LITTLE ROCK, Ark. (Legal Newsline) - Arkansas Attorney General Leslie Rutledge, facing a judge’s threat to dismiss the state’s lawsuit against opioid makers Johnson & Johnson and Endo Pharmaceuticals, pleaded for another month to correct her mistakes.
The AG and her outside lawyers at Baron & Budd and Dover Dixon Horne have repeatedly stonewalled the defendants on their requests for documents to back up the state’s allegations. A frustrated Pulaski County Judge Morgan Welch finally ordered Arkansas to remove any claims on behalf of state agencies including the Department of Health and Human Services, which administers the Medicaid program at the heart of the state’s theory of damages. The Arkansas Supreme Court rejected AG Rutledge’s appeal of that order in June.
The defendants filed a motion to dismiss the state’s lawsuit on Aug. 4, and in an Aug. 10 filing, Rutledge asked the court for an extension until Sept. 13 to respond.
Arkansas sued now-bankrupt Purdue Pharma, Endo and J&J in in 2018, seeking repayment of all governmental costs associated with narcotic abuse. The complaint named the state Health, Human Services, Corrections, Police and Courts departments, saying they had “devoted an increasingly large segment” of state resources combatting opioid abuse they tied to the companies’ marketing campaigns.
Endo and Johnson & Johnson moved to dismiss for failure to state a claim, which the court denied in April 2019. The companies then served the state with interrogatories seeking information to support its claims. Arkansas refused, saying “there is no person or entity who can speak on behalf of the state as a whole.” The Attorney General refused to produce documents outside her own office, saying she couldn’t speak for state agencies.
On Oct. 1, 2019, the court ordered Arkansas to turn over the requested documents from the five agencies named in the state’s complaint within 45 days. In January 2020, the defendants complained the Health Department and State Police refused to identify anyone with knowledge of the facts in the complaint, the Corrections Department produced only six documents and one email, and other departments were similarly uncooperative.
At an August 2020 hearing, the judge threatened to dismiss the case with prejudice unless the state turned over more documents. During a conference call later to try to resolve the impasse, lawyers at Baron & Budd refused to speak, claiming they didn’t represent state agencies, even though their retention contract explicitly states the opposite. A representative from the Administrative Agency of the Courts hung up minutes into the call.
On Sept. 15, 2020, Judge Welch ordered Arkansas to drop any claims related to five state agencies, including its Medicaid fraud claim. After failing to reverse the order at the state Supreme Court, Arkansas filed an amended complaint in July, removing previous references to state agencies but keeping a claim of Medicaid fraud.
In their joint motion to dismiss, the defendants say Rutledge and her outside lawyers working under contingency fees committed the fatal error of undermining the legal basis their own case. In the amended complaint, Rutledge says her office doesn’t represent state agencies and they are not participating in the lawsuit, yet the state is seeking reimbursement for money the agencies spent combatting opioid addiction and crime.
“By the State’s own allegations, the State has effectively pled itself out of court,” the defendants say in their motion to dismiss. ”The State has now alleged that it does not have a direct role in administering Medicaid claims, and that those claims are instead administered by an agency that the State alleges is not a party to this case.”
The defendants also argued the state’s public nuisance claim fails under Arkansas law, citing decisions dismissing public nuisance claims in other states including Illinois, New Jersey, Delaware and North Dakota. An Illinois judge dismissed Cook County’s public nuisance claims against opioid distributors in January, for example.
In Arkansas, a court dismissed a public nuisance lawsuit accusing manufacturers of cold medicine of abetting illegal methamphetamine production in 2009, saying public nuisance law is limited to claims involving the use of land.