Whenever I hear that the naturally occurring biological insecticide Bacillus thuringiensis var. kurstaki (Btk) is not killing caterpillars, the first thing I try to find out is whether or not the "caterpillars" are actually caterpillars. Btk products (e.g. Dipel, Thuricide, etc.) only kill caterpillars, they do not kill sawfly larvae.
Caterpillars belong to the order Lepidoptera meaning they grow up to become butterflies or moths. Many types of sawfly larvae look like caterpillars and even feed like caterpillars, but they are related to bees, wasps, and ants; they belong to the order Hymenoptera. On the other hand, there are some caterpillars like Zebra Caterpillars (Melanchra picta) that look like sawfly larvae.
There's an easy way to tell the difference between caterpillars and sawfly larvae using a system taught to me by Dave Shetlar (OSU Entomology, Professor Emeritus). Although others may have happened upon this handy system, I always refer to it as the "Shetlar Method."
A Little Anatomy
Starting from the head and working towards the backend, the first group of legs you find on both caterpillars and sawfly larvae are three pairs of thoracic legs. These match with the three pairs of legs found on the adults. The next multiple pairs of fleshy legs are called abdominal prolegs and the last pair of fleshy legs located at the backend are appropriately called anal prolegs.
Adult insects use their legs for locomotion, or for just standing around thinking insect thoughts if insects think. Caterpillar and sawfly larvae primarily use their thoracic legs for holding onto things; they crawl around using their prolegs.
Count the Prolegs
Count the number of abdominal prolegs; do not count the anal prolegs. Caterpillars have 5 or fewer pairs of abdominal prolegs. Sawfly larvae have 6 or more pairs of abdominal prolegs.
Here's a handy way to remember this: Caterpillars have the same number or fewer pairs of abdominal prolegs as the fingers on your hand; sawfly larvae have more pairs of abdominal prolegs than the fingers on your hand.