The opinion of the court was delivered by: WEINSTEIN
MEMORANDUM, ORDER, AND JUDGMENT ON DISTRIBUTION OF THE SETTLEMENT FUND
On May 7, 1984, a settlement was reached in this class action by Vietnam veterans and their family members against seven chemical companies for injuries plaintiffs believed were caused by exposure of the veterans to Agent Orange and other phenoxy herbicides in Vietnam. The settlement has been found, under the circumstances, to be fair, reasonable and adequate; the reasonable fees and expenses to be paid from the settlement fund to plaintiffs' attorneys have been determined; and final approval has been given to the settlement. See, e.g., In re "Agent Orange" Product Liability Litigation, F. Supp. , M.D.L. No. 381 (E.D.N.Y. Jan. 7, 1985) (Memorandum and Order on Attorney Fees and Final Judgment); 597 F. Supp. 740 (Preliminary Memorandum and Order on Settlement); F. Supp. , M.D.L. No. 381 (E.D.N.Y. May 9, 1985) (Memorandum, Order and Judgment dismissing chemical companies' third-party claims against the United States); F. Supp. , M.D.L. No. 381 (E.D.N.Y. May 8, 1985) (Memorandum, Order and Judgment dismissing the actions of 281 veterans who opted out of the class action against the chemical companies); 104 F.R.D. 559 (E.D.N.Y. 1985) (Memorandum and Order lifting protective ordes with stay pending disposition of appeals); 603 F. Supp. 239 (E.D.N.Y. 1985) (Memorandum, Order and Judgment dismissing plaintiffs' claims against the United States); 597 F. Supp. at 876-78 (listing all previously published opinions).
The issue now posed is how to distribute the balance of the settlement fund -- some $200 million -- remaining after payment of attorney fees and expenses. There is no entirely satisfactory answer to the distribution problem. The definition of the class gives guidance only insofar as it requirese two conditions for an award to any individual: (1) exposure of Agent Orange in Vietnam, and (2) a claim of injury as a result of that exposure. Because no substantial scientific evidence supports a finding of causal connection between Agent Orange exposure and any specific disease except chloracne, and because of the near impossibility of proving that any particular plaintiff's condition was caused by Agent Orange, dividing the fund among those with particular diseases is unjustified. Dividing the fund equally among all of those who might now or in the future meet the two requirements -- exposure and injury -- has the appeal of simplicity, but the individual sums allocated would be too small to provide an appreciable benefit to the recipient.
A number of other suggestions are discussed below. None has as much merit as that proposed by Special Master Kenneth R. Feinberg, Esq. In an elegant solution, he suggests a combination of insurance-type compensation to give as much help as possible to individuals who, in general, are most in need of assistance, together with a foundation run by veterans with the flexibility and discretion to take care of individuals and groups most in need of help. With some slight modifications, the Special Master's recommendations are adopted. The Special Master will be reappointed to oversee implementation of the distribution plan.
The greater part of the fund will be distributed through a payment program to individual veterans and family members in the form of death and disability benefits. Another portion will be allocated to a class assistance foundation to be administered for the benefit of the class as a whole, including the spouses and children of veterans. Finally, two percent of the fund will be allocated if trusts can be established in Australia and New Zealand for disbursement to class members in those countries.
In essence, an insurance policy for death and disability during the period from 1970 to 1995 will be purchased for $150 million covering each of an estimated 600,000 United States Vietnam veterans exposed to Agent Orange. In addition, a foundation initially funded at $45 million will be organized to provide services to exposed veterans and their families, particularly those with children having birth defects.
Actual distribution cannot begin until appeals are decided. The first of thesse appeals was filed early this year and the last of them probably will not be decided until 1986. Nevertheless, to speed disposition as much as possible, the Special Master is being directed to take all necessary steps to enter into the requisite contracts, set up the necessary organizations, and receive applications for awards so that payments can be made promptly should the appellate courts approve. Payments to members of the class necessarily will be stayed pending the final decisions on appeal.
Recovery is limited by the definition of the class certified. It consists of certain Vietnam veterans and their family members:
The plaintiff class is defined as those persons who were in the United States, New Zealand or Australian Armed Forces at any time from 1961 to 1972 who were injured while in or near Vietnam by exposure to Agent Orange or other phenoxy herbicides, including those composed in whole or in part of 2, 4, 5-trichlorophenoxy-acetic acid or containing some amount of 2, 3, 7,8-tetracholordibenzo-p-dioxin. The class also includes spouses, parents, and children of the veterans born before January 1, 1984, directly or derivatively injured as a result of the exposure.
In re "Agent Orange" Product Liability Litigation, 100 F.R.D. 718, 729 (E.D.N.Y. 1983), mandamus denied, 725 F.2d 858 (2d Cir.), cert. denied, U.S. , 104 S. Ct. 1417 (1984) (emphasis added). The term "Agent Orange" as used in this and earlier opinons refers to other phenoxy herbicides -- Agent Orange II, Agent Purpole, Agent Pink and Agent Green -- as well as Agent Orange. The settlement covers the claims of all class members. See In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 862-66 (E.D.N.Y. 1984) (reprinting settlement agreement).
Distribution of preliminary claim forms began in June 1984. Class members wishing to participate in distribution of the settlement fund were required to submit claim forms by the filing deadline if the injuries believed to be related to Agent Orange exposure had already become manifest. Those who later learn of adverse health effects previously unknown to them are required to file claims within 120 days of acquiring that knowledge.
The original filing deadline of October 26, 1984 was extended twice at the request of various veterans groups. The final deadline required claim forms to be delivered or postmarked by January 15, 1985. Special provision was made for veterans whose names were on a list provided by the Veterans Administration in December 1984. A postcard was mailed to each of these individuals with instructions to sign and return it if that person had not previously received a claim form; once a claim form had been mailed, that individual had 30 days to complete and return it. Similarly, a person who wrote or called requesting a claim form by January 2, 1985 was given 30 days to complete and return a claim form once one had been mailed to that individual.
To date, about 245,000 claims have been filed with the Agent Orange Computer Center, the facility that has bene processing claim forms under court supervision. About 12,000 of them were filed after the applicable deadline.
A significantly higher number of claims has been received than was originally anticipated. The aggregate number of claims submitted, however, has little bearing on the question of how many claims have any merit. Many claims appear to have been submitted because various organizations have advised veterans to file claims whether or not anything was wrong with them and whether or not any problems they may have could conceivably be related to Agent Orange exposure. See Memorandum of Agent Orange Plaintiffs' Management Committee in Opposition to Report of the Special Master Pertaining to the Disposition of the Settlement Fund, filed May 7, 1985, pp. 7, 14.
The $180 million settlement fund has been accruing interest since the date of settlement and now totals over $195 million. On January 7, 1985, attorney fees and expenses amounting to about $9.3 million were awarded. This award has not been paid pending appeals. Motions for reconsideration of a number of these fees awards are presently pending before the Magistrate. The portion of the settlement fund available for distribution now amounts to about $185 million, a figure subject to adjustment when the final decision on reconsideration of attorney fees awards is made. A total of about $200 million should be available for distribution to the class once appeals have been completed.
Following the public hearing on distribution held on March 5, 1985, the court received a number of submissions that required thorough review. The Agent Orange Plaintiffs' Management Committee had requested and were granted additional time to address the merits of the plan submitted by Special Master Kenneth R. Feinberg. Their comments were forwarded to the court on May 6, 1985. Individual letters from veterans organizations and members of the class received by May 15, 1985 were all considered by the court. The numerous distribution propoosals, extensive testimony and other commentary on various proposals all were evaluated carefully in reaching a decision on which plan was most practicable and fair.
II. LEGAL STANDARDS FOR FUND DISTRIBUTION
The court's responsibility for ensuring that a satisfactory and equitable distribution plan is implemented derives from the requirement that settlement of a class action have court approval. Fed. R. Civ. P. 23(e); see, e.g., Curtiss-Wright Corp. v. Helfand, 687 F.2d 171, 173-75 (7th Cir. 1982); Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978). "Until the fund created by the settlement is actually distributed, the court retains its traditional equity powers." Zients v. Lamorte, 459 F.2d 628, 630 (2d Cir. 1972). The Rule 23(e) standard of fairness, adequacy, and reasonableness "applies with as much force to the review of the allocation [plan] as it does to the review of the overall settlement between plaintiffs and defendants." In re Chicken Antitrust Litigation American Poultry, 669 F.2d 228, 238 (5th Cir. 1982). So long as there is no "abuse of discretion," the district court's decision on distribution details in binding. See, e.g., In re Equity Funding Corp. of America Securities Litigation, 603 F.2d 1353, 1362, 1365 (9th Cir. 1979); West Virginia v. Chas. Pfizer & Co., 440 F.2d 1079, 1085 (2d Cir.), cert. denied sub nom. Cotler Drugs, Inc. v. Chas. Pfizer & Co., Inc., 404 U.S. 871, 92 S. Ct. 81, 30 L. Ed. 2d 115 (1971). The broad general powers of the court are enhanced in this case by the settlement agreement itself granting the court "continuous jurisdiction, control and supervision" of the fund. In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 864 (E.D.N.Y. 1984). See Curtiss-Wright Corp. v. Helfand, 687 F.2d 171, 173 (7th Cir. 1982).
This is a diversity tort class action. A class member's substantive right to recover for personal injuries arises under state law rather than federal law. In re "Agent Orange" Product Liability Litigation, 597 F. Supp. at 799-816 (conflict of laws and statutes of limitations); 580 F. Supp. 690 (E.D.N.Y. 1984) (general discussion of conflict of laws). In approving a distribution plan in such an action pursuant to Rule 23(e), care must be exercised to see that the plan is consistent with substantive rights to damages governed by state law. See 28 U.S.C. § 2072 (Rules Enabling Act).
Traditionally, a tort plaintiff's entitlement to damages requires a particularized showing of individual causation and injuries. Faithfulness to traditional tort rules in disbursing a class action settlement fund thus would require "the court to weigh the strengths and weaknesses of the claims of each class member against each of the settling defendants," a truly herculean task, "rendered a practical impossibility [if] * * * the settling defendants agreed to and did participate only in a joint settlement wherein the breakdown of the contribution from each of the individual defendants was not disclosed." In re Equity Funding Corp. of America Securities Litigation, 603 F.2d 1353, 1365 (9th Cir. 1979). Moreover, in the case of Agent Orange implementation of any distribution plan based on traditional tort principles is impossible because of a virtual absence of proof of causation, financially impracticable because of administrative costs, and not feasible for other compelling reasons. See infra Part III.
Under such circumstances, the consensus of state law, see In re "Agent Orange" Product Liability Litigation, 580 F. Supp. 690 (E.D.N.Y. 1984), undoubtedly would permit alternative methods of disbursement to be considered in undertaking "the almost impossible task of determining the distribution of the settlement fund among the myriad claimants." In re Equity Funding Corp. of America Securities Litigation, 603 F.2d 1353, 1365 (9th Cir. 1979).
Alternative methods of distributing a settlement fund may be premised on a rationale similar to the cy pres doctrine of testamentary interpretation. See West Virginia v. Chas. Pfizer & Co., 440 F.2d 1079, 1085-91 (2d Cir.), cert. denied sub nom. Cotler Drugs, Inc. v. Chas. Pfizer & Co., Inc., 404 U.S. 871, 92 S. Ct. 81, 30 L. Ed. 2d 115 (1971);o In re Folding Carton Antitrust Litigation, 557 F. Supp. 1091, 1108-09 (N.D. Ill. 1983), aff'd in pertinent part, 744 F.2d 1252, 1254 (7th Cir. 1984), petition for cert. filed, 53 U.S.L.W. 3600 (U.S. Feb. 7, 1985) (No. 84-1266). Since the settlement agreement does not provide for automatic reversion of any portion of the settlement fund except on disapproval of the settlement, there is no basis for objecting to the mode of fund allocation among the plaintiffs on the ground that the court lacks cy pres authority. See Beecher v. Able, 575 F.2d 1010, 1016 n. 3 (2d Cir. 1978) (distinguishing fluid class recovery holding of Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973), vacated and remanded on other grounds, 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974)).
III. COMPARISON OF VARIOUS PROPOSALS FOR DISTRIBUTION
A number of general principles and specific suggestions for distribution were put forward at the 1984 Fairness hearings. See In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 858-61 (E.D.N.Y. 1984). Helpful comments also were made at the March 5, 1985 hearing on proposals for a distribution plan and in many written submissions to the court. Among general criteria proposed were that a simple and easily administered benefits program should be implemented, simple eligibility criteria should be developed to the extent possible, transaction costs such as attorney and expert fees and administrative overhead should be minimized, those veterans who most needed help should be given the most assistance, a national center for assisting Vietnam veterans should be established, and a fund should be set aside to help children with birth defects. These suggestions have been given substantial weight in developing this distribution order. The various distribution proposals submitted to the court will be described and analyzed below.
A. Postpone Distribution Until the United States Has Accepted its Responsibility
There is a strong body of opinion among the veterans that a considerably larger fund is required. While this view obviously has merit, no further funds are available from the defendant chemical companies. See In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740 (E.D.N.Y. 1984) (opinion on fairness of settlement).
A strong argument has been made by many veterans that the United States should participate in the settlement. The facts developed to date strongly support the view that the government knew or should hav eknow of the dangers involved in the use of Agent Orange and that the government made a calculated -- and perhaps justifiable -- choice to use the chemicals in order to save the lives of many members of the armed forces and perhaps civilians by making it easier to deal with ambushes from jungle and brush hiding places. The government has refused to discuss settlement and it cannot be held liable as the law has been interpreted. See 597 F. Supp. at 879; 603 F. Supp. 239 (E.D.N.Y. 1985) (dismissing individual actions against government); F. Supp. , M.D.L. No. 381 (E.D.N.Y. May 9, 1985) (dismissing third-party actions against government).
The government should not, however, refuse to cooperate with the Special Master and others in implementation of the distribution plan. Such cooperation could include access to experts, help in obtaining and interpreting military records, and assistance in coordination with benefit and social services programs. The Social Security Administration and personnel of other government agencies have already been helpful in the process of fashioning a distribution plan.
By passing legislation providing for possible compensation of veterans for Agent Orange exposure, Congress in effect has promised to make adequate compensation available should there be established at any time in the future a satisfactory scientific basis for finding a causal link between Agent Orange exposure and any medical problems from which Vietnam veterans suffer. See Veterans' Dioxin and Radiation Exposure Compensation Standards Act, Pub. L. 98-542, 98 Stat. 2725 (1984). The Act states that "[t]here is some evidence that chloracne, porphyria cutanea tarda, and soft tissue sarcoma are associated with exposure to certain levels of dioxin as found in some herbicides * * *." Id. § 2(5), 98 Stat. 2725. It establishes a presumption of causation for chloracne, a skin rash, and porphyria cutanea tarda (PCT), a liver disorder, if either of those diseases became manifest within one year of a veteran's departure from Vietnam. In the absence of evidence overcoming the presumption, interim death or disability benefits are payable for the period from October 1, 1984 to September 30, 1986. See id. § 9, 98 Stat. 2732; H.R. Rep. No. 592, 98 Cong., 2d Sess. 10-11, reprinted in 1984 U.S. Code Cong. & Ad. News 4449, 4457; Explanatory Statement of House Bill, Senate Amendment, and Compromise Amendment, 98th Cong., 2d Sess., 130 Cong. Rec. H11161 (daily ed. Oct. 3, 1984), reprinted in 1984 U.S. Code Cong. & Ad. News 4470, 4477-78.
The Administrator of Veterans' Affairs will appoint a Veterans' Advisory Committee on Environmental Hazards, an eight-member panel of which will evaluate scientific studies on the connection between dioxin exposure and adverse health effects. Act § 6, 98 Stat. 2729-30. For diseases other than chloracne, PCT and soft tissue sarcoma, the Administrator after considering the panel's advice will determine whether or not "there is sound scientific or medical evidence" of a causal connection to exposure to dioxin-contaminated herbicides. Id. § 5(b)(2)(B), 98 Stat. 2728. For all diseases meeting this threshold and for chloracne, PCT and soft tissue sarcoma, the Administrator in prescribing regulations for the resolution of claims for benefits will make determinations "based on sound medical and scientific evidence" about whether service connection will be granted in the adjudication of individual cases, specifying the factors to be considered in and circumstances governing the granting of service connection. Id. § 5(b)(2)(A), (3), 98 Stat. 2728-29.
On April 22, 1985, the Veterans Administration issued proposed regulations to implement the Act. See 50 Fed. Reg. 15,848-55 (1985) (to be codified at 38 C.F.R. §§ 1.17, 3.102, 3.311a-3.311b, 3.813). The rules establish a formal procedure for evaluating scientific or medical studies on the connection between dioxin exposure and adverse health effects. They also fulfill the statutory requirement that the VA issue rules specifying whether and under what circumstances cholorane, PCT and soft tissue sarcomas will be recognized as service-connected.
Proposed section 1.17 provides that, from time to time, the Administrator will publish evaluations of scientific or medical studies on causation in the Federal Register. It also stated that the factors that will be considered in evaluating a study include (1) statistical significance and replicability of the study's findings, (2) whether the study and its findings have withstood peer review, (3) whether methodology is sufficiently described to permit replication, (4) whether the findings are applicable to veterans exposed to dioxin, and (5) the views of the appropriate panel of the Veterans' Advisory Committee on Environmental Hazards. 50 Fed. Reg. 15,852 (to be codified at 38 C.F.R. § 1.17).
Proposed section 3.311a addresses the connection between dioxin exposure in Vietnam and specified diseases. It presumes exposure for any veteran who served in Vietnam during the Vietnam era, and provides that the date of the veteran's exposure will be considered to be the date of the veteran's latest departure from Vietnam. 50 Fed. Reg. 15,853 (to be codified at 38 C.F.R. § 3.311A(4)(b)).
Service connection for resulting disability will be granted for chloracne manifested not later than three months from the date of exposure, id. (to be codified at 38 C.F.R. § 3.311a(4)(c)), absent a supervening cause. Id. (to be codified at 38 C.F.R. § 3.311A(4)(e)0. No other diseases will be considered service-connected, because "[s]ound scientific and medical evidence does not establish a cause and effect relationship between dioxin exposure and [any other disease]." Id. (to be codified at 38 C.F.R. § 3.311a(4)(d)). Service connection, however, may be granted for a desease shown to have been incurred in or aggravated by active service. Id. (to be codified at 38 C.F.R. § 3.311a(4)(g)). Interim benefits will be available for chloracne or PCT that became manifest within one year after the date of the veteran's most recent departure from Vietnam, under the statutory presumption of causation. 50 Fed. Reg. 15,854-55 (to be codified at 38 C.F.R. § 3.813).
The absence of a sound scientific basis for finding causation and service connection for diseases other than chloracne under section 5 of the Act, and the narrow scope of presumed causation for certain diseases under section 9 of the Act, suggest that few if any veterans are currently eligible for disability benefits under the Act. No cases have yet been certified as warranting a disabilty finding for the purpose of receiving benefits. Letter from Arvin Maskin, Trial Attorney, Torts Branch, Civil Division, United States Department of Justice, dated May 15, 1985. Should further studies reveal some link between dioxin exposure and the veterans' medical problems, the procedure set up to add diseases to the list of those presumptively considered causally connected is designed to give adequate protection to the veterans.
Unfortunately, the Act did not take into account the widespread fears of genetic and other damage to the veterans' wives and children resulting from the veterans' exposure to Agent Orange in Vietnam.No substantial showing of causation has yet been made for this category of medical problems, but it undoubtedly would ease the tensions and fears amaong the veterans and their famailies if Congress were to expand the scope of the Act to include damage to the veterans' wives and children. Cf. In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 853-54 (1984) (discussing limited Veterans Administration benefits currently payable to spouses and children of veterans). If use of the VA as a compensation mechanism were deemed undesirable for administrative reasons, the Advisory Committee panel could report directly to Congress and direct legislative action could be taken on their findings as appropriate. Given the current state of scientific knowledge on causation, the potential cost to the government of making such compensation available would be negligible, while the benefit in terms of a sense of security and the assurance that the government really does care would be enormous. The Special Master is directed to bring this matter of possible amendment of the Veterans' Dioxin and Radiation Exposure Compensation Standards Act to the attention of appropriate legislative and executive bodies. He shall now, however, lobby in any way on this or other matters connected with the Agent Orange litigation. Lobbying activities would be inconsistent with his judicial role.
So far as a distribution plan is concerned, it clearly is not possible to wait for the government and others to make further funds and resources available. We are dealing with a scarce resource. Many class members have immediate needs, and much of the value of a settlement lies in the ability to make funds available promptly. The hard choices that must be made in distribution must be made by the court now.
It is a position of some veterans that further extensive research to determine causation should be undertaken financed by the monies available from the fund. They would hold distribution in abeyance pending completion of such research. This expenditure is not warranted. The government has completed and has under way studies costing approximately $150,000,000. There is no reason to believe that any studies under court auspices undertaken at this time would add substantially to scientific knowledge, and in the interim no class member would receive any benefit from the settlement. Cf. In re Folding Carton Antitrust Litigation, 744 F.2d 1252, 1254-55 (7th Cir. 1984) (allocation of unclaimed portion of fund to research not permissible when existing efforts would be duplicated), petition for cert. filed, 53 U.S.L.W. 3600 (U.S. Feb. 7, 1985) (No. 84-1266); In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 859 (E.D.N.Y. 1984) (waiting for development of perfect plan, assuming one can be desived, loses much of the value of a settlement, which makes funds available immediately). So far as research is concerned, the government has effectively assumed its obligations.
The only research for which the court will authorize funding is that incidental to the work of the class assistance foundation. See infra Part V.D. Research-related serviced could form a valid component of the foundation's program in two limited respects. First, monitoring and oversight of existing research could be funded to ensure that all research gaps are addressed, the data analysis takes into account all possibilities, and that research is performed thoroughly and efficiently. Second, if financially feasible and to the extent not addressed by other sources, limited funds might be provided for specific, applied research to develop techniques to help treat the medical problems of the class. For example, it may come to the attention of the foundation as a result of the monitoring of some of its grants that particular research is required. There would be no objection to using limited funds to "seed" such research or to seek governmental or private resources to conduct it if the probability of benefit to the class is substantial.
C. Medical Treatment and Health Care Services
Many class members have suggested funding a variety of medical treatment and health care services ranging from the establishment of a hospital for Agent Orange class members to the purchase of medical and health insurance. For a number of reasons, these suggestions cannot be adopted.
The funding of a hospital for the treatment of problems believed to be related to Agent Orange exposure is impractical. Expenditure of the entire settlement fund would be required to set up an institution of any significant size. Operation costs would be very great. Even if the fund were not exhausted by capital expenditures, it soon would be by a variety of required subventions. In general, there is no shortage of hospital beds in this country.Moreover, even if the proposed hospital were centrally located, very few class members would be able to use it. Providing good hospital care is an obligation of the Veterans Administration.
A medical insurance plan is undesirable for several reasons. First, it would essentially duplicate rather than supplement existing services. The Veterans Administration has been criticized by many class members. Nevertheless, it is obligated to provide free medical treatment to Vietnam veterans who may have been exposed to a toxic substance found in herbicides and whose health problems are not clearly attributable to other causes. See 38 U.S.C. § 610. In addition, many if not most class members have access to private medical insurance or are eligible for Medicare or Medicaid. An Agent Orange medical insurance plan would simply duplicate coverage and perhaps displace benefits provided under proviate insurance contracts or governmental programs. In effect, the fund would be used to benefit not veterans, but private insurers or governmental assistance programs.
Second, the fund could not afford to provide substantial medical insurance coverage. A program offering comprehensive major medical insurance would be prohibitively expensive. Comprehensive major medical coverage typically costs $1,000-$1,200 per person per year for a normal population. Report of the Special Master Pertainaing to the Disposition of the Settlement Fund, dated February 27, 1985, p. 72 n.33 ("Special Master's Report"). Multiplying this figure by the approximately 245,000 claims already filed yields a cost of over $245 million for one year. And this cost does not take into consideration the fact that the claimants are a self-selected population, presumably including many with severe medical problems, so that premiums would have to be much higher than for an average population.
A catastrophic health insurance plan also would be very expensive. For example, catastrophic medical coverage, with a $100,000 deductible per year, costs about $100 per year per person for a normal population.Special Master's Report, p. 73 n.34. Doubled for a self-selected population with severe medical problems, and multiplied by 245,000 claimants, the cost would total $49 million per year. Provision for full coverage for preexisting medical conditions would be even more expensive. Such a plan might be afforable for a few years as the sole program offered by the fund, but it would only benefit those claimants who are relatively well-off. Claimants with sever, long-term illnesses who do not have substantial financial resources or insurance would be unable to pay the costs needed to trigger catastrophic coverage. Such claimants instead would probably receive assistance from various governmental programs. Thus, for the most needy claimants, catastrophic health insurance would provide no additional benefit. Such a program clearly is an undesirable use of the fund.
A fixed-term hospital indemnity insurance plan would be relatively easy to administer and could be made affordable by limiting the total indemnity for each claimant and including a large deductible. But payments would not be high enough to compensate significantly for medical cost. A hospitalization payment moreover would target settlement funds toward claimants who are not necessarily the most sick, the most disabled, or the most in need. The indemnity plan also might provide an incentive to extend hospitalization unnecessarily.
D. High Compensation for Specific Diseases
The Agent Orange Plaintiffs' Management Committee ("PMC") has proposed that a large group of specified diseases be compensated if exposure to dioxin-contaminated Agent Orange is shown. These diseases are suspected of being associated with dioxin exposure in laboratory studies or industrial settings. This proposal is essentially a tort-based compensation scheme, based upon an assumption of a causal connection between Agent Orange exposure and a given disease. It requires claimants to submit substantial medical, diagnostic and other proof.
The diseases proposed to be compensated include chloracne; peripheral and central neuropathy; various liver disorders including cirrhosis, chronic hepatitis and porphyria cutanea tarda; gastrointestinal conditions; hematological endocrinal and metabolic problems; all benign and malignant tumors; and birth defects and miscarriages. See Plaintiff's Preliminary Plan for Allocation and Distribution of Settlement Fund, filed November 26, 1984, pp. 9-13. The PMC's proposal also suggests making payment for some additional medical problems that "see to have been reported in the literature as possibly accompanying Agent Orange exposure." Id. at 13. These allegedly Agent Orange-related problems include arthritis, photophobia, diarrhea, heart burn and abdominal pain. Id.
Each claimant who could show that he or she suffered from one or more of these medical conditions would be entitled to be considered for a benefit payment. Each claim would be discounted to reflect the legal problems with the plaintiffs' case.An "individual discount factor" also would be applied to each award to reflect "individual causation risks" -- that is, the factual problems that would have arisen in proving each individual class member's claim in court. The method of calculating the "individual discount factor" is not clear, but it would take into account such factors as "exposure to Agent Orange" exposure to dioxin; levels of exposure to Agent Orange and/or dioxin; individual medical history; family medical history; lifestyle considerations; various confounding factors; specific causation; proximate causation; and damages." Id. at 14. After legal and factual discounts have been made, each award would be increased or decreased based on other criteria specific to each claimant, including availability of collateral source benefits and number of dependents. Id. at 15.
The PMC's plan suffers from a number of serious defects. Based on the information presently available, no substantial evidence of causality exists as between dioxin-contaminated Agent Orange exposure and any given disease or medical problem, with the exception of chloracne -- and chloracne alone should not be compensated according to a spokesman for the PMC. See, e.g., In re "Agent Orange" Product Liability Litigation, F. Supp. , , M.D.L. No. 381, slip op. at 3-4 (E.D.N.Y. May 9, 1985); F. Supp. , M.D.L. No. 381, slip op. at 109-10 (E.D.N.Y. May 8, 1985); 603 F. Supp. 239, 245-47 (E.D.N.Y. 1985); 597 F. Supp. 740, 777-95 (E.D.N.Y. 1984); H.R. Rep. No. 592, 98th Cong., 2d Sess. 5, 7, reprinted in 1984 U.S. code Cong. & Ad. News 4449, 4451, 4453; Transcript of March 5, 1985 Hearing, p. 182 (testimony of David Dean, Esq.). Any list of diseases such as that used in the PMC's plan would certainly be open to criticism as arbitrary and lacking in scientific foundation. Moreover, "[t]here is a strong likelihood that even if some causal link could be established between Agent Orange and the diseases from which plaintiffs claim they are suffering, it would be impossible in most cases to identify the individual clas members who were injured by Agent Orange." In re "Agent Orange" Product Liability Litigation, 597 F. Supp. at 842. Great controversy would attend the determination that would have to be made about whether individual claimants' diseases were "caused by" Agent Orange exposure or would have occurred as part of the normal background incidence of disease in the general population.
Given the lack of scientific basis for general causation and the significant uncertainties involved in proof of individual causation -- that is, the indeterminate plaintiff problem -- it cannot now be established with any appropriate degree of probability that any individuals who suffer from the diseases listed in the PMC's plan incurred them as a result of Agent Orange exposure, or that these diseases are more likely than others to be causally related.
It is significant that the PMC has never been able to estimate the number of cases of each of the diseases for which it would compensate. Nor has it been able to show any evidence that the incidence of the disease among Vietnam veterans is greater than among a like population of nonveterans. See In re "Agent Orange" Product Liability Litigation, F. Supp. , (E.D.N.Y. May 8, 1985) (analysis of epidemiological data); 597F. Supp. 740, 775-95 (E.D.N.Y. 1984).
Necessarily, the contemplated inquiry would involve a great deal of work by attorneys, doctors and claims administrators. Claimants would have to assembled extensive evidence including sophisticated medical tests to prove specific diseases. Such a requirement would be burden some, expensive and emotionally trying for the claimants. The transaction costs of such a distribution plan would be substantial.
The cost of establishing the PMC's "individual discount factor" could be enormous for both the fund and the claimant, depending on the degree to which the PMC would insist on proof of causation for each individual claimant. Even if a categorical discount factor were established for each disease based on probability of causal connection -- a determination that would be speculative at best in light of presently available scientific evidence -- many variables unique to each individual would have to be documented and accounted for, all at substantial cost to all concerned.
No comprehensive estimates of the administrative costs to the fund and the costs to individual claimants of producing the requisite medical proof and other documentation has been provided by the PMC. It has been estimated that such a plan might cost as much as $800 to $1,000 per claim. See Special Master's Report, pp. 71 n.32, 343. The PMC recently provided a one-page estimate of the cost of running a claims facility. See Memorandum of Agent Orange Plaintiffs' Management Committee in Opposition to Report of the Special Master Pertaining to the Disposition of the Settlement fund, app., filed May 7, 1985. The underlying assumptions and other bases for the figures provided are not explained. The figures appear to be low for the type and degree of claims processing required by the PMC's plan. Compare id. with Special Master's Report, pp. 53-54. Moreover, no estimates of the aggregate transaction costs of the PMC's plan are given.
A probable result of implementing this plan would be that too great a share of the fund would go to lawyers and medical experts in a vain effort to capture a will-o"-the-wisp causal connection that simly cannot be established at this time. Moreover, a handful of veterans might get large recoveries, while the vast majority would get nothing, all on the basis of controversial and speculative causal distinctions. This kind of lottery is inequitable and inappropriate.
The PMC's plan could be modified to eliminate such of the administrative costs and costs to the claimants. The list of compensable medical conditions could be limited to a small number of relatively rare diseases that might be caused by dioxin exposure, diseases that are uncommon in the general population and easily diagnosed. Such a plan would have the seeming virtue of addressing a common, albeit mistaken perception of causality held by even educated laypersons: Because the listed diseases would be unusual, a claimant suffering from one of them might well believe that his or her condition was unqiue in the general population and that its cause must be related to the veteran's special experience in Vietnam.
In fact, based on currently available scientific evidence, there is no reason to believe that the incidence of any unusual physical problem is greater among those exposued to Agent Orange than among any similar cohort of the unexposed.The number of cases of these diseases among class members could be estimated fairly accurately for past and future years. See, e.g., In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 786 (E.D.N.Y. 1984) (chart showing cumulative expected number of deaths broken down by cause); F. Supp. , , M.D.L. No. 381, slip op. at 81 (E.D.N.Y. May 8, 1985 (mortality caused by hepatitis). Class members suffering from such diseases could be ascertained by medical examination. Exposure determinations would be no more difficult that under any other plan. See infram Part IV.D. Detailed inquiry into "individual discount factors" could be eliminated. Award grids based on severity could readily be devised. The number of awards would be no more than a few thousand.
Such a plan would result in average recoveries of several hundred thousand dollars with relatively low aggregate transaction costs. The same fundamental difficulty associated with any tort-based compensation scheme, however, would persist: No factual basis exists for choosing or excluding any disease, since causation cannot be shown for either individual claimants or individual diseases with any appropriate degree of probability. The choice of diseases and hence persons to be compensated is essentially arbitrary.
Approval of the PMC plan in any form would be inconsistent with the court's responsibility to the class under Rule 23(e) to provide for an equitable allocation of the settlement fund. See, e.g., Curtis-Wright Corp. v. Helfand, 687 F.2d 171, 174-75 (7th Cir. 1982); In re Equity Funding Corp. of America Securities Litigation, 603 F.3d 1353, 1363, 1365 (9th Cir. 1979); Beecher v. Able, 575 F.3d 1010, 1016 (2d Cir. 1978); Zients v. Lamorte, 459 F.3d 628, 630 (2d Cir. 1972); In re Folding Carton Antitrust Litigation, 557 F. Supp. 1091, 1108-09 (N.D. Ill. 1983), aff'd in pertinent part, 744 F.2d 1252, 1254-55 (7th Cir. 1984), petition for cert. field, 53 U.S.L.W. 3600 (U.S. Feb. 7, 1985) (No. 84-1266).
E. Death and Disability Payment Program and Class Assistance Foundation
A distribution plan for a settlement in a tort class action should as far as possible reflect the traditional tort law principle that individuals will receive monetary compensation for their injuries. See supra Part II. The common law generally holds that money damages are a preferred remedy. Many class members apparently has assumed that the distribution would be based on this premise. Accordingly, a major portin of the settlement fund should be distributed in the form of individual awards if at all possible.
To be both practicable and fair, a program of individual benefits must minimize transaction costs, be relatively easy to administer and involve relatively simple, understandable and objective eligibility criteria, while maximizing protection of those said to have suffered as a result of exposure to dioxin-contaminated Agent Orange. The presently available evidence of causation is far too speculative to serve as the primary basis for a distribution plan, although exposure must be used as an eligibility criterion because of the class definition.
The only realistic means of proceeding with distribution that sufficiently addresses these concerns is embodied in the Special Master's Report. Payments will be made for death and long-term total disability among veterans. See infra Part IV. Three-quarters of the settlement fund, or $150 million, will be set aside for this program, which will be administered by an insurance company or other appropriate disbursing institution or institutions, subject to court supervision. Only those exposed will be eligible.
Under this plan only totally disabled veterans and the surviving suposes or children of deceased veterans will receive individual cash awards. The class as a whole, however, will benefit significantly in other ways. As discussed infra Part V, about one-quarter of the settlement funds, or some $45 million, will be turned over to a class assistance foundation. The foundation will fund services on behalf of the class as a whole, including aid to children of veterans and their families in coping with birth defects. The foundation's work will provide useful and meaningful benefits to those class members not eligible for direct individual awards. About 2.0% of the fund, or $4 million, will be available to be administered separately for the benefit of Australian and New Zealand claimants. See infra Part VI.
Given "the manifest inadequacy of the alternative solutions that have been proposed," In re Folding Carton Antitrust Litigation, 557 F. Supp. 1091, 1109 (N.D. Ill. 1983), aff'd in pertinent part, 744 F.2d 1252, 1254 (7th Cir. 1984), petition for cert. filed, 53 U.S.L.W. 3600 (U.S. Feb. 7, 1985) (No. 84-1266), this plan provides the only reasonable formula for distribution. See id.; In re Corrugated Container Antitrust Litigation, 659 F.2d 1322, 1328-29 (5th Cir. 1981), cert. denied, 456 U.S. 998, 102 S. Ct. 2283, 73 L. Ed. 2d 1294 (1982); Detroit v. Grinnell Corp., 356 F. Supp. 1380, 1388-89 (S.D.N.Y. 1972) (under across-the-board settlement distribution, "some claimants will receive less than they are entitled to, as a percentage of actual damage suffered, while others receive more," but "the formula adopted is the only realistic one" available), aff'd in pertinent part, 495 F.2d 448 (2d Cir. 1974); supra Part II.
IV. PAYMENTS FOR DEATH AND TOTAL DISABILITY OF EXPOSED VETERANS
Under the payment program, individual awards will be made only to exposed veterans who suffer from long-term total disabilities and to the surviving spouses or children of exposed veterans who have died. A number of reasons exist for channeling individual compensation payments to class members in these categories.
First, the settlement fund, though large in absolute terms, is not sufficient to satisfy the claimed losses of every class member.An "equitable allocation of the large settlement fund [must be made] among the even larger claims of the various class members." In re Equity Funding Corp. of America Securities Litigation, 603 F.3d 1353, 1363 (9th Cir. 1979). Although a meaningful individual cash award cannot be paid to every claimant, a class assistance foundation will be created to fund services to help meet the needs of the entire class. Every class member will be eligible to benefit from this aspect of the distribution plan. See infra Part V.
Second, however slight the suggestion of a causal connection between the veterans' medical problems and Agent Orange exposure, even less evidence supports the existence of an association between birth defects and exposure of the father to Agent Orange in Vietnam. See in re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 777-95 (E.D.N.Y. 1984). This distinction does not imply that the miscarriage and birth defect claims were frivolous: If the spouses and children of the veterans were "completely without any colorable legal claims against defendants, it would [be] an abuse of the court's discretion to allow them to share in the settlement fund." In re Chicken Antitrust Litigation American Poultry, 669. F.2d 228, 238 (5th Cir. 1982). Yet, if one set of claims had a greater likelihood of ultimate success than another set of claims, it is appropriate to weight "distribution of the settlement * * * in favor of plaintiffs whose claims comprise the set" that was more likely to succeed. In re Corrugated Container Antitrust Litigation, 643 F.2d 195, 220 (5th Cir. 1981), cert. denied, 456 U.S. 998, 102 S. Ct. 2283 (1982). See also In re Equity Funding Corp. of America Securities Litigation, 603 F.3d 1353, 1364-66 (9th Cir. 1979); In re Investors Funding Corp. of New York Securities Litigation, 9 Bankr. 962, (S.D.N.Y. 1981); Dunn v. H.K. Porter Co., Inc., 78 F.R.D. 50, 53-54 (E.D. Pa. 1978); cf. Holmes v. Continental Can Co., 706 F.3d 1144, 1148 (11th Cir. 1983) ("there is no rule that settlements benefit all calss members equally" and "higher allocations to certain parties [may be] rationally based on legitimate considerations").
Third, the plan targets for benefits those veterans who have suffered the most severe injuries. Limiting the program to death and total disability benefits wiould requiring proof of a specific disease or a causal connection also minimizes transaction costs, which would almost certainly be overwhelming if any of the other individual award proposals submitted to the court were implemented. See, e.g., supra Part III.D. Proof of eligibility will be relatively simple and will not impose on the applicant the enormous burdens of producing volumes of medical records and payment expensive medical and legal fees for complicated processing and testing. An outside contractor such as an insurance company has the necessary skills and experience and can process such claims at minimum cost to the fund, particularly because relatively little documentation and handling will be needed. Creation of a costly new claims-processing bureaucracy, which would devour money that should go to class members, thus is avoided. "The proposed method of distribution will maximize the value of the recovery actually received by the class." Ohio Public Interest Campaign v. Fisher Foods, Inc., 546 F. Supp. 1, 11 (N.D. Ohio 1982).
Finally, this plan "obviate[s] the necessity for particularized proof" and is "a fair response to the particular difficulties that this class would have in gathering and presenting evidence of damages." In re Chicken Antitrust Litigation American Poultry, 669 F.3d 228, 240 & n.20 (5th Cir. 1982). See also Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 260-63 (5th Cir. 1974), cert. denied, 439 U.S. 1115, 99 S. Ct. 1020, 59 L. Ed. 2d 74 (1979); Women's Committee for Equal Employment Opportunity v. National Broadcasting Co., 76 F.R.D. 173, 178-79 (S.D.N.Y. 1977).
In distributing the settlement fund, every possible effort should be undertaken to alleviate the suffering of men, women and children in the class. But compassion, though heartfelt, must be tempered with a down-to-earth sense of what can and what cannot be done. The needs of the class must be weighed against the realities of what can be accomplished given the amount of money available, the danger that administrative, medical and legal costs will bankrupt the fund, and the premise that if anyone was injured by Agent Orange it was the veterans who were directly exposed. Attainment of a just result requires that a balance be struck among "competing notions of reasonableness," in favor of the veterans themselves. In re Corrugated Container Antitrust Litigation, 659 F.2d 1322, 1325 (5th Cir. 1981), cert. denied, 456 U.S. 998, 102 S. Ct. 2283, 73 L. Ed. 2d 1294 (1982). The choices are difficult, but they must be made.
A. Compensable Death or Disability
Awards will be made for the death or total disability of a veteran. All deaths and total disabilities will be compensable, regardless of what disease was the cause, unless predominantly caused by traume, whether or not self-inflicted. All veteran claimants who file a claim will receive a notice confirming that they or their eligible survivors may file for compensation upon proof of exposure if death or total disability occurs before the expiration of the payment program. See infra part VII.A.1.
The reasons for limiting compensation to death and total disability have already been stated. The exclusion of traumatic injuries rests on different grounds. The causal connection between Agent Orange exposure and specific health conditions is too speculative to serve as a basis for distribution, but injuries and deaths nevertheless may be excluded as not compensable if they are manifestly unrelated to Agent Orange exposure -- for example, those incurred in automobile accidents, homicides, suicides and war wounds. Given that a relatively limited fund must be distributed among a large number of potentially eligible claimants, it is reasonable and equitable to excluse those claims that are unquestionably unrelated to Agent Orange exposure in Vietnam.
Denial of compensation for all deaths or disabilities resulting from traumatic injuries will eliminate the most prevalent causes of death or disability that are clearly unrelated. It is reasonable to make self-inflicted injuries or suicides ineligible for payment as well, notwithstanding the theoretical possibility that Agent Orange might have contributed in some way to the depression that induced the injury. A rule that holds veterans responsible for self-inflicted harm will counteract any incentive toward suicide that provision of a death benefit from the fund to a veteran's eligible survisors might unintentionally create.
A rule that excludes traumatic, accidental and self-inflicted injuries will be simple to administer. They are relatively easy to define and determine. Aside from injuries in these categories, all others will be compensable. Few medical conditions are uncontrovertibly unrelated to Agent Orange exposure. A determination of whether one of these conditions caused a particular veteran's death or disability would require complex procedures that would be far too costly and time-consuming.
B. Determining Total Disability
An objective test for disability is needed that will provide clear, easily administrable guidelines. The enormous expense and time required for individual adjudication hearings must be avoided.
Determinations of long-term total disability will be based on the definition of disability found in the Social Security Act. 42 U.S.C. §§ 301-1397f. Section 223 of the Act defines "disability" as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." 42 U.S.C. § 423(d)(1)(A).
Use of the Social Security Act definition of "disability" has a number of advantages. First, it would be relatively easy to apply given the extensive guidelines and precedents already developed under the Social Security program. Second, claimants are likely to be familiar, at least in general, with the elements of disability under this definition. Third, it would provide a cost-effective and easily administered eligibility screen. Since a similar definition of disability is found in many insurance policies, claims processing facilities are already equipped to apply such a definition efficiently and consistently. Fourth, and perhaps most important, the payment program could minimize some administrative costs by accepting Social Security determinations of disability as evidence of eligibility for veterans who are already receiving disability benefits.
Because reviewing medical evidence to determine whether an individual is disabled involves administrative costs, the payment program to the extent possible will rely on disability determinations made by the Social Security Administration. Any veteran claimant certified as disabled by the Social Security Administration will be considered disabled for purposes of the payment program, unless the disability was predominantly caused by a traumatic, accidental or self-inflicted injury.
It was recommended by the Special Master that claimants who have not applied for Social Security disability benefits, and who would be eligible for payments under either the Supplemental Security Income (SSI) means test or the Social Security employment test, be required to apply for Social Security and exhaust all appeals within the agency before their application under the payment program would be processed. Special Master's Report, pp. 74-77. Under the Special Master's proposal, once a veteran had received a final ruling from the agency, he would be entitled to an evaluation of disability by the program, if that ruling were unfavorable.
There is considerable merit to this suggestion. Requiring claimants to apply for Social Security as a prerequisite to independent determination under the payment program would result in significant savings in administrative costs to the fund. This requirement, however, would cause substantial delay in disbursing payment to some claimants, even though the veteran would only need to exhaust his or her appeals within the agency.
In addition, the savings to the fund do not justify burdening the Social Security system with the screening costs of this Agent Orange litigation. The court takes judicial notice of the fact that the admnistrative agency is already considerably strained. Placing additional stresses on the process to aid private litigants is arguably against public policy. In any event, it is unwise and this requirement is rejected.
In the absence of a finding of disability under the Social Security administrative process, a claimant will have the right to apply to the disbursing agency for compensation. This right shall exist even if the claimant has applied and been rejected or is awaiting a Social Security disability ruling.
Claimants will be required to submit medical evidence, including records, diagnosis, and test results, similar to that required by the Social Security Administration. In determining whether a veteran claimant is eligible for a disability award, the payment program will take into account, as evidence, a Social Security determination that the veteran is not disabled, or certification of disability from other entities such as the Veterans Administration or private insurers.
C. Proof of Death and Eligible Survivorship
A death certificate ordinarily will be sufficient proof of death. If the certificate does not adequately state the cause of death, further documentation such as medical and hospital records may be required by the disbursing agency to demonstrate that death was not predominantly traumatic, accidental or self-inflicted.
The claimant will be required to establish the deceased's status as a class member veteran and confirm the existence of at least one eligible survivor -- a spouse married to the veteran at the time of death or a dependent child at time of death. No death benefit will be paid if no such eligible survivor is living at the time of application for an award, see infra Parts IV.H and V.A, even if the survivor was alive when the initial claim form was filed. If there is a surviving spouse, the death award will be paid to her. If there is no surviving spouse, the death award will be divided equally among the dependent children. If death of a claimant occurs after application but before the award is made, it will go to his or her estate.
Proof of eligible survivorship will be the responsibility of the claimant. Because the name of a surviving spouse is generally listed on a death certificate, verification of eligibility for a spouse will be straightforward in most instances. The claimant must sign a certificate of dependency for each dependent child. Documentary evidence will be required to establish a child's dependent status. Such evidence may include a birth certificate, an adoption order, or a child support order issued by a court.
Use of a dependency test to determine whether surviving children should receive death benefits will to some extent help preserve the fund for the most needy claimants. A dependency test also is consistent with the objective of maximizing benefits to the younger veterans because they are more likely to have dependent children. The increase in administrative costs if any will not be significant.
Claimants will be required to demonstrate exposure to Agent Orange or other phenoxy herbicides during military service in or near Vietnam. Exposure is a legitimate and necessary eligibility criterion because it is embodied in the class definition. See In re "Agent Orange" Product Liability Litigation, 100 F.R.D. 718, 729 (E.D.N.Y. 1983), Mandamus denied, 725 F.3d 858 (2d Cir.), cert. denied, U.S. , 104 S. Ct. 1417 (1984).
The Special Master's Report recommended restriction of eligibility to the 50 percent of veterans most heavily exposed to Agent Orange in Vietnam, on the grounds that "scientists do agree that the possibility of adverse health effects increases as the amount of exposure increases." Special Master's Report, p. 79 (emphasis in original). Such a restriction would maximize the individual award to each claimant. The Special Master's Report also discussed a graduated payment approach, under which "veterans could be divided into three tiers, depending on whether they received low, moderate or high levels of exposure relative to the other veterans." Id. at 80. The Special Master favored the 50-percent approach as being easier to administer and allowing the maximum payment to be made to a larger number of claimants. Less highly exposed claimants under the Special Master's plan would receive special consideration in the operation of the class assistance foundation. Id. at 81-83.
Objections have been raised to use of either of the exposure options outlined by the Special Masster on the ground that it would be devisive, causing widespread dissension among class members. See, e.g., Comments of Vietnam Veterans of American on Plans Pertaining to the Disposition of the Settlement Fund, pp. 7-10, filed April 10, 1985 ("Comments of VVA"). VVA, although generally supporting the Special Master's plan, opposes making the recommended exposure-based distinctions for two reasons. First, a strong correlation between adverse health effects and degree of exposure should be shown before such a criterion is used in deciding how to allocate the fund. No consensus among scientific experts exists on this point; according to VVA "the scientific evidence is not advanced enough to be confident that there is a strong correlation between degree of exposure and the possibility of injury." Id. at 8. Second, VVA states that "[g]iven the exposure information currently available, one cannot place great confidence in the accuracy of determinations on degree of exposure." Id.
The points made by VVA and others on the use of a graduated exposure criterion have merit. The Special Master's recommended methodology is based on a fundamental theory of toxicology concerning the dose-response relationship of toxic substances. That theory holds that the greater the exposure, the greater the toxic response. See Special Master's Report, p. 362. So far as is known, all toxic substances act with this dose-response relationship. Id. at 371. The theory also has intuitive appeal: If A repeatedly strikes B, B probably is hurt more than if struck only once. But it is possible that -- assuming some validity to the theory of causality -- individuals could vary greatly in their susceptibility to dioxin-contaminated Agent Orange exposure. Some might not experience adverse health effects though exposed to high levels of dioxin, while others might fall ill after exposure to relatively low levels. Comments of VVA, p. 8. That is, C, who is struck once, may be injured more seriously than is B, who is struck ten times.
The problems associated with proving degree of exposure and correlating degree of exposure with probability of injury compounds the enormous difficulty of proving causation generally. As already noted, causality is too speculative a basis for distribution. Similarly, the court's duty to ensure an equitable allocation and the desirability of minimizing discord within the class where possible, favor rejection of a graduataed exposure factor that lacks a strong empirical basis.
On balance, these concerns outweigh the considerations on which the Special Master relied. Claimants accordingly will be required to demonstrate exposure, but degree of exposure will not be considered in making individual awards.
Some substantial showing of exposure, however, must be made to ensure that only class members who were exposed receive payment. Exposure is a jurisdictional requirement for class membership. A presumption that all claimants were exposed is not workable. This presumption alternative would reduce the maximum possible payment level because of the increase in otherwise eligible claims. That result would be unfair to a truly exposed class member whose award otherwise would be higher. Thus a presumption of exposure to all Vietnam veterans similar to that employed by the Veterans Administration, see 50 Fed. Reg. 15,853 (1985) (to be codified at 38 C.F.R. 4S 3.311a(4)(b)), cannot be used in connection with the payment program.
A self-reporting method of determining exposure raises similar problems. Such an approach would be an unreliable index of exposure if used alone:
During the Vietnam war, large areas of land were defoliated for reasons completely unrelated to the use of herbicides. Bombing, shelling, constant resettlement, clearing of forests, and agricultural practices all left their mark. Consequently, a veteran could understandably but erroneously assume contact with Agent Orange because he spent time in an area that was defoliated due to some other caue. Thus, a self-reporting system will not effectively screen claimants for exposure.
Special Master's Report, p. 85. However honest the claimants might be, the number of otherwise eligible claims probably would increase in the absence of any objective check on the claimants' assertions of exposure. In addition, dishonest claims could not be screened out. Both results would be unfair to the truly exposed class member who otherwise would receive a higher award. The need to ensure an equitable allocation of the fund requires a greater showing of exposure.
Claimants could be required to submit military records demonstrating a likelihood of exposure. Such records could be useful in corroborating other information on exposure. They are, however, too cumbersome, incomplete and lacking in uniformity to serve as the sole basis for exposure determination, or even as the sole adjunct to self-reporting if other alternatives are available.
Under the Special Master's recommendations, a veteran who performed a job involving direct handling or application of Agent Orange, such as backpack spraying, would be deemed exposed. Other veterans would be processed under an objective computerized exposure evaluation system:
The methodology would call for complex calculations based on information regarding a veteran's service location and on information on spraying operations obtained from the HERBS tape. The HERBE tape is a computerized record of individual herbicide dissemination missions in Vietnam, which was prepared from log books maintained at U.S. military headquarters in Saigon. The HERBS tape contains precise information on the location of spray missions, and both the type and quantity of herbicide used.
Special Mater's Report, p. 86 (footnote omitted).
The HERBS tape does not contain a complete record of herbicide spraying Vietnam. At present, it accounts for neither pre-1965 aerial spraying nor nonaerial spraying. Id. at 95. Agent Orange itself, of course, did not come into use until early 1965, but other phenoxy heribicdes had been used earlier. In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 775-76 (E.D.N.Y. 1984). The National Academy of Sciences nevertheless has estimated that the HERBS tape covers about 86 percent of herbicide use in Vietnam, and updated information may become available in the future. Special Master's Report, p. 95 & n.42. The Academy has concluded that the HERBS tape is a reliable record of herbicide operations. Id. at 86 n.41.
The HERBS tape thus can serve as a reasonable starting point for exposure determination in conjunction with military records and claimants' affidavits asserting exposure. Accordingly, the Special Master's recommendation to this extent is adopted. In processing claims, two basic steps will be followed.
First, a questionnaire will be sent to all claimants. In addition to providing information concerning death or disability, each claimant will be asked to indicate the dates and locations of the veteran's Vietnam service. If certain veterans or their surviving families cannot recall this data, the institution administering the payment program insofar as possible will help such claimants obtain and evaluate information about the veterans' service history. Such assistance might be provided through the class assistance foundation. See infra Part VII.A.5.
The questionnaire also will ask whether the veteran held a job in or near Vietnam involving direct handling or application of Agent Orange. It will include an authorization to obtain military records to confirm the claimant's statements.
Second, the questionnaire data will be analyzed by objective criteria. The following test will be used:
(1) Any veteran who held a job involving direct handling or application of Agent Orange will be considered exposed. This category includes backpack sprayers; sprayers on airplanes, helicopters or boats; and loaders or handlers of spraying equipment. Military records will be used to confirm claims in this category.
(2) All other claims will be evaluated under a computerized process that will compare the veteran's location data with the HERBS tape data to determine the correlation, if any, between the veteran's whereabouts in Vietnam and the location of spraying missions.
Exposure to Agent Orange residues from past spraying as well as to contemporaneous Agent Orange spraying will be considered in making this evaluation, accounting for the possibility that a veteran might have been exposed to Agent Orange not only through his presence in an area during spraying, but also by walking, sleeping or drinking contaminated groundwater in or near a contaminated area well after spraying. But because degree of exposure will not be considered in making awards, and because exposure or its absence will be the central criterion, the Special Master's recommendation evaluation methodology must be modified. The following criteria will be used in determing whether or not a veteran was exposed to Agent Orange for purposes of making awards from the settlement fund.
First, a veteran who was present in a sprayed area when the spraying occurred will be considered exposed. Second, some temporal and geographic limits must be set to determine whether a veteran who was in a location near a sprayed area at or subsequent to the time of spraying will be considered exposed. Because location data has not yet been submitted for the veterans comprising the claims population, the time and place parameters to be used to determine exposure for fund distribution purposes cannot be established with certainty at this time. Nevertheless, some limits will have to be determined if the exposure requirement is to have any meaning. In order to give preliminary guidance in structuring the payment program, some tentative requirements will be needed. Preliminary and final time and place parameters will be subject to court approval on recommendation of the Special Master or disbursing agency in light of the nature and quality of the data subsequently submitted by claimants.
Because the HERBS tape does not account for all possible expsoures, an appeal process will be available to supplement HERBS tape determinations. Veterans who claim exposure despite a contrary exposure index finding could obtain further consideration of their claims, ordinarily on a written record, through an appeal to an independent board or review. See infra Part IV.H.4. The board of review will consider the veteran's military records and any other documentation submitted by the veteran in rendering a decision.
E. Payment Program Time Limits
Only those who file claim forms will be considered for individual awards. See the filing deadline requirements outlined supra Part I.
Of the approximately 245,000 claims received as of the date of this opinion, about 12,000 were filed late. The most common reason given for the failure to meet the filing deadline is lack of knowledge of (1) the lawsuit, (2) the need to file a claim, or (3) the deadline itself. The court has the power to accept late claims in the exercise of its equitable discretion. See, e.g., In re Gypsum Antitrust Cases, 565 F.2d 1123, 1128 (9th Cir. 1977); Zients v. Lamorte, 459 F.2d 628, 630-31 (2d Cir. 1972); In re Folding Carton Antitrust Litigation, 557 F. Supp. 1091, 1103-04 (N.D. Ill. 1983), aff'd in pertinent part, 744 F.2d 1252 (7th Cir. 1984), petition for cert. filed, 53 U.S.L.W. 3600 (U.S. Feb. 7, 1985) (No. 84-1266); Seiffer v. Topsy's International, Inc., 70 F.R.D. 622, 625 n.1 (D. Kan. 1976). Accordingly, all claims filed by the date of this opinion will be considered timely.
No further consideration of claims filed late will be made unless the court determines that good and special reason exists for failure to meet the deadline. Class members seeking compensation from the fund in the future must file a claim form or application for payment within 120 days after the veteran dies or learns of a total disability.
The payment program will run for ten years, beginning January 1, 1985 and ending December 31, 1994. No payment will be made for death or disability occurring after December 31, 1994. Payment will be made for compensable deaths occurring both before and after January 1, 1985. Payments will be made for compensable disability to the extent that the period of disability falls within the ten years of the program's operation. In addition, initial ...