Can Employers Subrogate Against Opioid Drugmakers?

Sacramento, CA - This January, the city of Everett, in Washington filed a first-of-its-kind lawsuit against Purdue Pharma alleging the drug maker "supplied OxyContin to obviously suspicious physicians and pharmacies," ultimately failing "to prevent the illegal diversion of OxyContin into the black market."

While other suits against the company by states and municipalities have accused Purdue Pharma of deceptive marketing - allegedly playing up OxyContin's effectiveness while playing down its addictiveness - Everett's lawsuit is the first to claim the company knew its drugs were being diverted and did nothing to stop it.

In particular, the complaint outlines a drug ring that began with a sham clinic in Los Angeles and ended with a kingpin running OxyContin on the streets of Everett. The unravelling was detailed in a Los Angeles Times investigation that triggered the idea for Everett's lawsuit.

The so-called Los Angeles pill mill was ultimately shut down and the cadre of physicians, pharmacists, and dealers that kept it churning were prosecuted.

In Everett, Washington, the jail is overflowing with addicts, the detox facility is set to double in size, and the city spends a fortune clearing its streets and parks of needles and tiny plastic bags.Those are the hallmarks of a heroin epidemic that began, city officials said, as a crisis dating back to the late 2000s that involved different drugs: opioid prescription painkillers.

Nearly a decade after the opioid onslaught, Everett is still struggling with the cost. And now the city wants the company that manufactured OxyContin to pay the bill.

Key to the complaint are internal Purdue emails outlined by the Los Angeles Times, including a 2009 excerpt from an exchange between the company's compliance director and a sales manager who had become suspicious of the number of OxyContin prescriptions traced back to the clinic's doctors.

After paying the clinic a visit, the sales manager wrote that "the line was out the door, with people who looked like gang members. I feel very certain that this is an organized drug ring."

Purdue Pharma disputes the allegations in the lawsuit. In a statement to NBC News, the company said the city "paints a flawed and inaccurate portrayal of events that led to the crisis in Everett."

The company said it has been a leader in developing abuse-deterrent medications, "which the FDA and National Institute on Drug Abuse have said are making a difference in the fight against abuse." The company also said that OxyContin accounts for less than 2 percent of all opioid prescriptions in the United States.

The first Oxycontin lawsuit to successfully procure a settlement came in 2007. The federal Oxycontin lawsuit alleged that the company had fraudulently encouraged over-prescription of the drug.This Oxycontin lawsuit distributed $130 million to victims of Oxycontin addiction. The "settlement" of the civil case was however part of a package settlement of criminal charges also pending against the company, and may not have been accomplished otherwise.

Private Oxycontin lawsuits concerning side effects have not been widely successful; however, a large number of Oxycontin lawsuits were settled out-of-court.

Santa Clara and Orange counties filed a case in 2015 in Orange County Superior Court. They alleged that Purdue Pharma, Cephalon, Janssen Pharmaceuticals, Endo Health Solutions and Actavis violated California's false advertising and unfair competition laws and created a public nuisance. The case was placed on hold in 2015 pending the outcome of FDA investigations that were underway at the time.

Chicago sued Teva Pharmaceuticals, Purdue Pharma Inc. and other drugmakers in 2014, saying they misled doctors and the public about the addictive nature of opiates and pushed prescriptions despite known dangers of addiction. A defense request for a stay order pending FDA investigations was denied in September 2016, and the Chicago case is still active.

The case is City of Chicago v. Purdue Pharma LP et al., case number 1:14-cv-04361, in the U.S. District Court for the Northern District of Illinois. The current federal court docket shows the case to be in the discovery stage with 439 documents filed in the case so far. The Third Amended Complaint filed on October 25, 2016 contains 341 pages of specific allegations against the defendant drugmakers (not counting exhibits) and reads like an organized crime fiction novel laced with intrigue. The information in this document would certainly steer a competent subrogation lawyer in the right direction to find evidence to make a case.

The outcome of these pending cases, and certainly more to follow, will weigh heavily on the answer to the question about the subrogation potential against opiate drugmakers for recovery of the costs of some of our most costly and protracted injury claims. Read More...