Even bigger bucks coming from Eli Lilly?

John O'Brien Jan. 27, 2009, 11:00am


CHICAGO (Legal Newsline) - The recent $1.4 billion settlement into which Eli Lilly & Co. entered with the federal government and more than 30 states may benefit those states that have been holding out on an agreement, a Chicago attorney recently opined.

Diane Romza-Kutz, chair of Neal Gerber Eisenberg's Life Sciences practice, last week said the word "huge" didn't begin to describe the amount of the settlement, which is the largest ever in a False Claims Act case. Eli Lilly is accused of promoting off-label uses for its prescription antipsychotic drug Zyprexa.

Twelve states still have claims against Eli Lilly pending.

"Some attorneys general have been very aggressive in going after drug companies," Romza-Kutz said. "They often tend to lead the charge. They are known to be very aggressive in terms of posture and settlement demands.

"It does not surprise me (that there are holdouts). There are always, quite frankly, strategies utilized to drive settlements up."

Some of the remaining attorneys general with a reputation for activism are Connecticut's Richard Blumenthal, West Virginia's Darrell McGraw and Mississippi's Jim Hood.

Those three, along with the states of Louisiana, Montana and New Mexico, all have federal claims against Eli Lilly. In October, U.S. District Judge Jack Weinsein told those six states, all represented by private practice firms hired by their respective attorneys general on a contingency fee basis, to take a month off their case to hammer out a settlement.

Eli Lilly had already agreed to pay $62 million to 32 states and the District of Columbia to resolve fraud claims. It was the largest consumer protection-based multi-state settlement with a pharmaceutical company, but 12 states chose not to participate.

Instead, the 12 attorneys general are asking for a total exceeding $1 billion, according to court documents.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

The $1.4 billion settlement with the Federal Government includes millions of dollars for state Medicaid programs. Nearly $800 million will be used to settle the civil allegations, with approximately $438 million going to the Federal Government and the remainder going to the involved states.

Another $615 million will be used to settle criminal charges. Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

Houston-based firm Bailey Perrin Bailey is the most notable of the firms representing the holdout states. It has contributed $50,000 to Hood.

"Do I think the states that have not settled are staying back and thinking about ones that have only received X, that they can get more money than those states going in on the settlement? Sure," Romza-Kutz said.

"I won't judge that posture. I think it's a legitimate look-see.

"Do I think, when push comes to shove, they will be entitled to more than other states? Do I think if there was a settlement conference, the judge would take a position they are entitled to more? I doubt it.

"They will use the argument that the feds' settlement was bigger than anticipated."

Bailey Perrin Bailey submitted a letter to U.S. Magistrate Judge Roanne Mann regarding Discovery issues on Thursday.

The firm's representation of the Commonwealth of Pennsylvania is under fire from attorneys from Janssen Pharmaceutica who argue a State violates its interest in justice by having a financial interest in the outcome of a lawsuit.

Those attorneys also note that Bailey Perrin Bailey contributed $75,000 to Gov. Ed Rendell, who hired the firm.

"You will always have the discussion that those firms, if they are getting a percent of the settlement, want to drive the settlement up," Romza-Kutz said. "I don't know the firms representing all the states. I don't know their past posture.

"If you as an attorney general are going to be aggressive with your posture, then you're going to hire an aggressive firm. You're going to have to justify that position."

Other firms and lawyers representing attorneys general in the federal case include:

-Morrow, Morrow, Ryan & Bassett of Opelousas, La., which donated $7,500 to Charles Foti from 2003-07, when he lost his bid for re-election, then donated $5,000 to now-Attorney General Buddy Caldwell;

-Kenneth DeJean of Lafayette, La., who donated $5,500 to Foti before giving $1,000 to Caldwell last year;

-Robert Salim of Natchitoches, La., who donated $1,000 to Caldwell last year;

-W. Howard Gunn and Associates of Aberdeen, Miss., which donated $2,500 to Hood before the 2007 election;

-William Quin of The Quin Firm in Jackson, Miss., who donated $3,000 to Hood while employed at Lundy & Davis in 2005; and

-Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw in 2004.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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