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FEN-PHEN
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What is it?
 Fen-Phen
is a combination of two drugs -- fenfluramine, an appetite suppressant,
and phentermine, a mild stimulant. When combined they create a powerful
diet drug. In 1996, there were 18 million prescriptions written for
Fen-Phen in the United States.
From 1989 through September 1997, American Home Products Corporation
(now named Wyeth NYSE - WYE) marketed and sold two brand name prescription
drugs for weight loss: Pondimin (fenfluramine ?FDA approved 1973)
and Redux (dexfenflurmine ?FDA approved 1996). These drugs work by
altering serotonin levels in the brain to suppress appetite. Doctors
prescribed both drugs in combination with phentemine (FDA approved
1959) in a "diet cocktail". While the drugs were approved individually
by the US Food and Drug Administration (FDA), the combination was
not. Ingestion of the two together is not under the control of the
FDA. Doctors believed that the use of the drugs in combination was
safe.
Approximately six million people used some combination of these drugs
for weight loss.
Mayo Clinic Report
On July 8, 1997, the Mayo Clinic reported 24 patients developed heart
valve disease after taking fen-phen. In five patients who underwent
valve replacement surgery, the diseased valves were found to have
distinctive features similar to those seen in carcinoid syndrome.
The cluster of unusual cases of valve disease in fen-phen users suggested
that there might be an association between fen-phen use and valve
disease.
On July 8, FDA issued a Public Health Advisory that described the
Mayo findings. The Mayo findings were reported in the August 28 issue
of the New England Journal of Medicine, along with an FDA letter to
the editor describing additional cases. FDA received over 100 reports
(including the original 24 Mayo cases) of heart valve disease associated
mainly with fen-phen.
There were also reports of cases of heart valve disease in patients
taking only fenfluramine or dexfenfluramine. No cases meeting FDA's
definition of a case were reported in patients taking phentermine
alone.
See "Appendix D - New England Journal of Medicine"
FDA Action
On September 15, 1997, American Home Products (now named Wyeth) and
the FDA announced that there would be no further sales of Pondimin
and Redux in the United States. Since the withdrawal, epidemiological
studies have established a causal relationship between fenfluramine
and dexfenfluramine and VHD. Epidemiological studies have also established
that fenfluramine and dexfenfluramine cause a fatal disease known
as primary pulmonary hypertension ("PPH").
See "Appendix E - FDA Press Release"
Damages Associated With Fen-Phen Use
There are three types of injuries associated with the use of Fen-Phen:
1. heart valve damage 2. primary pulmonary hypertension 3. neuropsychological
damage. Persons with Fen-Phen related Heart valve damage are eligible
to participate in a national class action settlement. See "Class Action
Settlement" and "Appendix H - Class Action Settlement"
Primary Pulmonary Hypertension (PPH)
Fen-Phen has been linked to an increased risk for primary pulmonary
hypertension (PPH), a condition characterized by the narrowing of
the blood vessels of the lungs. This causes high blood pressure, which
can eventually lead to heart failure. Symptoms of PPH include: ?Shortness
of breath (dyspnea) ?Dizziness, weakness, fainting spells ?Chest
pain ?Fatigue ?Ankle swelling PPH can be treated with medication
to stop the progression of the disease. Many patients take vasodilators
to enlarge the blood vessels in the lungs or anti-coagulants to reduce
the risk of developing blood clots. Severe PPH may require a heart-lung
transplant.
Medical Studies released in November 2001 suggest that the occurrence
of pulmonary hypertension in diet drug users may be seven times higher
than anticipated in 1997, when the diet pills were removed from the
market. Some medical researchers believe North America may experience
an epidemic of primary pulmonary hypertension cases related to use
of the fen-phen diet drugs.
Primary pulmonary hypertension is not covered in the national class
action settlement. Persons suffering from Fen-Phen related PPH damage
must litigate individually.
Neuropsychological Damage
Neuropsychological damage can include memory loss, behavioral changes,
depression, psychotic breakdowns, and mood swings.
Neuropsychological damage is not covered in the national class action
settlement. Persons suffering from Fen-Phen related neuropsychological
damage must litigate individually.
Why wasn't This Problem Discovered Earlier?
The type of valve disease that FDA believes may be associated with
fenfluramine and dexfenfluramine is an extremely unusual type of drug
reaction. Because valve disease is not usually associated with drug
use, it is not normally screened for in human clinical testing of
drugs. Since valvular heart disease is not screened for in clinical
trials, it would usually not be detected unless patients developed
symptoms. No cases were detected in 500 patients followed for one
year in a clinical trial of dexfenfluramine. Furthermore, asymptomatic
heart valve disease (heart valve disease without symptoms) would not
likely be detected in patients taking the drugs as part of a weight
loss program. The number of patients who have been reported to have
symptoms of heart valve disease associated with recent exposure to
the drugs has been very small, compared to the number of recent prescriptions,
although there may be a delay in the development of symptoms. And
even in symptomatic patients, the link between the symptoms and drug
use may not be obvious because such a reaction is not common. These
factors may explain why this problem was not discovered earlier.
As it became widely prescribed as part of the fen-phen regimen, there
has been a marked increase in amount and duration of use of fenfluramine.
In 1992, articles were published about study results suggesting that
the combined use of phentermine and fenfluramine would result in significant
weight loss when used over an extended period of time. The results
of these studies were not reviewed by FDA, and the conclusion about
long-term use of the combination of drugs has not received FDA approval.
The increased magnitude and duration of use probably led to an increase
in the number of cases of symptomatic heart valve disease, which may
have contributed to the recent recognition of this association.
With respect to dexfenfluramine (Redux), which was approved on April
29, 1996, the labeling states that safety has not been shown for longer
than one year of use. This reflects the length of the study upon which
dexfenfluramine was approved. It was a one-year European study of
1,000 subjects, half of whom were treated with dexfenfluramine. The
study population was 80 percent women with an average age of 41. Heart
disease was not noted in the study. A follow-up study directed toward
uncovering heart disease after termination of the study was not performed
because there was no reason to believe at that time that the heart
was affected. In addition, dexfenfluramine had been marketed in Europe
for over a decade without detection of an association between dexfenfluramine
and heart valve problems. FDA is currently trying to obtain such follow-up.
Litigation History
Torts
A tort is a wrong involving any damage, injury, or wrongful act done
willfully, negligently, or in circumstances involving strict liability
(but not involving breach of contract) for which a court of law will
grant monetary damages or an equitable remedy to compensate the victim.
Torts can be violations of civil law, like personal injury, negligence,
misrepresentation, libel or slander, trespassing, invasion of privacy,
etc. Or torts may involve criminal acts, like assault, battery, kidnapping,
arson, burglary, manslaughter, murder, rape, or robbery.
So while a tort may also be a crime, the primary purpose of tort law
is to compensate the injured party, not to punish the wrongdoer as
in criminal law, except where the conduct is particularly offensive.
Punitive damages (compensation in excess of actual damages designed
to punish the wrongdoer) may be awarded if the perpetrator's conduct
was willful, malicious, or outrageous.
In the past, huge corporations with large legal staffs and highly
paid outside counsel, held the upper hand in litigation matters. It
was difficult for the individual plaintiff to prevail in a lengthy,
expensive legal struggle.
Mass Torts
In the past decade however, so-called Mass Torts cases have turned
the tables. Mass Torts occur when a large number of people have been
similarly injured. Examples of mass torts include major multi-party
lawsuits involving faulty products such as silicone breast implants,
tobacco, or pharmaceutical cases.
When a widely used product is identified as potentially harmful, as
happened with Pondimin and Redux in 1997, organized groups of plaintiffs'
lawyers rapidly inundate the manufacturer with lawsuits, loading the
dockets of federal and state courthouses around the country. Cases
are filed in several hostile state court jurisdictions, such as West
Virginia, Texas and the notorious Jefferson County Mississippi.
Joinder
Under Rule 20 of the Mississippi Rules of Civil Procedure, suits raising
similar issues of fact and law, even those from out of state, can
be joined. ("Mass Action"). Under Rule 20, which has been upheld by
the state Supreme Court, a local plaintiff is needed to file a suit
in the jurisdiction and a local defendant is necessary to keep that
suit against a big corporation from being removed to federal court.
Mississippi doesn't have class actions; each plaintiff sues individually.
Jefferson County
The population of Jefferson County is largely poor and uneducated.
Only half of the county's jury pool of 6,571 graduated from high school,
and more than 1,000 have not completed the ninth grade. The median
household income in Jefferson County is just more than $15,000 per
annum, about half of the state average. The county has a population
of less than 10,000, but a total of 21,000 plaintiffs filed lawsuits
there between 1995 and 2000.
Bankston Drug Store
As the only pharmacy in the county, Bankston Drug Store has been named
in every suit alleging defective manufacture of consumer drugs - Fen-Phen,
Rezuling and Propsulsid. The lawyers include Bankston Drug store to
stay in Jefferson County because the verdicts tended to be higher.
Located on Main Street in Fayette since 1902, the drug store is a
remnant of America's past. Antique cabinets line the walls, and ice
cream is still hand-dipped at the soda fountain where Fayette's citizens
sit and gossip over coffee, Coca Cola, or chocolate malts. Fayette
or Jefferson County is not a "profit center" that would attract CVS
or Rite Aid, yet this rural farming community has become ground zero
for some of the most famous class action lawsuits filed in America.
America's best known health supplement lawsuit - Fen-Phen - was filed
here. So was the lawsuit against Rezulin and Propulsid. A jury in
the Propulsid case that went after the deep pockets of Johnson & Johnson,
the parent company of Janssen which developed the heartburn drug,
awarded the plaintiffs in Pickard's court $100 million.
Defendants Overwhelmed
Mass Tort defendant corporations become overwhelmed by the sheer numbers
of claims scattered around a labyrinth of courthouses. Dealing with
the constantly rising numbers of claims can become impossible, even
for the largest deep-pocketed defendants.
Companies often agree to pay huge sums to settle claims rather that
run the risk of financial ruin. Sometimes the settlement aggregate
far beyond the harm their products caused. Many legal professionals,
including the chief justice of the United States, believe the courts
need a major overhaul to cope with the growing trend of mass litigation.
Chief Justice William H. Rehnquist has all but begged Congress in
recent years to enact laws to help the courts deal with a problem
that, he has said, "cries out for a legislative solution."
The House of Representatives passed a bill that would consign all
class-action cases of nationwide scope to the federal courts. In theory,
because federal courts are governed by the same rules, that would
establish uniformity in the way claims are resolved. But the bill
would not prevent individual litigants from opting out of federal
class-action settlements and filing separate suits in state courts
The Case Against Wyeth
While any Mass Tort action is difficult to fend off, the facts of
the Wyeth case are particularly troublesome to the company because
of its exposure to large punitive damage awards. Documents produced
in discovery showed that the company had been slow to update warnings
about a risk that clearly was known - that the diet drugs in rare
instances could cause primary pulmonary hypertension. The company
had waited two years before putting new warnings about that danger
on its drug labels.
During a New Jersey trial, Dr. Marc Dietch, former Vice President
of Medical Affairs for Wyeth-Ayerst Laboratories testified that the
company was slow to investigate examples of heart damage and that
warning labels were "inaccurate".
While fenfluramine and phentermine each had the approval of the FDA
for sale in the treatment of obesity, the fen-phen combination was
never an "approved" use. "Off label" uses of a drug are not regulated
by the FDA, because the FDA does not control medical practice. However,
doctors who make off label use of drugs run a risk of being sued in
medical malpractice cases, particularly if they do not gain their
patients' consent. Other abuses in the way that these drugs were prescribed,
with the knowledge of the manufacturer, included allowing users to
stay on these drugs for extremely long periods of time - often much
longer than the recommended course of treatment. Indeed, while the
risks of serious side effects were reported to go up dramatically
after 3 months of use, many of the Mayo Clinic study patients were
on the drug for six months or more. Prescriptions were also not limited
to persons truly obese, but rather the drugs were routinely prescribed
to those individuals who just wanted to lose a few pounds.
Plaintiffs' lawyers argue that the company failed to do testing that
might have revealed the danger. They contend that American Home Products
(Wyeth) was well aware of this drug cocktail being advertised and
routinely used throughout the United States. The theme of the suits
is that Wyeth had sought to make huge profits from a pair of dangerous
drugs.
In perhaps the most sensational case of the litigation, a 30-year-old
Quincy, Mass., woman named Mary Linnen died of primary pulmonary hypertension
in 1997 after taking Pondimin to lose weight for her wedding.
Documents unearthed by plaintiffs' lawyers appeared to show a cavalier,
uncaring attitude among some Wyeth employees toward people who used
the diet drugs.
In one 1996 e-mail, a Wyeth employee complained to a colleague about
the prospect of a flood of diet-drug refund requests: "Am I off the
hook or can I look forward to in my waning years signing checks for
fat people who are a little afraid of some silly lung problem?"
First Lawsuit Filed
On July 8, 1997, Lieff Cabraser Heimann & Bernstein, LLP, files a
nationwide fen phen class action lawsuit in federal district court.
The lawsuit alleged that defendants, manufacturers of fen phen, failed
to adequately and appropriately warn physicians and consumers that
the fen-phen drug combination was not approved by the FDA, and had
not been tested by appropriate clinical trials. In subsequent individual
lawsuits on behalf of phen phen users, Lieff Cabraser alleged that
the patients suffered injuries including heart valve regurgitation,
valvular heart disease, or an increased risk of developing these conditions,
and primary pulmonary hypertension ("PPH").
Federal Lawsuits Transferred to Single District Court
December 10, 1997 - After hearing motions to transfer and consolidate
the various federal fen-phen actions in one U.S. district court, the
Judicial Panel on Multidistrict Litigation transferred all federal
diet drug cases to the United States District Court for the Eastern
District of Pennsylvania for coordinated or consolidated pretrial
proceedings before Chief Judge Emeritus Louis C. Bechtle. The case
is identified as In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine)
Products Liability Litigation, MDL No. 1203 (E.D. Pa.).
First Trial
On August 7, 1999, in the first verdict against the makers of Fen-Phen,
a jury in Van Zandt County, about 50 miles east of Dallas, awarded
Debbie Stone Lovett, 36, a manicurist from Grand Saline, Tex., $23
million. Ms. Lovett's lawyers said that the verdict was particularly
significant because American Home Products tried the case because
it felt that the facts favored the company. The case was reportedly
settled for less than 10% of the judgment during an appeal. Class
Action Settlement
After the Texas verdict, American Home Products decided to negotiate
a class action settlement, which was approved by the court on October
7, 1999. Wyeth and its lawyers thought they had effectively resolved
the bulk of the litigation in a $3.75 billion settlement (later increased).
The complex and carefully constructed deal, worked out before U.S.
District Judge Louis C. Bechtle in Philadelphia, was considered one
of the most comprehensive class-action settlements in history. "Opt-Out"
Trials
The settlement was announced with much fanfare in October 1999 by
a coterie of plaintiffs' lawyers who had negotiated it. But dozens
of other lawyers soon staged a nationwide advertising blitz urging
diet-drug users to opt out.
About 50,000 people - far more than Wyeth's lawyers had anticipated
- chose to try for a better deal in state courts, particularly in
Mississippi, Texas and West Virginia.
Mississippi Verdict
On December 22, 1999, a Mississippi jury awarded five people $150
million in compensatory damages. Within hours and as the jury deliberated
possible punitive damages, Wyeth settled the case for an undisclosed
sum. With the settlement, the judge set aside the $150 million in
compensatory damages.
Pennsylvania Verdict
On February 24, 2000, after deliberating for five hours, a Philadelphia
jury yesterday came back with an $8 million verdict against the manufacturer
of fenfluramine, the fen in the fen-phen diet drug combination, and
a doctor who prescribed it to a popular jazz musician who developed
primary pulmonary hypertension from taking it. Jazz artist Shirley
Scott settled with American Home Products for an undisclosed amount
of money before the start of the trial. Defendant Dr. Leonard Guinta
filed a cross-claim against American Home. The jury found the both
the drug manufacturer and the doctor 50 percent liable, making Guinta
responsible for only $4 million of the total verdict. The trial before
the 12-member jury was before Philadelphia Common Pleas Court Judge
Joseph D. O'Keefe and lasted for nine days. (Philadelphia Inquirer)
Mary Linden Case
In January 2000, just as the trial in Middlesex Superior Court was
ending its second week, Linnen, et al. v. A.H. Robins, et al. ?the
nation's first wrongful death lawsuit against the manufacturers of
fen-phen ?settled for an undisclosed amount. Rumored to be between
$13 million and $19 million, the settlement is said to be one of the
largest wrongful death recoveries in the history of Massachusetts.
Though the trial failed to play out, its two-week run was not without
its legally significant moments. Under the direction of Judge Raymond
J. Brassard, Linnen was one of the first times in the commonwealth
where evidentiary hearings under the Daubert ruling were undertaken.
(Massachusetts Lawyers Weekly)
Oregon Verdict
On June 27, 2000, a Coquille, Oregon jury awarded Richard Wirt and
Juanita Batson $.9 million in compensatory damages and $25.3 million
in punitive damages for heart damage.
Second Texas Verdict
On April 7, 2001, a Jury in Alice, Texas, 60 miles west of Corpus
Christi, awarded Gloria Lopez $11.5 million in compensatory damages
and $45 million in punitive damages. The court reduced the verdict
to $8.2 million plus $1 million in pre-trial interest. The case was
settled soon after for an undisclosed amount.
New Mexico Verdict
On February 7, 2003, Wyeth won the first defense verdict in a diet
drug case after five straight losses when a Santa Fe jury on Feb.
7 found that Redux did not injure Josephine Garcia (Anna M. Aragon,
et al. v. Wyeth, et al., No. D-101-CV-2000-1387, N.M. Dist., Santa
Fe Co.).
The verdict was a complete exoneration of American Home Products,
now Wyeth, in obtaining FDA approval for Redux and marketing the drug
to the public. Redux (dexfenfluramine) was a refined form of Pondimin
(fenfluramine) that avoided the latter drug's tendency to make users
drowsy.
Garcia had severe obstructive sleep apnea, malignant hypertension
and severe diastolic dysfunction.
Her first three echocardiograms did not show severe valvular heart
disease.
Garcia, 49, a bank manager, had taken Redux for four to five months.
She had filed an initial opt out and was therefore not constrained
by recent evidentiary rulings stemming from the national settlement.
First Judicial District Judge Jim Hall did not allow her to bring
in Wyeth's admission of liability in a Texas case.
Garcia claimed moderate mitral valve and pulmonary hypertension and
said her physicians have told her she will probably require replacement
of the mitral valve. According to published reports, the case was
complicated by the amount of time that had passed between Garcia's
use of Redux and when she became ill and the presence of other medical
problems such as high blood pressure and sleep apnea, which can elevate
pulmonary artery pressure.
Inventory Settlements
After the Oregon verdict, the company threw in the towel and began
aggressively working out “inventory settlements?with opt-out lawyers
with large blocs of clients.
In an inventory settlement related to the Mississippi case, the company
agreed to pay a lump sum to settle the claims of 873 people, 500 of
whom were residents of the state. The settlement was reported to be
between $350 million and $500 million.
Class Action Settlement
On October 7, 1999, American Home Products agreed to a class action
settlement valued at as much as $4.75 billion to pay for the claims
of patients prescribed Pondimin or Redux. On August 28, 2000, Judge
Louis C. Bechtle of the Eastern District of Pennsylvania granted final
approval to the settlement. The AHP settlement provides refunds, testing
and compensation to exposed persons with qualifying exposures and/or
conditions, including heart damage. The settlement does not include
persons with PPH or neuropsychological damage.
This nationwide, class action settlement is open to all Redux or Pondimin
users in the U.S., regardless of whether they have lawsuits pending.
It offers a range of benefits depending on a participant's particular
circumstances, including: ?a refund program for the cost of the drugs;
?medical screening; ?additional medical services or cash payments
?substantial compensation in the event of serious heart valve problems.
KEY TERMS:
Eligibility: Open to all persons who used Pondimin or
Redux for any length of time, regardless of whether they have a lawsuit
pending.
Scope: Covers all claims arising from the use of Pondimin
or Redux at any time, except for claims of Primary Pulmonary Hypertension
(PPH).
Maximum Cost of Settlement: Depends on actual claims
experience but will not exceed an aggregate payment cap with a maximum
present value of $3.75 billion. Will include two separate funds. Fund
A ($1 billion, fully payable upon final judicial approval of the settlement)
will cover refunds, medical screening costs, additional medical services
and cash payments, education and research costs, and administration.
Up to $200 million in additional funds will be available for attorneys'
fees related to Fund A that are judicially approved. Fund B ($650
million payable upon final judicial approval and the remainder paid
over 15 years as and if needed; maximum present value of $2.55 billion)
will compensate claimants with significant heart valve disease and
pay attorneys' fees related to Fund B that are judicially approved.
Fund A: (Refunds/Screening/Medical Services or Cash/Education and
Research):
1. Persons who used Pondimin or Redux for more than 60 days
- will be offered an echocardiogram and an interpretive visit
with a physician;
- will, if the echocardiogram shows FDA Positive level(1) heart
valve regurgitation, be entitled to choose either $6,000 in cash
or $10,000 worth of additional medical services; and
- may qualify for a refund of their prescription costs ($30/mo
for Pondimin and $60/mo for Redux) up to a $500 cap, to the extent
that there are sufficient funds in Fund A.
2. Persons who used Pondimin or Redux for 60 days or less
- qualify for a refund of their prescription costs ($30/mo for
Pondimin; $60/mo for Redux);
- will, if they obtain an echocardiogram on their own during a
specified screening period and if that echocardiogram shows FDA
Positive level heart valve regurgitation, be entitled to reimbursement
for the cost of the echocardiogram up to a specified amount;
- may apply to receive an echocardiogram under limited compassionate
and hardship programs; and
- will, if an echocardiogram shows FDA Positive level heart valve
regurgitation, be entitled to choose either $3,000 in cash or
5,000 worth of additional medical services.
An education and research fund of $25 million will be established
to sponsor additional education and research concerning heart disease.
Fund B: (Compensation Program):
1. Class members who are diagnosed with FDA Positive level or mild
mitral regurgitation as of the end of the screening period and who
register for benefits will be eligible for additional payments in
the event that -- within 14 years from final approval of the settlement
(but not later than December 31, 2015 - they develop serious heart
valve disease, as defined in the settlement.
2. The amount of the payment to which a class member may be entitled
may be up to approximately $1.5 million. The amount of the payment
will depend on several factors, including the kind and degree of regurgitation
at the end of the screening program, the severity of the heart valve
condition ultimately claimed, the class member's age and other medical
conditions and the duration of drug use. Timing of Benefits: Class
members will begin to receive settlement benefits following final
judicial approval. Accelerated Implementation Option: Claimants who
would like to receive settlement benefits sooner will be given the
opportunity to participate in a separate agreement with AHPC on the
same terms as those in the settlement, but without any option to opt
out of the agreement. Benefits under this option will become available
following trial court approval of the settlement and will be provided
regardless of the outcome of any appeals.
Opt Outs: The agreement provides three opportunities
to opt out of the settlement. All claimants will have the customary
opportunity to opt out before the settlement is approved by the court.
Claimants who first learn that they are FDA Positive during the screening
period will also have an opportunity to opt out shortly thereafter.
Claimants will then have another opportunity to opt out at the time
they first qualify for a Compensation Program payment. In the latter
two instances, class members who opt out will forego the right to
seek punitive damages. AHPC may terminate the settlement at its discretion
based on the number of initial opt outs.
AHPC Payments: Initial payments into the funds are anticipated
to begin later this year and to continue for approximately 16 years
after final judicial approval, if needed. Payments to be made during
the next two years are anticipated to total $1.85 billion. In the
aggregate, all payments under the settlement cannot exceed $3.75 billion
in present value. Future payments will be made only as and if needed
and are subject to annual maximum amounts.
AHPC Credits for Payments to Opt Outs: AHPC will receive
a credit against the aggregate payment cap for payments to specified
categories of claimants who opt out. The amount of the credit will
depend on the point at which the claimant has opted out, the nature
of the claimant's alleged injuries, and the amount of the claimant's
financial recovery.
(1) "FDA Positive" level valve regurgitation means mild, moderate
or severe aortic valve regurgitation or moderate or severe mitral
valve regurgitation. These are the levels of regurgitation used by
the FDA in September 1997 to assess the possible association of regurgitation
with diet drug use. Recent Events Relating to The Class Action:
In a strongly worded opinion that questioned the ethics of two law
firms and two doctors, the federal judge who is overseeing the $3.75
billion Fen-Phen diet drug class action settlement has found that
dozens of claims of heart valve damage were "medically unreasonable"
and that the doctors and lawyers responsible for the invalid claims
must now be watched more closely.
U.S. District Judge Harvey Bartle III said he was forced to issue
an injunction because the settlement funds were set aside for "rightful
claimants who suffered from Fen-Phen and not as a pot of gold for
lawyers, physicians and non-qualifying claimants."
The ruling in the matter of In re Diet Drugs is a significant victory
for the team of lawyers who represent the settlement trust -- Andrew
A. Chirls and Abbe F. Fletman of Wolf Block Schorr & Solis-Cohen --
who argued that the settlement fund is being rapidly depleted by a
"deluge" of exaggerated claims.
Chirls and Fletman focused on two New York law firms -- Napoli Kaiser
Bern & Associates and Hariton & D'Angelo -- and said the claims submitted
by their clients included a shockingly high percentage of claims for
hefty benefits.
Prior to the settlement, they said, statistics showed that only about
10 percent to 11 percent of Fen-Phen users would test positive for
heart valve abnormalities. But the clients of the two New York firms
were testing positive at a rate of 60 to 70 percent, they said.
Fletman took the lead in a recent six-day hearing that focused on
78 claims. She argued that an unbiased doctor had reviewed them all
and found that none of the diagnoses was medically reasonable.
Bartle agreed, saying that he found Fletman's expert witness, Dr.
John Dent, to be "extremely well qualified" and that he completely
accepted Dent's conclusions about the medical unreasonableness of
the readings.
As a result, Bartle ordered that 78 claims submitted by the clients
of two New York law firms "shall not" be paid.
But Bartle also said those same claimants have the right to resubmit
their claims if they get new doctors -- anyone other than Dr. Linda
J. Crouse or Dr. Richard L. Mueller -- to conduct an echocardiogram
and complete their claims forms.
Some of the harshest criticism in Bartle's opinion was levied on Crouse,
who was paid $725,000 by the Hariton and Napoli firms for reading
725 echocardiograms and $2 million from other law firms for similar
work.
"When considering the thousands of echocardiograms that Dr. Crouse
interpreted during the period that she worked for the Hariton and
Napoli firms, her practice resembled a mass production operation that
would have been the envy of Henry Ford," Bartle wrote.
Bartle found that Crouse had improperly relied on law firm employees
to instruct her staff on how to interpret the echocardiograms and
that she "spent little time actually reviewing and approving the results."
He also found that Crouse "never met with the claimants, never reviewed
their medical records, and largely relied on the law firms to provide
the medical history," despite clear requirements that the cardiologist
herself was responsible for attesting to the accuracy of the information
on the claims forms.
Mueller was also criticized by Bartle for allowing the law firms to
fill out portions of the claims forms that were his responsibility
and for employing what Bartle called questionable diagnostic practices.
Significantly, Bartle found that some of the lawyers may have violated
ethics rules by agreeing to pay Mueller a bonus for every diagnosis
that resulted in a claim for benefits.
Bartle found that Mueller's promised compensation was outlined in
a letter from attorney Mario D'Angelo that said he would receive "an
extra $1,500 if the claimant obtained a benefit or the claim was submitted
to the trust for payment."
Lawyers for the law firms argued that there was nothing improper in
the payment arrangement because Mueller was simply being paid for
doing the extra work that went along with submitting a claim.
Bartle disagreed, saying, "That is not what happened here. Dr. Mueller
received additional compensation not for simply filling out the [claims
forms] but only if the claimant received a benefit or if the [form]
was forwarded to the trust."
As a result, Bartle concluded, "Mueller's remuneration depended on
how he interpreted the echocardiogram and on what he stated on the
form. He had a financial incentive to reach a particular result."
Calling it a "highly questionable practice," Bartle said the payment
"seems to violate a lawyer's ethical obligation not to compensate
a witness on a contingent fee basis."
In a separate order, Bartle referred the matter to the New York disciplinary
authorities "for further review and consideration."
But Bartle didn't give the trust's lawyers everything they asked for.
Chirls and Fletman had asked Bartle to bar the two law firms from
representing any clients in filing for benefits with the trust.
Bartle declined to go so far, saying, "Although their conduct has
certainly not been totally exemplary and in at least one respect there
has been highly questionable behavior, we will not at this point take
such a drastic step. To bar them now could cause needless harm to
innocent claimants who are eligible for benefits."
Instead, Bartle found that the appropriate remedy was to allow the
trust to audit all claims filed by clients of the Hariton and Napoli
firms.
Under the settlement agreement, the trust is allowed to audit 15 percent
of the claims.
But Bartle found there was "good cause" to allow the trust to begin
auditing 100 percent of the claims submitted by the two New York law
firms, as well as any claim in which the attesting doctor is either
Crouse or Mueller.
Likewise, Bartle ruled that the settlement trust may now begin auditing
100 percent of the claims certified by either Crouse or Mueller.
But the judge also refused to order that claimants cannot rely on
attestations of Crouse or Mueller to support their right to "opt out"
of the settlement and pursue a lawsuit.
To exercise such an opt-out, claimants must submit a form that certifies
that they have tested positive for heart valve damage.
Bartle found that it was not his place to bar such claimants from
relying on Crouse or Mueller.
"While we do not condone the performances of Dr. Crouse or Dr. Mueller
in the cases before us . . . this issue must be resolved in the lawsuit
filed by the opt-out claimant and not before this court," Bartle wrote.
In those lawsuits, Bartle said, the defendant, Wyeth, "will be able
through the adversary process to dispute any questionable conclusions
or findings of either Dr. Crouse or Dr. Mueller which might surface."
One of the lawyers who represented the Hariton and Napoli firms -
attorney Abraham C. Reich of Fox Rothschild O'Brien & Frankel - said
he was disappointed by the judge's ruling, especially by the suggestion
that his clients had behaved unethically.
"These are honorable people," Reich said, adding that he expects that
the New York disciplinary authorities would agree that no ethics violations
occurred.
Reich said he was disappointed that Bartle premised his decision on
the complete acceptance of the credibility of the trust's expert witness.
In court papers, Reich said, the two New York firms had set out to
give the judge detailed information on each of the 78 challenged claims.
But the judge's analysis, he said, didn't focus on any individual
information. (The Legal Intelligencer)
Wyeth
Wyeth changed its name from American Home Products in March 2002.
The company is listed on the New York Stock Exchange ?ticker symbol
WYE. It is a huge global research-based pharmaceutical company. Its
product areas include pharmaceutical and biotechnology, consumer health
care and animal health care. Wyeth facts:
- $14.5 Billion in Wyeth products were sold in more than 140 countries
during 2002
- The company earned $6.09 Billion before taxes during 2002
- The company has more than 52,000 employees with manufacturing
facilities on five continents
Wyeths prominent drugs include Efexor, an anti-depressant.
The company's consumer health care brands include the following:
- Advil
- Anacin
- Anbesol
- Centrum
- Chap Stick
- Preparation H
- Primatene
- Robitussin
Wyeth has set aside more than $14 billion to settle and litigate claims
over its diet drugs Pondimin and Redux.
The company's fourth quarter 200210Q filing with the SEC includes
the following disclosure:
The nationwide class action settlement to resolve litigation brought
against the Company regarding use of the diet drugs PONDIMIN (which
in combination with phentermine, a product that was not manufactured,
distributed or sold by the Company, was commonly referred to as "fen-phen")
or REDUX received final judicial approval effective January 3, 2002.
The Company recorded an initial litigation charge of $4,750.0 million,
net of insurance, in connection with the REDUX and PONDIMIN litigation
in 1999, an additional charge of $7,500.0 million in 2000, a third
litigation charge of $950.0 million in the 2001 third quarter and
a fourth charge of $1,400.0 million in the 2002 third quarter. The
principal reason for the charge taken in the 2002 third quarter was
that the volume and size of the claims filed in the nationwide diet
drug settlement were greater than anticipated.
These charges are intended to cover the total amount required to resolve
all diet drug litigation, including anticipated funding requirements
for the nationwide class action settlement, anticipated costs to resolve
the claims of any members of the settlement class who in the future
may exercise an intermediate or back-end opt out right, costs to resolve
the claims of primary pulmonary hypertension (PPH) claimants and initial
opt out claimants, and administrative and litigation expenses.
During the 2002 first nine months, payments to the nationwide class
action settlement funds, individual settlement payments, legal fees
and other costs totaling $1,047.4 million were paid and applied against
the litigation accrual. As of September 30, 2002, $2,210.3 million
of the litigation accrual remained.
On January 18, 2002, as collateral for the Company's financial obligations
under the settlement, the Company established a security fund in the
amount of $370.0 million and recorded such amount in Other assets
including deferred taxes. In April 2002, pursuant to an agreement
among the Company, class counsel and representatives of the settlement
trust, an additional $45.0 million, also included in Other assets
including deferred taxes, was added to the security fund, bringing
the total amount in the security fund to $415.0 million. The funds
are owned by the Company and will earn interest income for the Company
while residing in the security fund. The Company will be required
to deposit an additional $180.0 million in the security fund and earned
interest will remain in the fund if the Company's credit rating, as
reported by both Moody's and Standard & Poor's (S&P), falls below
investment grade.
Under the terms of the nationwide class action settlement, the period
during which class members could register to receive a screening echocardiogram
from the settlement trust ended on August 1, 2002. Those echocardiograms,
as well as echocardiograms that class members choose to receive on
their own outside the settlement, must be completed by January 3,
2003, unless that date is extended by the court. Class members whose
echocardiograms demonstrate FDA-positive levels of heart valve regurgitation
(mild or greater aortic valve regurgitation or moderate or greater
mitral valve regurgitation) must elect either to remain in the settlement
or to withdraw from the settlement and proceed as an intermediate
opt-out (with specific rights and limitations defined in the settlement)
by May 3, 2003.
Based upon the information available at this time, the Company believes
that the balance remaining in its reserves will be adequate to cover
the remaining obligations relating to the diet drug litigation. However,
in light of the inherent uncertainty in estimating litigation exposure
it is possible that additional reserves will be required.
In the opinion of the Company, although the outcome of any legal proceedings
cannot be predicted with certainty, the ultimate liability of the
Company in connection with its legal proceedings will not have a material
adverse effect on the Company's financial position but could be material
to the results of operations or cash flows in any one accounting period.
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