Attorney: Former partners got greedy in Fen-Phen cases

John O'Brien Apr. 28, 2011, 10:06am

JACKSON, Miss. (Legal Newsline) - The Mississippi Supreme Court has permitted the testimony of a Fen-Phen lawyer who claims two of his colleagues were settling cases too early and for too little in order to maximize attorneys fees.

Sixteen former clients of Vicksburg attorneys Paul Loyacono and Scott Verhine say the two were maximizing their profits by rushing to settle their Fen-Phen cases against American Home Products. Those clients allege the lawyers breached their fiduciary duties to them.

Warren County Circuit Court Judge Kosta Vlahos ruled that the testimony of one of the plaintiffs' witnesses - an attorney fired once by the defendants - was inadmissible hearsay. Vlahos granted the defendants summary judgment because the plaintiffs could not prove they would have won their cases at trial.

Even if Keith Morgan's testimony relies on his opinion and not fact, it is admissible, the court rules. The court determined a different rule should be applied to his testimony.

"Obviously, an opinion as arbitrary as the defendants suggest would never satisfy the strict requirements of expert witnesses under Rule 702 and our caselaw. And this is precisely why Rule 701 applies," Justice Jess Dickinson wrote on April 21.

"As long as the opinion is not based on the kind of technical expertise required by Rule 702, a lay witness may offer opinion testimony if the other parts of the rule are met, as they are here.

"Since Morgan's discretionary disbursement of the settlement funds to his clients did not implicate the kind of specialized knowledge implicated by Rule 702, to the extent his testimony constitutes opinion, it was admissible under Rule 701."

Morgan was amassing clients for Fen-Phen cases when Verhine and Loyacono teamed with him. The two defendants came up with 55 clients, but did not sign the complaint as attorneys of record.

After a year, Loyacono and Verhine secretly began negotiating settlements on behalf of the 55 clients, and 34 accepted settlements reached by the two. And Loyacono and Verhine kept 100 percent of the fees, instead of the 25 percent to which they'd agreed with Morgan.

Morgan had a settlement matrix which classified his clients based on the severity of their injuries. Eventually, he reached a $39 million settlement with AHP, now known as Wyeth, and says those who accepted the settlements reached by Loyacono and Verhine would have recovered more if they were a part of his settlement.

Vlahos ruled that Morgan's testimony was "based, to a degree, on another attorney's matrix" and were "inadmissible on the grounds of hearsay, lack of any supporting documentation, the failure to designate Morgan as an expert and speculation."

Dickinson was joined in hearing the case by justices William Waller and James Kitchens.

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