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By OPIOID WATCH|June 5, 2018
U.S. District Judge Dan Aaron Polster
Quick Takeaway
  • At least 1,319 cases against opioid manufacturers and/or distributors are pending in federal court, brought by municipalities.
  • At least 25 state attorneys general are suing opioid manufacturers and/or distributors.

Civil Litigation

Counties and Cities Suing Manufacturers and Distributors

As of October 15, 2018 there were 1,319 lawsuits pending in federal court, filed mainly by counties and cities (municipalities), against opioid manufacturers or distributors. There are scores of additional cases in various state courts across the country.

The plaintiffs are seeking reimbursement for excess expenditures allegedly caused by the opioid epidemic, including, for example, the increased costs of emergency room care, first-responders, Narcan (the overdose-reversal nasal spray), neonatal care for children born in withdrawal, foster care, drug courts, morgue space, and body bags.

Some similar cases have also been brought by private hospitals, Indian tribes, and third-party payors, including self-insured unions.

The suits allege mainly that the manufacturers, like Purdue Pharma, engaged in false advertising, created a public nuisance, and committed civil racketeering by falsely representing prescription opioids to be less addictive and more effective in treating chronic pain than they are. Some cases also allege that prescription opioid distributors, like McKesson Corp., failed to report and refrain from sales to suspicious buyers. The defendants have denied wrongdoing.

The cases in federal court have been consolidated before a single federal judge in Cleveland, U.S. District Judge Dan Aaron Polster. (The consolidated case is known as the federal multidistrict litigation, or MDL.)  Polster intially stayed almost all litigation in these cases while he urged the parties to reach a global settlement. But after a settlement conference on March 6, he decided that the best way to surmount “various barriers” to settlement was to let the litigation process go forward.  The New York Times has a good article on Polster here.

On April 11, Polster set three of the cases down for a joint trial in Cleveland, now scheduled for September 2019. The model cases—intended to help provide guidance to all the litigants, thereby facilitating a global settlement—are those brought by the City of Cleveland; Cuyahoga County (which includes Cleveland); and Summit County (which includes Akron). Polster is also pushing forward five other model cases from Alabama, Florida, Illinois, Michigan, and West Virginia.

The co-lead plaintiffs lawyers in the consolidated federal case are Paul Farrell, Jr., of Huntington, West Virginia; Paul Hanly, Jr., of New York; and Joe Rice, of Mt. Pleasant, South Carolina.

The lead manufacturers’ lawyers are Mark Cheffo and Carole Rendon, while the lead distributors’ counsel are Enu Mainigi, Shannon McClure, and Ralph Cascarilla.

Judge Polster has no control over the state courts, but hopes to persuade the key lawyers for each side, who have cases in all jurisdictions, to work toward a global settlement.

The most frequently named manufacturer defendants in all these suits, whether in federal or state court, are Purdue Pharma (maker of OxyContin); Teva Pharmaceutical (and its Cephalon unit, maker of Actiq and Fentora); Endo Health Solutions (maker of Opana); Johnson & Johnson (and its Janssen unit, maker of Duragesic and, until April 2015, Nucynta); Allergan (formerly known as Actavis, formerly known as Watson Pharmaceuticals, maker of Kadian); and Mallinckrodt (maker of Exalgo and many generics).

The most frequently named distributor defendants are McKesson Corp.; Cardinal HealthAmerisourceBergenMiami-Luken and H.D. Smith. Also frequently named are chain pharmacies, including CVS, Rite-Aid, Walgreens, Walmart, Kroger, and others.

A typical complaint of this genre—and one of the first—is that of the City of Chicago, filed in June 2014. (Though the suit was initiated in state court, the defendants later succeeded in moving it to federal.) It is one of the model cases Judge Polster is pushing forward.

United States Department of Justice

On April 2, 2018, the government filed a motion to participate in the federal consolidated cases, asking to be involved in settlement negotiations.

On April 13, 2018, the government also intervened (i.e., joined as a plaintiff) in five consolidated whistleblower (or “qui tam”) suits against Insys Therapeutics in federal court in Los Angeles, alleging frauds against the federal government. (Its intervention was publicly revealed on May 11.) The allegations are related to those  in a pending indictment against Insys, described below under “Criminal Matters, Pending Indictment.”

Cases Filed on Behalf of the States

At least 25 state attorneys generals are suing opioid manufacturers (and, in some cases, distributors) on behalf of their entire states. Most of these cases are in state court. The Justice Department of Puerto Rico has also sued.

The recent wave of AG litigation was kicked off by Mississippi Attorney General Jim Hood in December 2015, with the assistance of former Mississippi AG Mike Moore. Moore was a key figure in launching a similar concerted attack by state AGs on the tobacco industry in the 1990s, which culminated in a global settlement worth more than $200 billion. A key architect of the tobacco settlement, Joe Rice, is also now representing several AGs in the opioid litigation, while also serving as co-lead counsel to the municipalities in the federal MDL.

The factual allegations in the state AGs’ cases closely resemble those of the municipalities’ suits. About half of these cases name multiple manufacturers as defendants, while the rest sue only Purdue, however. A few, like New Mexico, have also sued distributors, like McKesson.

When Massachusetts sued Purdue Pharma on June 12, 2018, it named as co-defendants in its complaint 16 current and former company executives or board members in their individual capacities, including eight members of the Sackler family. It is the only state to have done so.

Those attorneys general who haven’t filed suit have formed a working group which is jointly investigating opioid manufacturers and distributors, with an eye to negotiating a settlement. But that group is eroding, as many of its members have split away and filed suits. Representatives of both groups of AGs—those who have sued and those who haven’t—are voluntarily participating in the settlement negotiations before U.S. District Judge Polster in Cleveland, though he has no jurisdiction over them.

The AGs’ filed suits include: Alabama; Alaska; Arkansas; Delaware; Florida; LouisianaMassachusetts; Mississippi; Missouri; Montana; Nevada; New Hampshire; New Jersey; New Mexico; North Carolina; North Dakota; Ohio (against manufacturers and, later, against distributors); Oklahoma; Rhode IslandSouth Carolina; South Dakota; Tennessee; Texas; Utah; and Washington. In addition, Kentucky has sued Purdue twice, in 2001 and 2007, and already settled twice, in 2004 and 2015. (Separately, Kentucky also sued Endo in November 2017; McKesson in January; Cardinal Health in February; AmerisourceBergen in March; and Johnson & Johnson/Janssen in April.)

Numerous AGs have separately sued Insys Therapeutics, manufacturer of Subsys, a fentanyl mouth spray, over the allegations that led to the indictment of its founder, John Kapoor last October. (See below, under Criminal Matters.)

For an overview of the opioids litigation as it stood late last year, see this New England Journal of Medicine article (December 14, 2017) by Rebecca Haffajee and Michelle Mello.

Insurance Cases 

On May 2, five proposed statewide class actions were filed on behalf of businesses and individuals who claim that the opioid crisis has increased the cost of their health insurance premiums, deductibles, co-pays. Such suits were filed in California, Illinois, Massachusetts, New Jersey, and New York.

Criminal Matters

Open Investigations:

Purdue: In October 2017, Bloomberg and others reported that Purdue Pharma is the subject of a criminal inquiry by the U.S. Attorney’s Office for the District of Connecticut. The probe apparently revolves around Purdue’s claim that OxyContin provides 12 hours of pain relief. The company says it is cooperating.

Endo: In January 2018, Endo disclosed that it had received broad grand jury subpoenas from the U.S. Attorney’s Office for the Southern District of Florida, as reported by Reuters, among others. The company says it is cooperating.

Pending Indictment:

Insys Therapeutics executives: In December 2016, former CEO Michael Babich and five other top officers of Insys Therapeutics were indicted in the District of Massachusetts (Boston) on criminal racketeering charges. In October 2017, company founder John Kapoor was named in a superseding indictment. The defendants are accused of bribing physicians to prescribe Subsys, a fentanyl mouth spray, for non-cancer patients. The defendants have pleaded not guilty.

Since 2017, at least four physicians have been convicted in federal court and sent to prison for accepting kickbacks from Insys in exchange for prescribing its fentanyl product. Five more physicians were charged with doing so in federal court in Manhattan in March 2018.

Past Convictions:

Purdue: In May 2007, Purdue Frederick, Purdue Pharma’s parent, pleaded guilty to a felony charge of misbranding in the Western District of Virginia (Abingdon). At the same time, three top executives—then president and CEO Michael Friedman; then Chief Legal Officer Howard R. Udell; and former Chief Scientific Officer Paul D. Goldenheim—pleaded guilty to misdemeanor misbranding charges. Together, the company and officers paid $634,515,475 in fines, penalties, and forfeitures.

Cephalon: In September 2008, Cephalon pleaded guilty to misdemeanor misbranding in the Eastern District of Pennsylvania (Philadelphia) for off-label promotion of three drugs, including Actiq, a fentanyl lollipop. It agreed to pay $425 million in civil and criminal fines and penalties.

Justice Department Enforcement Actions

McKesson: On January 17, 2017, distributor McKesson Corp. agreed to pay $150 million in civil penalties for failure to report suspicious orders of prescription opioids from distribution centers in Colorado, Florida, Ohio, and Michigan over a period of years.

McKesson:   On May 2, 2008, McKesson agreed to pay $13.25 million in civil penalties for failure to report suspicious orders of prescription opioids.

Cardinal Health: On December 23, 2017, the company agreed to pay $44 million in civil penalties to resolve allegations by the DEA that it, and its Kinray subsidiary, had failed to report suspicious sales of prescription opioids in Florida, Maryland, and New York between 2009 and 2012.