LOS ANGELES (Legal Newsline) - A Delaware law firm is seeking more than $7 million in fees and costs that it incurred in representing a California whistleblower in a False Claims Act lawsuit over the off-label promotion of cancer drugs, according to a complaint filed in a California federal court this month.
Plaintiff Grant & Eisenhofer PA, headquartered in Wilmington, Del., filed its lawsuit in the U.S. District Court for the Central District of California Aug. 10. The firm specializes in securities and complex litigation, false claims/whistleblower litigation, antitrust, bankruptcy and consumer protection.
The named defendants include California resident Beverly Brown and law firms Richard Harpootlian PA and Bienert Miller & Katzman PLC.
“Faced with an enforceable retainer agreement with G&E, Ms. Brown and her new attorneys have attempted to claim that her retainer agreement is not valid in California,” the firm wrote in its 12-page complaint.
Brown, who worked as a Celgene Corp. sales representative, filed her whistleblower complaint in 2010 over the off-label use of drugs Thalomid and Revlimid.
Off-label use is the use of pharmaceutical drugs for an unapproved indication or in an unapproved age group or dosage.
According to Celgene, the litigation related primarily to allegations that it promoted Thalomid for off-label uses before its 2006 U.S. Food and Drug Administration approval for newly-diagnosed multiple myeloma, a form of blood cancer that develops in the bone marrow.
Under the settlement, which Celgene announced last month, the pharmaceutical company will pay a total of $280 million to the U.S. federal government, 28 states, the District of Columbia and the City of Chicago.
“Celgene has denied any wrongdoing in this matter, but is settling to avoid the uncertainty, distraction, and expense of protracted litigation,” the company said in a July 25 statement.
“Celgene contends, and has contended throughout the litigation, that Thalomid and Revlimid are medical breakthrough medicines that have benefitted patients with serious illnesses; that physicians prescribed these medicines based on their independent medical judgment; and that Celgene's relationships with physicians have been appropriate, and have helped to advance patient care and science.”
According to its complaint, G&E represented Brown from 2009 through 2015 and advanced more than $7 million in legal fees and costs, which Brown and her new attorneys, Harpootlian and Bienert, now refuse to pay, in addition to any part of the relator’s bounty Brown contracted to share with G&E.
G&E contends Brown and her new attorneys conspired to terminate G&E in order to keep all of the court-awarded fees and Brown’s portion of the $280 million settlement.
“Ms. Brown and her remaining lawyers are refusing to pay G&E any of its fees and costs, or any percentage of her recovery, so that they can keep Ms. Brown’s share of this huge sum for themselves,” G&E alleges.
According to G&E, Brown signed a retainer agreement with it on Oct. 26, 2009. Pursuant to that agreement, G&E was to represent Brown on a contingency fee basis and advance the costs of litigation.
The value of the service provided by G&E were deemed to be G&E's awarded fees and costs, as well as 40 percent of any amount awarded to Brown as a relator.
According to G&E’s complaint, the agreement was drafted by a close associate of the Harpootlian and Bienert firms, Reuben Guttman, “the same treacherous former G&E Director who stole the Celgene Matter from G&E.”
G&E claims that Guttman -- who, because of a contractual provision, must be sued separately in Washington, D.C. -- signed Brown as a client at his newly formed firm in 2015, even while he was still a director, or partner, at G&E.
“While G&E was following through on the promise of an orderly transition and attempting to contact clients openly and appropriately, Guttman was busy improperly and surreptitiously inducing Ms. Brown and other clients to terminate their contracts with G&E,” G&E alleges in its complaint. “Indeed, G&E was prepared to continue representing Ms. Brown together with Guttman as co-counsel if the parties could reach a fair agreement.
“Unfortunately, as set forth below, Guttman and his co-conspirators had no interest in keeping G&E as co-counsel, but wanted to use G&E as a litigation funding source only. This arrangement was not acceptable to G&E. They wanted to substantively participate in the case, but they would not act simply act as a source of funds.”
Bienert, based in San Clemente, Calif., had been local counsel for Brown and co-counsel, together with G&E while G&E still represented Brown, and remained local counsel through the settlement of the case and to the present.
“Therefore, the Bienert firm knew of G&E retainer agreement and its terms, knew of Ms. Brown's surreptitious departure enabled by Guttman, and to this day continues in the concerted attempt to deprive G&E of its fees and costs and percentage of the Celgene Settlement,” G&E alleges, noting Harpootlian, based in Columbia, S.C., began to represent and finance litigation in Celgene shortly after G&E was terminated but was aware of Brown’s agreement with G&E “at all relevant times.”
“The contention that G&E abandoned the Celgene matter is therefore demonstrably false,” the Delaware firm contends.
G&E, arguing Brown has benefited from its services “in an amount in the tens of millions of dolalrs,” is seeking damages and an award of costs and fees it has incurred.
“G&E performed extensive legal services pursuant to the Celgene Agreement with Ms. Brown, including taking the laboring oar in the case for 6 years, negotiating with the Government and CMS, briefed and defeated a motion to dismiss, and engaged in a massive discovery effort,” the firm explained.
“G&E is therefore entitled to its reasonable attorneys' fees and costs, as well as a pro rata share of the settlement amount recovered by Ms. Brown in the Celgene Matter.”
The firm contends jurisdiction lies within the Central District of California because the parties reside in different states and the amount in controversy exceeds $75,000.
Harpootlian Managing Partner Richard A. Harpootlian and Bienert partner Thomas H. Bienert Jr. could not immediately be reached for comment on G&E’s allegations.
Senior Judge Christina A. Snyder has been assigned the case.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.