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Courtney Victims to Get About $71-million in Settlement from Drug Makers

According to Dan Margolies of The Kansas City Star, victims of Kansas City pharmacist Robert Courtney's drug dilution scheme are slated to get about $71-million in settlement payments from drugmakers Eli Lilly and Co. and Bristol-Myers Squibb Co.

 The terms of last October's confidential settlement were previously unknown. But new information published in The Kansas City Star indicate arbitrators last month assessed $48.55-million against Eli Lilly and $23.55-million against Bristol-Myers Squibb, bringing the settlement total to $72.1-million. With litigation and administrative expenses totaling roughly $1-million, hundreds of claimants and their attorneys will share in about $71-million.

The initial case, brought by ovarian cancer patient Georgia Hayes, was nearing trial date, but the settlement resolved hundreds of civil lawsuits against the drug companies.

Referring to the confidentiality provisions, lead plaintiffs' attorneys Grant Davis and Michael Ketchmark declined to comment on the settlement amounts, as did drug company officials.

Eli Lilly spokeswoman, Judy Kay Moore stated, "when we announced the settlement, we said the terms would remain confidential, and we're abiding by that."

Cathy Dean, one of Bristol-Myers Squibb's outside attorneys, said the company would have no comment.

Dividing the money

A Kansas City bank account holds the settlement monies transferred by the drug companies earlier this year. The amounts paid each claimant will be formula-based according to the strengths of their cases. Some claimants will receive more than others.

Retired Jackson County Circuit Judge Forest Hanna III was appointed to devise the formula expected in a final form soon. Once that happens, living claimants should be paid first, followed by heirs of deceased patients.

"We've got two four-drawer filing cabinets full of claims," Hanna said. "I have three administrative assistants who are loading the claims onto a computer program. That's just started."

The money will be divided among the more than 350 claimants who sued the drug companies in Jackson County Circuit Court.

Claimants who are determined to have received diluted cancer drugs made by Eli Lilly or Bristol-Myers Squibb on or after January 1, 1998 — the date when plaintiffs in the civil lawsuits alleged Eli Lilly learned that Courtney was selling more cancer drugs than he was buying — will receive minimum payments of $100,000, according to documents obtained by the Star.

"I think this is a settlement that makes a lot of sense, both for the plaintiffs and the defendants," said David Achtenberg, a law professor at the University of Missouri-Kansas City School of Law. "It ensures a substantial recovery for victims who otherwise would have faced extremely difficult and chancy litigation. And for the defendants, it lets them put behind them a very troublesome and tragic chapter in their corporate lives. The lawyers for both sides have obviously done very good work for their clients."

 


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A TIME-LINE OF EVENTS

The drugmakers' settlement payments mark the final phase of a contentious, drawn-out process which began when the drug companies were sued by victims, and families of victims, of Courtney's dilution scheme.

Courtney, who pleaded guilty in February 2002, was sentenced to 30 years in prison in December 2002 for diluting cancer medications to a fraction of their potency. 

His criminal conduct triggered hundreds of civil lawsuits by cancer patients and their families against Eli Lilly, Bristol-Myers Squibb and Courtney. 

The lawsuits alleged that Eli Lilly and Bristol-Myers Squibb knew or had reason to know of Courtney's dilution scheme but did nothing to stop him. 

Both companies made chemotherapy drugs that were adulterated by Courtney. 

The plaintiffs contended Eli Lilly and Bristol-Myers Squibb had access to sales data revealing Courtney's sales numbers exceeded the drug quantities he purchased. 

Both companies vehemently denied liability, citing incomplete sales data that were used to determine sales representatives' compensation and quotas, not to uncover criminal conduct. The drugmakers insisted they learned of Courtney's scheme only after his arrest in August 2001.

On October 7, 2002, just as the Hayes case was set to go to trial, Eli Lilly and Bristol-Myers Squibb agreed to settle the lawsuits on a confidential basis.

The settlement was reached after Senior Jackson County Circuit Judge Lee Wells prodded the parties to meet with an outside mediator.

Reasons to settle

In a joint statement explaining their decision to settle, the companies said the mediation "forced all the parties to take an additional hard look at this case and to carefully consider the emotional impact of protracted litigation on the plaintiffs."

A key factor leading to the settlement was a peculiarity of Missouri law. Under the law, even if a jury had found the drug companies only one percent at fault, they could have been forced to pay 100 percent of any damages awarded by the jury.

The companies' possible exposure was made clear just days after the settlement, when a jury assessed more than $2-billion in damages against Courtney in the Hayes case. It was the only one of the cases to go to trial, and it resulted in the second-largest jury verdict in the United States last year.

The verdict was largely symbolic, because Courtney's assets and insurance coverage were nowhere near that amount. But the verdict underscored the emotional effect of Courtney's misdeeds and showed what the drug companies would have been up against.

While the companies faced risks in proceeding to trial, the plaintiffs also faced uncertainties. In seeking to hold Eli Lilly and Bristol-Myers Squibb liable, they sought to break new legal ground by asserting the companies had an obligation to go to the aid of a person in harm's way.

A legal principle holds that there is no legal duty to rescue someone from the wrongful conduct of another.

"In view of the companies' possible exposure and in view of the possibility that the plaintiffs might not have received $71-million, the settlement probably makes perfect sense," said Jeffrey Berman, a law professor at the University of Missouri-Kansas City School of Law.

Bristol-Myers Squibb is paying less than half as much as Eli Lilly because the plaintiffs alleged that Bristol-Myers learned of Courtney's scheme only a few months before Courtney's arrest. The plaintiffs alleged that Eli Lilly knew of the dilution scheme as early as three or more years before his arrest.

The overall settlement amount comports with what the mediator, former Houston Judge Susan Soussan, recommended during the mediation talks in October.

A three-member arbitration panel, including Soussan, determined the amount. When the settlement was announced in October, the two sides had agreed only to a settlement range of between $21-million and $85-million.

The plaintiffs' legal fees will come out of their payouts, based on the contractual arrangements each has with attorneys. Typically, plaintiffs' attorneys charge a contingency fee of between 30 percent and 40 percent in cases that are settled.

The settlement is in addition to a restitution plan that was part of Courtney's federal criminal case. In conjunction with his guilty plea, Courtney forfeited at least $10.5-million in personal assets for restitution to cancer victims and their families.

The restitution arrangement, which is subject to court approval, involves less money but embraces more victims than the settlement with the drug companies. It includes patients who received diluted drugs as far back as 1991.

 

 


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