of the Trust's needs and the Settlement Agreement. He also had had the experience of working closely with the Trust's consultant, Dr. B. Thomas Florence of ARPC during the transition of the Trust's processing activities in-house.
Prior to hiring Mr. Mitchell as Executive Director, the Trust conducted a nationwide search, which involved interviewing and considering many other applicants for the position. Mr. Mitchell's performance as interim Claims Administrator, his prior experience, and his knowledge of the matters at hand were the basis for the Trust's decision to hire him as Executive Director, a decision which was approved by the court. See PTO No. 2400. We will not discharge the Trustees on the basis of their hiring and retention of Mr. Mitchell. See In re Mathues' Estate, 185 A. at 768 (Pa. 1936).
Finally, certain class members argue that the Trustees should be discharged for the retention of Dr. Florence and ARPC as experts to advise the Trust about the technical aspects of its claims processing and payment operations. The Settlement Trust Agreement specifically grants the Trustees the power to retain experts, including accountants, appraisers, and others, as appropriate. Settlement Trust Agreement § 6.02. The Settlement Trust Agreement contemplates that there may be areas of the Trust's operations in which the Trustees have reason to seek the advice of experts. Id. Dr. Florence has extensive experience in litigation consulting, mass tort case management, toxic tort evaluation, forecasting, statistical modeling, work flow design, and computerization, upon which the Trust has been able to rely as a guide in its management and operations. ARPC was able to evaluate the cost and practicality of the available options relating to the implementation of the Trust's internalized processing system in a way that would be compatible with the data system used by the contractor the Trust used before bringing the system in-house. ARPC has continued to advise the Trust on technical aspects of the claims processing and payment operation. We find that the hiring and retention of Dr. Florence and ARPC as expert advisors was within the discretion of the Trustees. See Settlement Trust Agreement § 6.02; In re Mathues' Estate, 185 A. 768 (Pa. 1936).
Accordingly, the motion of certain class members to discharge the Trustees of the AHP Settlement Trust will be denied.