Judge Won't Stop Suit Against Clinical Lab

In a ruling that breaks new ground in the area of drug products liability, a federal judge has refused to dismiss negligence and fraud claims against a clinical laboratory for allegedly conspiring with a drug manufacturer to mislead the FDA.

The suit alleges that the conspiracy was designed to win approval of a drug which, the plaintiff claimed, later caused complications during her spinal surgery and left her wheelchair-bound. In her 20-page opinion in Wawrzynek v. Statprobe Inc., U.S. District Judge for the Eastern District of Pennsylvania Gene E.K. Pratter rejected a defense argument that a laboratory cannot be held liable for the work it performs in assisting a pharmaceuticals company in conducting its clinical trials.

“While it is true that laboratories are rarely found to have a duty to a third party, the facts here are unique in that Statprobe appears to be more intimately involved than a typical clinical data researcher and analyst and the facts alleged do articulate allegations that Statprobe participated in misleading the FDA and, by extension, the public,” Pratter wrote. Significantly, Pratter also found that the plaintiff was entitled to a tolling of the statute of limitations because her lawyers did not learn of Statprobe's role in the alleged fraud until they received documents in discovery in a suit against the drug's manufacturer, Gliatech Inc. The ruling is a victory for attorney Daniel L. Thistle of Philadelphia, who filed the suit on behalf of Eileen Wawrzynek.

The Suit

The plaintiff claims that after doctors used the drug ADCON-L during a spinal surgery, she suffered complications that required a second surgery and left her permanently disabled. Wawrzynek had also sued Gliatech. Even though the firm is now in bankruptcy, Wawrzynek won a court order that allowed her lawyers to conduct discovery despite the bankruptcy court stay. In March 2002, Gliatech pleaded guilty to federal criminal charges — failure to notify the FDA of reportable events occurring in medical procedures; adulteration of a medical device; and submission of a report regarding a medical device that was false and misleading in a material respect.

Alleged Conspiracy

According to Wawrzynek's suit against Statprobe, the FDA's approval of ADCON-L was the result of a conspiracy in which both the manufacturer and the lab manipulated data to make the drug appear effective. The suit alleges that Statprobe was hired by Gliatech, to provide bio-statistical services for a “double-blind” clinical study of the effectiveness of ADCON-L for use in some spinal surgeries.

In May 1998, the U.S. Food & Drug Administration granted conditional approval to Gliatech to manufacture and distribute ADCON-L. According to the suit, one of the conditions of approval was that “a final report for your U.S. clinical trial … must be provided within 3 months of study completion.”

The suit alleges that in July 1997, Statprobe became aware of irregularities with respect to the ADCON-L studies, including data manipulation, and requested its name not be used on reports or presentations. By November 1997, the suit says, the study was completed and Statprobe informed Gliatech that the data failed to show that the drug was effective.

A Code to 'Unblind'

But in January 1998, the suit says, at Gliatech's request, Statprobe provided Gliatech with the code to “unblind” the status of patients in the treatment and control groups. Gliatech personnel later performed a second reading of the studies that changed some of the data in a manner that made ADCON-L appear more effective, the suit alleges. In addition, the suit says Gliatech provided the new data to Statprobe, which accepted the new study and altered its report to show that ADCON-L was effective.

According to the suit, Statprobe “insisted on payment prior to accepting this new data” and “failed to reveal in the final report that the study was unblinded, that some data was changed, and that the original study had found the product ineffective.”

After receiving the final study, the suit says, the FDA approved Gliatech's continued marketing of ADCON-L. The suit alleges that the study revealed that approximately 2% of the patients who used ADCON-L developed leaks of spinal fluid following surgery, while none of the control patients developed such leaks.

Wawrzynek underwent lumbar surgery in February 1999, the suit says, and ADCON-L was used because she had suffered a minor injury to the dura. In court papers, attorney Thistle contends that “ADCON-L prevented adequate healing of the injured dura resulting in a second surgery … As a result of that second surgery plaintiff developed an infection that developed into osteomyelitis (a bone infection) which has caused degeneration and collapse of her spine.”

What Lead to the Suits

Wawrzynek initially filed two lawsuits — one against her surgeon and a second against Gliatech. Although Gliatech was in bankruptcy, Wawrzynek was able to circumvent the bankruptcy stay in order to engage in discovery in which she obtained more than 200,000 documents. Thistle contended in his brief that the trove of documents made him aware of “Statprobe's involvement” and its “fraudulent concealment of its improper conduct.” Filing a third lawsuit, Thistle accused Statprobe of breach of contract, negligence and fraud. Statprobe's lawyers — Joseph McHale, Samuel J. Arena Jr. and Jana M. Landon of Stradley Ronon Stevens & Young – moved for dismissal of the entire suit. In their brief, they argued that the statute of limitations had run on all of Wawrzynek's claims and that, even if the claims were timely, they nonetheless failed because Statprobe owed no duty to Wawrzynek.

“No court has ever found that a biostatistical company has this kind of duty to potential consumers,” the defense team wrote. “Statprobe did not analyze any MRIs or meet with any patients; Statprobe merely compiled the data from neuroradiologists and made sure the study met with the outlined protocol.”

As a result, the defense team argued, “to extend a duty to Statprobe under these circumstances would be to widen the negligence net to a degree that has not been contemplated by any court.” Now, Pratter has rejected nearly all of the defense arguments.

In one victory for the defense team, however, Pratter dismissed a breach of contract claim against Statprobe after finding that Wawrzynek cannot show that she was a “third-party beneficiary” of the contract between Gliatech and Statprobe.

“Because, prior to ADCON-L being pulled from the market, any member of the public may have used ADCON-L, plaintiffs here would have the Court redefine the 'intent' prong of the third-party beneficiary test to include virtually every member of the public,” Pratter wrote.

“This court will not so expand the definition of third-party beneficiary simply because, significantly after the contract is executed, plaintiffs can describe a subset of the general public that was, in this case, harmed by Statprobe's alleged breach of the contract.”

But on the remaining issues, Pratter sided with the plaintiff. On the statute-of-limitations argument, Pratter found that a jury must decide if Thistle was correct in arguing that the time limits should be tolled under the “discovery rule” since he was unable to learn of Statprobe's role in the alleged fraud until he received documents from Gliatech.

The defense team wrote “From the complaint, it would appear that Statprobe's name was not publicly connected to the ADCON-L trials, leaving a question whether reasonable diligence would have revealed this information prior to the discovery activity looking into Gliatech's alleged negligence.”

And even if Statprobe was known to be involved in the original study, Pratter said, the suit alleges facts that “could lead a reasonable juror to conclude that plaintiffs had no way of knowing Statprobe's alleged actionable conduct prior to plaintiffs' receipt of the discovery material in October 2003.”

As a result, Pratter concluded that “the question of when reasonable diligence would have made the injury and its cause known to a party is a matter for determination by the juryPratter also concluded that Thistle had alleged valid claims of negligence and fraud.

“While Statprobe raises an innovative argument that its work related to the effectiveness of the product versus the actual harm alleged, this argument requires the court to evaluate facts and make conclusions of fact that are premature at this time,” Pratter wrote.

The defense team argued that Wawrzynek's negligence claim failed because she failed to allege the specific theories she now relies on — “negligent misrepresentation” and “negligent undertaking.”

Pratter disagreed, saying “while these precise terms are not explicitly mentioned in the complaint, the complaint clearly alleges facts that would support such theories.”

The suit, Pratter noted, alleges that Statprobe gave “false information” to the FDA and the public, and that Wawrzynek's physical harm was caused by the FDA's and public's reasonable reliance on data ostensibly published by Statprobe or with Statprobe's knowledge.

The suit also alleges that Statprobe “knew when it substituted false data to gain approval for ADCON-L that this product would be used in patients by physicians both of whom would rely on [Statprobe's] honesty and integrity.” As a result, Pratter concluded that the suit “placed Statprobe on notice that plaintiffs are claiming that the services undertaken by Statprobe on behalf of Gliatech were services which Statprobe should recognize as necessary for the protection of a third person.”

In a ruling that breaks new ground in the area of drug products liability, a federal judge has refused to dismiss negligence and fraud claims against a clinical laboratory for allegedly conspiring with a drug manufacturer to mislead the FDA.

The suit alleges that the conspiracy was designed to win approval of a drug which, the plaintiff claimed, later caused complications during her spinal surgery and left her wheelchair-bound. In her 20-page opinion in Wawrzynek v. Statprobe Inc., U.S. District Judge for the Eastern District of Pennsylvania Gene E.K. Pratter rejected a defense argument that a laboratory cannot be held liable for the work it performs in assisting a pharmaceuticals company in conducting its clinical trials.

“While it is true that laboratories are rarely found to have a duty to a third party, the facts here are unique in that Statprobe appears to be more intimately involved than a typical clinical data researcher and analyst and the facts alleged do articulate allegations that Statprobe participated in misleading the FDA and, by extension, the public,” Pratter wrote. Significantly, Pratter also found that the plaintiff was entitled to a tolling of the statute of limitations because her lawyers did not learn of Statprobe's role in the alleged fraud until they received documents in discovery in a suit against the drug's manufacturer, Gliatech Inc. The ruling is a victory for attorney Daniel L. Thistle of Philadelphia, who filed the suit on behalf of Eileen Wawrzynek.

The Suit

The plaintiff claims that after doctors used the drug ADCON-L during a spinal surgery, she suffered complications that required a second surgery and left her permanently disabled. Wawrzynek had also sued Gliatech. Even though the firm is now in bankruptcy, Wawrzynek won a court order that allowed her lawyers to conduct discovery despite the bankruptcy court stay. In March 2002, Gliatech pleaded guilty to federal criminal charges — failure to notify the FDA of reportable events occurring in medical procedures; adulteration of a medical device; and submission of a report regarding a medical device that was false and misleading in a material respect.

Alleged Conspiracy

According to Wawrzynek's suit against Statprobe, the FDA's approval of ADCON-L was the result of a conspiracy in which both the manufacturer and the lab manipulated data to make the drug appear effective. The suit alleges that Statprobe was hired by Gliatech, to provide bio-statistical services for a “double-blind” clinical study of the effectiveness of ADCON-L for use in some spinal surgeries.

In May 1998, the U.S. Food & Drug Administration granted conditional approval to Gliatech to manufacture and distribute ADCON-L. According to the suit, one of the conditions of approval was that “a final report for your U.S. clinical trial … must be provided within 3 months of study completion.”

The suit alleges that in July 1997, Statprobe became aware of irregularities with respect to the ADCON-L studies, including data manipulation, and requested its name not be used on reports or presentations. By November 1997, the suit says, the study was completed and Statprobe informed Gliatech that the data failed to show that the drug was effective.

A Code to 'Unblind'

But in January 1998, the suit says, at Gliatech's request, Statprobe provided Gliatech with the code to “unblind” the status of patients in the treatment and control groups. Gliatech personnel later performed a second reading of the studies that changed some of the data in a manner that made ADCON-L appear more effective, the suit alleges. In addition, the suit says Gliatech provided the new data to Statprobe, which accepted the new study and altered its report to show that ADCON-L was effective.

According to the suit, Statprobe “insisted on payment prior to accepting this new data” and “failed to reveal in the final report that the study was unblinded, that some data was changed, and that the original study had found the product ineffective.”

After receiving the final study, the suit says, the FDA approved Gliatech's continued marketing of ADCON-L. The suit alleges that the study revealed that approximately 2% of the patients who used ADCON-L developed leaks of spinal fluid following surgery, while none of the control patients developed such leaks.

Wawrzynek underwent lumbar surgery in February 1999, the suit says, and ADCON-L was used because she had suffered a minor injury to the dura. In court papers, attorney Thistle contends that “ADCON-L prevented adequate healing of the injured dura resulting in a second surgery … As a result of that second surgery plaintiff developed an infection that developed into osteomyelitis (a bone infection) which has caused degeneration and collapse of her spine.”

What Lead to the Suits

Wawrzynek initially filed two lawsuits — one against her surgeon and a second against Gliatech. Although Gliatech was in bankruptcy, Wawrzynek was able to circumvent the bankruptcy stay in order to engage in discovery in which she obtained more than 200,000 documents. Thistle contended in his brief that the trove of documents made him aware of “Statprobe's involvement” and its “fraudulent concealment of its improper conduct.” Filing a third lawsuit, Thistle accused Statprobe of breach of contract, negligence and fraud. Statprobe's lawyers — Joseph McHale, Samuel J. Arena Jr. and Jana M. Landon of Stradley Ronon Stevens & Young – moved for dismissal of the entire suit. In their brief, they argued that the statute of limitations had run on all of Wawrzynek's claims and that, even if the claims were timely, they nonetheless failed because Statprobe owed no duty to Wawrzynek.

“No court has ever found that a biostatistical company has this kind of duty to potential consumers,” the defense team wrote. “Statprobe did not analyze any MRIs or meet with any patients; Statprobe merely compiled the data from neuroradiologists and made sure the study met with the outlined protocol.”

As a result, the defense team argued, “to extend a duty to Statprobe under these circumstances would be to widen the negligence net to a degree that has not been contemplated by any court.” Now, Pratter has rejected nearly all of the defense arguments.

In one victory for the defense team, however, Pratter dismissed a breach of contract claim against Statprobe after finding that Wawrzynek cannot show that she was a “third-party beneficiary” of the contract between Gliatech and Statprobe.

“Because, prior to ADCON-L being pulled from the market, any member of the public may have used ADCON-L, plaintiffs here would have the Court redefine the 'intent' prong of the third-party beneficiary test to include virtually every member of the public,” Pratter wrote.

“This court will not so expand the definition of third-party beneficiary simply because, significantly after the contract is executed, plaintiffs can describe a subset of the general public that was, in this case, harmed by Statprobe's alleged breach of the contract.”

But on the remaining issues, Pratter sided with the plaintiff. On the statute-of-limitations argument, Pratter found that a jury must decide if Thistle was correct in arguing that the time limits should be tolled under the “discovery rule” since he was unable to learn of Statprobe's role in the alleged fraud until he received documents from Gliatech.

The defense team wrote “From the complaint, it would appear that Statprobe's name was not publicly connected to the ADCON-L trials, leaving a question whether reasonable diligence would have revealed this information prior to the discovery activity looking into Gliatech's alleged negligence.”

And even if Statprobe was known to be involved in the original study, Pratter said, the suit alleges facts that “could lead a reasonable juror to conclude that plaintiffs had no way of knowing Statprobe's alleged actionable conduct prior to plaintiffs' receipt of the discovery material in October 2003.”

As a result, Pratter concluded that “the question of when reasonable diligence would have made the injury and its cause known to a party is a matter for determination by the juryPratter also concluded that Thistle had alleged valid claims of negligence and fraud.

“While Statprobe raises an innovative argument that its work related to the effectiveness of the product versus the actual harm alleged, this argument requires the court to evaluate facts and make conclusions of fact that are premature at this time,” Pratter wrote.

The defense team argued that Wawrzynek's negligence claim failed because she failed to allege the specific theories she now relies on — “negligent misrepresentation” and “negligent undertaking.”

Pratter disagreed, saying “while these precise terms are not explicitly mentioned in the complaint, the complaint clearly alleges facts that would support such theories.”

The suit, Pratter noted, alleges that Statprobe gave “false information” to the FDA and the public, and that Wawrzynek's physical harm was caused by the FDA's and public's reasonable reliance on data ostensibly published by Statprobe or with Statprobe's knowledge.

The suit also alleges that Statprobe “knew when it substituted false data to gain approval for ADCON-L that this product would be used in patients by physicians both of whom would rely on [Statprobe's] honesty and integrity.” As a result, Pratter concluded that the suit “placed Statprobe on notice that plaintiffs are claiming that the services undertaken by Statprobe on behalf of Gliatech were services which Statprobe should recognize as necessary for the protection of a third person.”