Fen-Phen: The Never-Ending Story

A deluge of suits followed the news that fen-phen could cause permanent damage or death. Claimants filed individual lawsuits and class actions in federal and state courts alleging that the use of the diet drugs had or might in future adversely affect their health. The lawsuits sought remedies including monetary damages, medical monitoring and screening. On Dec. 10, 1997, the Judicial Panel on Multidistrict Litigation transferred all federal diet drug cases to the U.S. District Court for the Eastern District of Pennsylvania for coordinated pretrial proceedings.

A multidistrict settlement agreement, worked out over the course of several years and approved in 2000, was supposed to speed the claims process. Claimants were even allowed to opt out of the agreement after joining the settling class. Problems soon arose, however. The trust set up to pay the settlements accused doctors and others of running diagnostic “mills” that turned out thousands of confirmations of damage to plaintiffs without proper investigation. The settling claimants accused the trust of foot dragging. As of May 17, the trust has paid $1,482,041,547 in benefits. In addition, 400,365 claimants have been notified of their eligibility to participate in the Echocardiogram Screening Program and 384,999 claimants have received other settlement payments.

Changes to Settlement Still Being Made

After the agreement was entered into, its terms continued to morph. The 2000 settlement that set aside $3.75 billion to pay claims was proving to be too little to pay all the legitimate claims being made and the claims process was too complicated. Under the terms of the latest amendment (the seventh), approved in March by Judge Harvey Bartle III of the Eastern District of Pennsylvania, a fund of $1.275 billion will be created and the claims process for complainants with less serious injuries (about 98% of all cases) will be streamlined. By streamlining the benefit/eligibility criteria, Judge Bartle stated, the amended settlement “promises a mechanism to administer benefits promptly and fairly, with disposition of the claims of some 40,000 … class members within approximately 1 year.”

According to the Seventh Amendment's terms, qualified claimants who pass medical review and satisfy other requirements will receive a pro rata share of the $1.275 billion fund, with the amount being determined by the number of claimants, the nature of the claim, the age of the claimant and other specified factors. Even those who don't qualify after medical review will receive $2000.

This new deal will get payments into the hands of claimants sooner, although most of them will receive less than they might have under the old system. Still, claimants who receive benefits under the terms of the Seventh Amendment won't give up all their future rights; If they have heart valve surgery or develop certain other more serious medical conditions by the Dec. 31, 2011, as defined in the amendment, they will remain eligible to submit claims to the pre-existing settlement trust and be paid the amounts authorized under its terms. If the trust is unable to pay those claims, Wyeth had agreed to such guarantee payment.

An Ongoing Parade of Trials

Over 75,000 claimants who originally agreed to join the settlement eventually pulled out of it. Wyeth successfully challenged the eligibility of many of these plaintiffs to hearings, but it is now fighting many of the remaining claimants' cases in court, with consequences for its stock value. For example, on Nov. 7, 2003, a plaintiff won a diet drug case against Wyeth, sending the company's stock down 7%. Hayes v. Wyeth-Ayerst, No. B165374 (Jefferson Co., Texas, Dist. Ct.) A few weeks later, Wyeth won a similar case, sending its stock price up 7%.

Several cases are now being heard in Pennsylvania, where the consolidated pre-trial proceedings were conducted. In the Philadelphia Court of Common Pleas this March, a jury in a bifurcated proceeding assessed $5.5 million in potential damages in suits brought by Camille Olsen and Isabel Vega, but weeks later found Wyeth not liable. A few weeks after that verdict, another plaintiff, Chris Jenson, was awarded $50,000 in the first phase of a bifurcated trail. A settlement negated the need for the second phase of that trial. In the first phase of another trial, one jury in May assessed damages of $260,000 for a plaintiff's injuries, $280,000 for another's, and $200,000 for yet another's. Then, a jury deciding the potential damages in the first phase of Margie Paul's and Elaine Karician's suits set the amount of damages for each plaintiff at $100 million.

Motion For Mistrial Accuses Plaintiff Attorneys of Wrongdoing

Wyeth moved for mistrial in the Paul and Karician cases, which motion was adjourned until July 25. According to The Legal Intelligencer, a Wyeth spokesman has said the parties jointly requested the prstponement to give them time to discuss a possible resolution of the two cases with the two Houston law firms representing the plaintiffs as well as a possible resolution of all the firms' fen-phen cases. Burke: Wyeth Seeks Mistrial in $200M Damages Suit, The Legal Intelligencer, 6/2/05.

The motion papers, filed May 27, charge that the “nine-figure verdicts, supposedly for compensatory damages, are so utterly divorced from evidence properly in the record that they cannot possibly survive.” Wyeth may be right. According to the averments in the motion, neither Paul nor Karician is currently disabled from use of Wyeth's product. In fact, both are able to work: Paul is a truck driver who still works up to 70 hours per week, and Karician works full-time as a schoolteacher. They both continue to take part in recreational activities. “These grossly excessive verdicts are, in and of themselves, proof positive that the jury was swayed by passion and prejudice, and disregarded the admitted facts of the case,” say Wyeth's attorneys in the motion. “Even a cursory review of the record shows an obvious explanation for these excessive awards — the repeated efforts of plaintiffs' counsel to influence the jury with inadmissible (and often outright false) 'facts' and to make a naked appeal for what amounted to punitive damages.” These alleged falsities include statements by plaintiff attorneys to the effect that Wyeth had refused to take responsibility for injuries caused by their drug. This, the motion papers claim, is “palpably false … Wyeth has offered — and these plaintiffs had initially accepted – both medical monitoring and, if necessary, surgery benefits in a $3.75 billion National Settlement.” Wyeth was not permitted to counter this argument by telling the jury about the settlement and plaintiffs' decisions to opt out of it.

Those claimants who initially entered into the settlement agreement but later opted out are barred by the terms of the agreement from seeking punitive damages. See NSA ' IV.D.4.c (back end opt out plaintiffs “may not seek punitive … damages”). Wyeth's motion asserts that because Paul and Karician are not disabled, have spent very little on medical bills due to their use of Wyeth's product and have only speculative future medical problems to pay for, the $100 million damages must necessarily be characterized not as actual damages or damages for pain and suffering, but as punitive damages. “[The jury's] outrageous verdict more than demonstrates that this jury has made up its mind to punish Wyeth … ,” claims Wyeth's attorneys.

Wyeth also asked for a mistrial May 20, 4 days before the jury's verdict was rendered. The basis for that motion, which was denied, was the allegation that the plaintiffs improperly placed prejudicial liability issues before the jury during the damages phase.

In a statement, Lawrence V. Stein, Senior Vice President and General Counsel of Wyeth, made a prediction as to the outcome to this dispute: “The damage awards are excessive and completely unsupported by the evidence and are inconsistent with other recent cases in Philadelphia with similar facts and circumstances. We are confident that this verdict will not stand.”

Conclusion

The largest verdict to date is one for more than $1 billion, awarded after a woman in her early 40s died of lung disease that was tied to her use of Wyeth's product. Several other juries have declined to award any damages at all. Most juries have kept damages below the $250,000 mark, even when actual injury is present. The wide disparity in the outcomes of these cases and the amounts being awarded makes clear that these are not cookie-cutter suits whose outcomes can be predicted with much certainty. With thousands more suits yet to be tried in Philadelphia and elsewhere and settlement negotiations still continuing, Wyeth may face a long uphill battle before it can put this episode behind it.

Janice G. Inman, Esq., is Editor-in-Chief of this newsletter.

The national settlement of the fen-phen lawsuits was intended, among other things, to help defendant Wyeth, one of the world's largest pharmaceuticals manufacturers, put the lawsuits behind it. However, the number of claimants who opted out of the settlement is huge, and many of their cases are now coming to trial, with mixed results. Recently approved changes to the settlement process are also altering plaintiffs' rights. In short, the last chapter of this epic litigation is a long way from being written. So, what is happening with the fen-phen settlement and litigitions?

Background

Doctors across the United States had been prescribing the hugely popular phen-fen combination for weight loss for some time when Wyeth (formerly American Home Products) pulled its diet drugs Pondimin' and Redux' off the market in 1997. The drugs, containing fenfluramine — the “fen” in phen-fen — were eventually shown to cause heart valve and lung damage when combined with products containing the chemical phentermine — the “phen” in phen-fen.

A deluge of suits followed the news that fen-phen could cause permanent damage or death. Claimants filed individual lawsuits and class actions in federal and state courts alleging that the use of the diet drugs had or might in future adversely affect their health. The lawsuits sought remedies including monetary damages, medical monitoring and screening. On Dec. 10, 1997, the Judicial Panel on Multidistrict Litigation transferred all federal diet drug cases to the U.S. District Court for the Eastern District of Pennsylvania for coordinated pretrial proceedings.

A multidistrict settlement agreement, worked out over the course of several years and approved in 2000, was supposed to speed the claims process. Claimants were even allowed to opt out of the agreement after joining the settling class. Problems soon arose, however. The trust set up to pay the settlements accused doctors and others of running diagnostic “mills” that turned out thousands of confirmations of damage to plaintiffs without proper investigation. The settling claimants accused the trust of foot dragging. As of May 17, the trust has paid $1,482,041,547 in benefits. In addition, 400,365 claimants have been notified of their eligibility to participate in the Echocardiogram Screening Program and 384,999 claimants have received other settlement payments.

Changes to Settlement Still Being Made

After the agreement was entered into, its terms continued to morph. The 2000 settlement that set aside $3.75 billion to pay claims was proving to be too little to pay all the legitimate claims being made and the claims process was too complicated. Under the terms of the latest amendment (the seventh), approved in March by Judge Harvey Bartle III of the Eastern District of Pennsylvania, a fund of $1.275 billion will be created and the claims process for complainants with less serious injuries (about 98% of all cases) will be streamlined. By streamlining the benefit/eligibility criteria, Judge Bartle stated, the amended settlement “promises a mechanism to administer benefits promptly and fairly, with disposition of the claims of some 40,000 … class members within approximately 1 year.”

According to the Seventh Amendment's terms, qualified claimants who pass medical review and satisfy other requirements will receive a pro rata share of the $1.275 billion fund, with the amount being determined by the number of claimants, the nature of the claim, the age of the claimant and other specified factors. Even those who don't qualify after medical review will receive $2000.

This new deal will get payments into the hands of claimants sooner, although most of them will receive less than they might have under the old system. Still, claimants who receive benefits under the terms of the Seventh Amendment won't give up all their future rights; If they have heart valve surgery or develop certain other more serious medical conditions by the Dec. 31, 2011, as defined in the amendment, they will remain eligible to submit claims to the pre-existing settlement trust and be paid the amounts authorized under its terms. If the trust is unable to pay those claims, Wyeth had agreed to such guarantee payment.

An Ongoing Parade of Trials

Over 75,000 claimants who originally agreed to join the settlement eventually pulled out of it. Wyeth successfully challenged the eligibility of many of these plaintiffs to hearings, but it is now fighting many of the remaining claimants' cases in court, with consequences for its stock value. For example, on Nov. 7, 2003, a plaintiff won a diet drug case against Wyeth, sending the company's stock down 7%. Hayes v. Wyeth-Ayerst, No. B165374 (Jefferson Co., Texas, Dist. Ct.) A few weeks later, Wyeth won a similar case, sending its stock price up 7%.

Several cases are now being heard in Pennsylvania, where the consolidated pre-trial proceedings were conducted. In the Philadelphia Court of Common Pleas this March, a jury in a bifurcated proceeding assessed $5.5 million in potential damages in suits brought by Camille Olsen and Isabel Vega, but weeks later found Wyeth not liable. A few weeks after that verdict, another plaintiff, Chris Jenson, was awarded $50,000 in the first phase of a bifurcated trail. A settlement negated the need for the second phase of that trial. In the first phase of another trial, one jury in May assessed damages of $260,000 for a plaintiff's injuries, $280,000 for another's, and $200,000 for yet another's. Then, a jury deciding the potential damages in the first phase of Margie Paul's and Elaine Karician's suits set the amount of damages for each plaintiff at $100 million.

Motion For Mistrial Accuses Plaintiff Attorneys of Wrongdoing

Wyeth moved for mistrial in the Paul and Karician cases, which motion was adjourned until July 25. According to The Legal Intelligencer, a Wyeth spokesman has said the parties jointly requested the prstponement to give them time to discuss a possible resolution of the two cases with the two Houston law firms representing the plaintiffs as well as a possible resolution of all the firms' fen-phen cases. Burke: Wyeth Seeks Mistrial in $200M Damages Suit, The Legal Intelligencer, 6/2/05.

The motion papers, filed May 27, charge that the “nine-figure verdicts, supposedly for compensatory damages, are so utterly divorced from evidence properly in the record that they cannot possibly survive.” Wyeth may be right. According to the averments in the motion, neither Paul nor Karician is currently disabled from use of Wyeth's product. In fact, both are able to work: Paul is a truck driver who still works up to 70 hours per week, and Karician works full-time as a schoolteacher. They both continue to take part in recreational activities. “These grossly excessive verdicts are, in and of themselves, proof positive that the jury was swayed by passion and prejudice, and disregarded the admitted facts of the case,” say Wyeth's attorneys in the motion. “Even a cursory review of the record shows an obvious explanation for these excessive awards — the repeated efforts of plaintiffs' counsel to influence the jury with inadmissible (and often outright false) 'facts' and to make a naked appeal for what amounted to punitive damages.” These alleged falsities include statements by plaintiff attorneys to the effect that Wyeth had refused to take responsibility for injuries caused by their drug. This, the motion papers claim, is “palpably false … Wyeth has offered — and these plaintiffs had initially accepted – both medical monitoring and, if necessary, surgery benefits in a $3.75 billion National Settlement.” Wyeth was not permitted to counter this argument by telling the jury about the settlement and plaintiffs' decisions to opt out of it.

Those claimants who initially entered into the settlement agreement but later opted out are barred by the terms of the agreement from seeking punitive damages. See NSA ' IV.D.4.c (back end opt out plaintiffs “may not seek punitive … damages”). Wyeth's motion asserts that because Paul and Karician are not disabled, have spent very little on medical bills due to their use of Wyeth's product and have only speculative future medical problems to pay for, the $100 million damages must necessarily be characterized not as actual damages or damages for pain and suffering, but as punitive damages. “[The jury's] outrageous verdict more than demonstrates that this jury has made up its mind to punish Wyeth … ,” claims Wyeth's attorneys.

Wyeth also asked for a mistrial May 20, 4 days before the jury's verdict was rendered. The basis for that motion, which was denied, was the allegation that the plaintiffs improperly placed prejudicial liability issues before the jury during the damages phase.

In a statement, Lawrence V. Stein, Senior Vice President and General Counsel of Wyeth, made a prediction as to the outcome to this dispute: “The damage awards are excessive and completely unsupported by the evidence and are inconsistent with other recent cases in Philadelphia with similar facts and circumstances. We are confident that this verdict will not stand.”

Conclusion

The largest verdict to date is one for more than $1 billion, awarded after a woman in her early 40s died of lung disease that was tied to her use of Wyeth's product. Several other juries have declined to award any damages at all. Most juries have kept damages below the $250,000 mark, even when actual injury is present. The wide disparity in the outcomes of these cases and the amounts being awarded makes clear that these are not cookie-cutter suits whose outcomes can be predicted with much certainty. With thousands more suits yet to be tried in Philadelphia and elsewhere and settlement negotiations still continuing, Wyeth may face a long uphill battle before it can put this episode behind it.

Janice G. Inman, Esq., is Editor-in-Chief of this newsletter.