New arguments spring in Bailey Perrin disqualification attempt

John O'Brien Feb. 3, 2009, 3:22pm


PHILADELPHIA (Legal Newsline) - Three new matters are at issue in Janssen Pharmaceutica's attempt to have the Commonwealth of Pennsylvania's contingent fee counsel disqualified.

Attorneys for Janssen have asked the state Supreme Court to prohibit Houston firm Bailey Perrin Bailey from representing Pennsylvania in a case over Janssen's antipsychotic drug Risperdal. BPB responded with three arguments Janssen said it did not anticipate in its application for extraordinary relief.

BPB says that Janssen lacks the standing to challenge the appointment of contingent fee counsel, that the funds that would be used to pay BPB would not come from the state's treasury and that the Commonwealth is acting in a proprietary capacity similar to an insurer.

Janssen's Jan. 29 reply, authored by Ed Posner of Drinker, Biddle & Reath of Philadelphia, restricts itself to addressing those three arguments.

BPB says Section 103 of the Commonwealth Attorneys Act "has placed the selection of Commonwealth counsel beyond the reach of private parties to question."

Janssen's attorneys call that argument a misreading of the act.

"The Act does not, however, prevent litigants such as Janssen from challenging the constitutionality of the Commonwealth's retention of private contingent fee counsel," the reply says.

"Janssen's application seeks to disqualify the Commonwealth's private counsel because their contingent fee arrangement violates constitutional principles of separation of powers and due process.

"The Act does not forbid assertion of these fundamental guarantees, nor could it."

BPB also argues that state lawmakers did not have to approve the contract because any funds recovered as a result of the litigation will not come from the treasury fund, but from Janssen itself.

Janssen cited Shapp v. Sloan, where the Court affirmed the General Assembly's exclusive spending power extends to "public monies... without regard to the source of the funds."

Janssen also cites the contingent fee contract between the two, which provides for BPB a maximum 15 percent "of the actual recovery to the Commonwealth by way of settlement or judgment."

Lastly, BPB says the Commonwealth is "acting as an insurer, a purchaser of products, seeking a refund for financial losses caused wrongfully by a private company" and because of this does not offend the defendants' right to due process.

Janssen said any counsel representing a government agency must be acting in the interest of justice, and having contingent fee counsel means the agency is financially motivated.

As to the "insurer" argument, Janssen wrote, "This argument is belied by the allegations of the Complaint, which make clear that the Commonwealth purports to bring this action not only in a proprietary capacity, as a purchaser, but also in its capacity 'as sovereign' and pursuant to its parens patriae powers, allegedly on behalf of thousands of Medicaid and (Pharmaceutical Assistance Contract for the Elderly) participants."

Janssen submitted an Application for Extraordinary Relief with the Court Jan. 6, less than a month after a state judge denied its initial request to have BPB disqualified.

Bailey Perrin Bailey has made the same claim of marketing violations against Janssen, a subsidiary of Johnson & Johnson, in at least six other states, including Arkansas and Louisiana. State Medicaid programs, it is alleged, are harmed by Janssen's off-label marketing and failure to disclose side effects.

Janssen also notes that the firm's head Kenneth Bailey donated $75,000 to Gov. Ed Rendell, who hired the firm. State Attorney General Tom Corbett is not involved in the litigation.

Bailey also donated more than $16,000 in airplane travel to Rendell.

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