Eli Lilly makes move with McGraw's Medicaid claims gone

John O'Brien Feb. 4, 2009, 6:56pm


NEW YORK (Legal Newsline) - Because the State of West Virginia is no longer seeking recovery for any actual damage done to its health care programs, much of its remaining claim must be dropped, attorneys for pharmaceutical giant Eli Lilly & Co. are arguing.

Attorneys representing state Attorney General Darrell McGraw's office say they have no need to figure up the cost of any damage done to the state's Medicaid program and instead are seeking only to impose civil penalties against Eli Lilly.

The State, through private attorneys, claims Eli Lilly misrepresented dangers associated with the antipsychotic Zyprexa from 1996 up until it filed suit in Feb. 2006. A four-year statute of limitations, Eli Lilly says, means the company shouldn't be able to be punished for anything that occurred before Feb. 2002.

"West Virginia law offers every defendant the 'right to rely on the certainty the statute of limitations provides,' and, 'by strictly enforcing statutes of limitations, (the Court is) both recognizing and adhering to the legislative intent underlying such provisions,'" attorneys for Eli Lilly wrote in their Jan. 29 motion for partial summary judgment.

"The Court, therefore, should dismiss the State's claims based upon conduct that allegedly occurred before Feb. 28, 2002, because the penalty provision that the State utilizes unambiguously limits civil liability to claims occurring no more than four years before the date on which the action is commenced."

In June, the State removed two of its three claims originally stated in the complaint during disputes over the amount of discovery that was needed. Those claims alleged violations of the state's Medicaid Fraud Act and fraudulent misrepresentation.

Diabetes, it is argued, is a side effect of Zyprexa use that Eli Lilly did not put on the drug's label.

Eli Lilly sought access to the state's Medicaid records and to depose individual physicians.

"Obtaining this data is a significant undertaking in both time and expense," West Virginia's counsel wrote when seeking a protective order against the discovery requests.

A third party in Salt Lake City electronically houses the state's Medicaid information, and extracting the requested records would have taken an estimated 2,066 hours at $126.57 per hour, the State wrote. That's a total of $261,493.

"The Medicaid data is simply not relevant to the State's claims or Lilly's potential defenses under the West Virginia Consumer Credit and Protection Act," the motion said.

"Lilly seeks the individual patient medical records not because it has a compelling need for them, but because it is fundamentally opposed to the nature of this case. Lilly seeks to turn a trial between two parties into a trial of hundreds of nonparties."

In January, Eli Lilly agreed to pay $1.4 billion to settle federal civil and criminal claims. The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

Consumer protection claims by 33 attorneys general were settled for $62 million last year, and 12 states still have claims pending against the company.

"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," U.S. District Judge Jack Weinstein wrote in October when he ordered the parties to take 30 days off from the case to try to work out a settlement.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

Representing West Virginia are South Carolina-based Richardson, Patrick, Westbrook & Brickman, Charleston's Jerri Janeen Legato and Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw's campaign in 2004.

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

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