Civil Litigation

Counties and Cities Suing Manufacturers and Distributors

Counties and cities (municipalities) have filed more than 700 cases against opioid manufacturers or distributors across the country, counting state and federal courts. The plaintiffs are seeking reimbursement for excess expenditures allegedly caused by the opioid epidemic, including the increased costs of emergency room care, first-responders, Narcan, neonatal care, 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.

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U.S. District Judge Dan Aaron Polster

At least 718 cases (as of May 15, 2018) are in federal court, and 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 on March 18, 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.

There are also scores of cases brought by municipalities that are proceeding in state courts around the country, which Judge Polster has no control over.

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); and Allergan (formerly known as Actavis, formerly known as Watson Pharmaceuticals, maker of Kadian).

The most frequently named distributor defendants are McKesson Corp.; Cardinal Health; and AmerisourceBergen, though Miami-Luken and H.D. Smith are also increasingly named, as is Wal-Mart, sometimes.

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 February 27, 2018, U.S. Attorney General Sessions announced that the U.S. Department of Justice would file a “statement of interest” in the federal MDL, signaling the government’s intent to seek reimbursement for federal expenditures attributable to the defendants’ wrongdoing. He simultaneously announced formation of a task force to use civil and criminal tools to fight the opioid epidemic. The statement was filed March 2.

On April 2, 2018, the government filed a motion to participate in settlement negotiations. The filing appears to reflect a decision to not file a separate lawsuit after all, but merely to protect federal interests in this fashion.

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 22 state attorneys generals have sued opioid manufacturers on behalf of their entire states. All but one on these cases is 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.

Those attorneys general who haven’t filed suit have joined a working group which is jointly investigating opioid manufacturers and distributors, with an eye to suing or settling. 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 Dan Polster in Cleveland, though he has no jurisdiction over them.

The AGs’ filed suits include: Alabama; Alaska; Arkansas; Florida; Louisiana; Mississippi; Missouri; Montana; Nevada; New Hampshire; New Jersey; New Mexico; North Carolina; North Dakota; Ohio (against manufacturers and, later, against distributors); Oklahoma; South Carolina; South Dakota; Tennessee; Texas; 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 to date, 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.