CLEVELAND (Legal Newsline) - The judge overseeing federal multidistrict litigation against the opioid industry rejected pharmacy operator Giant Eagle’s motions to dismiss, saying that even though the Drug Enforcement Agency found the company in “full compliance” with federal regulations after multiple inspections, only a jury can decide whether it caused a public nuisance by filling too many prescriptions.
Giant Eagle, in an Aug. 17 filing, said the DEA conducted seven “in-depth physical investigations” of its distribution operations between 2009 and 2020 and repeatedly said in writing that the company complied with requirements under the Controlled Substances Act. The investigations included at least a dozen DEA diversion investigators who concluded the company had effective systems to detect suspicious prescriptions that might result in pills being diverted to the wrong people, Giant Eagle said.
Despite this record, U.S. District Judge Dan Polster rejected Giant Eagle’s motion to dismiss pending lawsuits by Lake and Summit counties that are set for representative or bellwether trials later this year. In his Sept. 1 order, Judge Polster cited a plaintiff expert’s opinion that Giant Eagle failed to provide its licensed pharmacists with “effective, available tools” to prevent diversion, as well as evidence fraudulent prescriptions were filled and opioid tablets disappeared.
In a footnote Judge Polster described as a “real-life analogy,” he compared Giant Eagle to a motorist who is repeatedly clocked by police driving the speed limit but whose elapsed time through several toll booths indicates he was speeding when he wasn’t observed by police.
The fact that Giant Eagle “passed their inspections does not prove they were in substantial compliance” with federal drug laws, Judge Polster wrote, “and does not insulate them from liability.”
From the beginning, Judge Polster has told opioid defendants his goal is to oversee a major settlement of the litigation, instead of testing the plaintiffs’ theories at trial. He has repeatedly rejected defense motions to dismiss claims and has even issued blunt warnings to companies that they might be forced into bankruptcy if they don’t pay the plaintiff governments – and their private lawyers – billions of dollars to settle the litigation.
In its motion to dismiss, Giant Eagle provided detailed evidence to support arguments it was entitled to “safe harbor” immunity from public nuisance liability because it complied with state and federal regulations.
A 30-year DEA veteran named Lewis Colosimo conducted investigations of Giant Eagle’s operations and concluded the company was in full compliance, Giant Eagle said. The company compared Colosimo’s conclusions with the opposite findings by James Rafalski, a 13-year DEA officer who has since become a paid expert for the plaintiffs.
Giant Eagle criticized Rafalski’s “cryptic conclusion” that its pharmacists operated without effective controls when that conflicts with “the consistent findings of at least 12 experienced DEA diversion investigators who actually inspected Giant Eagle’s facilities and systems, or how those agents could have gotten it so wrong over so many years.”
State pharmacy regulators also conducted at least 92 inspections of the Giant Eagle pharmacies in Lake and Summit Counties, the company said, and found only “a few minor issues” which the company said it quickly resolved.
Giant Eagle cited testimony from several present and former state agents including Special Agent William “Trey” Williams, who said he inspected the company’s pharmacies 25 times and found they were in compliance with regulations. A detective with the Lake County prescription narcotics task force said he never bothered to investigate Giant Eagle because he never saw any evidence of diversion.
Giant Eagle also said it dispensed fewer opioids after 2012 in the two counties, even as the DEA increased manufacturing quotas significantly nationwide.
“That Giant Eagle was dispensing less of these opioids while our nation’s pharmacies were dispensing more of them pursuant to increasing DEA quotas confirms that Giant Eagle was not a significant source of diversion in Lake and Trumbull Counties,” the company said.
One indication a pharmacy is filling suspicious prescriptions is when controlled substances amount to more than 20% of prescriptions or patients pay for them in cash, Giant Eagle said. Giant Eagle’s ratio of controlled to non-controlled substance prescriptions was 9.8%, the company said, and 95% of its opioid prescriptions were paid by insurance. Ex-DEA agent Rafalski, the plaintiff expert, testified in a deposition that pharmacies filling the number of prescriptions as Giant Eagle did “shouldn’t raise an eyebrow” and “would not be a red flag.”
Judge Polster rejected Giant Eagle’s evidence, saying the plaintiff counties raised enough questions about the adequacy of resources the company devoted to fighting drug diversion and filled prescriptions “without requisite due diligence” that only a jury can decide if they amounted to a public nuisance.