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Friday, April 10, 2020

Michigan uses drug-dealer law to sue opioid distributors; Campaign supporter among lawyers hired by AG

Campaigns & Elections

By Daniel Fisher | Dec 18, 2019


LANSING, Mich. (Legal Newsline) - Michigan upped the ante in the litigation war against the opioid industry, suing the nation’s largest pharmaceutical distributors under a law written to strip assets from criminal drug dealers.

In a lawsuit filed in state court Tuesday, Attorney General Dana Nessel and the private lawyers she hired on a contingency fee (one of whom gave her campaign nearly $7,000) say McKesson, Cardinal Health, AmerisourceBergen and Walgreens “used their licenses to distribute controlled substances in Michigan as a cover for what is essentially a criminal enterprise.”

The lawsuit cites Michigan’s Drug Dealer Liability Act, which allows plaintiffs to sue to recover the costs of injuries and drug treatment from anyone who participates “in illegal marketing of controlled substances.” The state also cites Michigan’s public nuisance statute and seeks to recover costs associated with the abuse of legal and illegal opioids, potentially tens of billions of dollars. 

While short on specific allegations about misconduct in Michigan, the lawsuit paints a portrait of a broad industry conspiracy to turn a blind eye to excess opioid prescriptions in order to boost revenue and profits. The state says all four companies were aware that doctors were prescribing too many pills and retail pharmacies were filling those prescriptions, yet did nothing to stem the flow of drugs.

No one from the four defendant companies was immediately available to comment. In federal multidistrict litigation comprising more than 2,000 municipal lawsuits in Ohio, the companies have said they complied with comprehensive federal regulations and filled only orders from licensed pharmacies. 

This isn’t the first time a municipal government has tried to use a law directed at criminal drug dealers to go after the opioid industry. In its lawsuit, Michigan cites a similar suit filed under Tennessee’s nearly identical DDLA. A Tennessee appeals court in September ruled that district attorneys could use the law to sue opioid companies, rejecting arguments by the industry that they couldn’t be sued for selling lawful pharmaceuticals.

In what has become a pattern in this litigation, Michigan doesn’t identify any specific orders it says the defendants improperly filled in the state. Instead, it cites news outlets including the Washington Post and 60 Minutes to support allegations the distributors shipped 2.9 billion opioid pills into the state between 2006 and 2012 without adequate controls to prevent them from being diverted into the wrong hands.

The distributors “stood by and raked in profits” after opioid manufacturers “engineered a marketing scheme that successfully changed the way the medical and scientific communities viewed the risks and benefits of using opioids for chronic pain,” the state says. Manufacturers provided rebates and volume discounts, the state says, giving distributors a financial incentive to process more orders through their systems.

The state accuses the distributors of using the Healthcare Distribution Alliance, formerly the Healthcare Distribution Management Association, in a conspiracy to evade Drug Enforcement Administration rules by collectively discussing procedures to prevent drug diversion. Michigan even says the distributors concealed data from the federal ARCOS database, which tracks every single opioid pill from manufacturing floor to retail pharmacy. Without explaining how they did this, the state goes on to say that as a result, Michigan “did not know and did not have the means to know the truth” about drug diversion. 

Michigan’s Democratic AG Dana Nessel hired three outside law firms in September to handle the state’s opioid litigation. Under their contract, Baron & Budd, Levin Papantonio and The Sam Bernstein Law Firm will get a percentage of whatever money they win, with the exact fee to be determined by a panel of three “neutral arbiters,” with one each selected by the Governor, the AG and the lawyers.

Texas-based Baron & Budd and Levin Papantonio of Florida are both active in opioid litigation on a national level and heavy contributors to the Democratic Party. Bernstein represents a number of Michigan cities and counties, but Nessel, who received $6,800 in campaign contributions from Bernstein in 2018, says in the lawsuit that there is no conflict of interest.

Nessel has embraced the model of hiring outside lawyers to sue on behalf of the state under potentially lucrative contingent-fee contracts. Earlier this year, she hired Fields LLC, Keating, Muething & Klekamp and DiCello Levitt Gutzler to investigate lawsuits over the widely used chemicals known as PFAS.

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Organizations in this Story

Walgreens Co.AmerisourceBergenLevin PapantonioCardinal HealthMcKesson CorporationBARON BUDDMichigan Office of Attorney General