Class Action Lawsuits
The Lyon Firm is investigating third party payer claims on behalf of labor and employment health funds. The third-party payor cases involve claims brought on behalf of labor and employment health plans against the manufactures of defective products that have driven up unnecessary health care costs that have burdened health plans and individual members.
When a drug or medical device company misrepresents the safety and/or efficacy of a drug or medical device, the financial consequences for the parties responsible for past and future health care are extreme. In the context of a Health Care Fund or Plan (“Fund”), a Fund, relying upon the marketing data presented by the manufacturer, unknowingly commits to paying for ineffective and/or unsafe products. The Fund is under the impression that the cost of the drug or device is justified since the benefits of preventative medicine will reduce the health costs from complications in the future.
However, when a company withholds data that is critical to the decision of whether to add a product to a Fund, the Fund is not in the best position to fully assess the risks and benefits of the product. Pharmaceutical recalls and litigations consistently reveal patterns of pharmaceutical companies placing marketing and sales ahead of patient safety. The conduct takes the shape of distorting clinical trial data, limited or no post marketing reporting, manipulating clinical trial design, and engaging in “off label” marketing campaigns. The New York Times reported last December that, “Nearly every company is under either civil or criminal investigation for alleged efforts to expand the use of its drugs beyond the specific illness or condition for which they are approved”.
When pharmaceutical companies mislead a Fund, the Fund unknowingly pays for more expensive and dangerous products, while increasing the health risk of its members and its financial exposure. The difference in costs between a quality alternative health care product and a defective product is often tens of millions and in some cases may be hundreds of millions. Lawsuits on behalf of health insurance companies, self insured health plans and union health plans (“Third Party Payors”) are designed to recover the TPP’s loss resulting from the companies’ conduct.
The Lyon Firm is investigation numerous claims for local and national union health plans.
THIRD PARTY PAYOR CAUSES OF ACTION
This summary offers a brief overview of available causes of action under Ohio law. The law in this area is very complicated in that it is a blend of common law and statutory construction, and the theories of recovery overlap between Tort and Contract Principles. Therefore, the law, including the cause of action, remedies, and applicable statute of limitations, must be analyzed within the context of a particular claim, while taking into account the specific facts supporting notice, liability, and damages. In order to allow full flexibility in the initial investigation and scope of the applicable causes of action, the decisions whether to pursue these claims should be made without delay.
Although the cases we are discussing involve products and liability arising from defective products, in the context of commercial payor, the courts generally do not treat TPP claims as product liability claim within the purview of Ohio’s product liability statutes. [1] Rather, the trend in Ohio law is that claims for economic damages on behalf of commercial and corporate entities are better classified as contract claims. Regardless of whether the case rests in contract or tort, the fundamental crux of any pharmaceutical case is the corporate misrepresentation. In other words, the primary issues presented is whether the Fund would not have covered the drug or device and incurred the excess cost, if it had been properly informed about the drugs safety and effectiveness. Multiples avenues of relief are available to properly frame and litigate this issue.
As for the remedies, a corporate entity may recover damages which include:
1.1 Uniform Commercial Code (OH)
As with other Sales of Goods Contracts, damages that arise from the sale and purchase of medical products are compensable under the Ohio Revised Code for Sales Contracts. The causes of action include breach of Express and Implied Warranties. Essentially, these claims operate with the same affect as Strict Liability.
Remedies include “Past Direct, Incidental, and Consequential Economic Losses”: e.g, where the product was more expensive than cheaper, safer alternatives, the recovery then is the cost of the difference between the two drug options or reimbursement for the cost of the drug), or lost inventory/ replacement Costs where the Plan has purchased a large inventory of products that cannot be used or need to be replaced, as in the case of medical device cases;
“Future Direct, Incidental, and Consequential Economic Losses” where the plan has incurred additional costs for future health care as a result of the injuries the members suffered (the recovery would be the cost associated with the future care of the Plan’s members for related injuries.);
1.2 Ohio Deceptive Trade Practices Act Ohio has strong statutory causes of action arising from Deceptive Trade Practices. Pursuant to O.R.C. 4165.02, a consumer may recover for damages sustained by a Deceptive Trade Practices Act. “A person [or company] engages in a deceptive trade practice when, in the course of the person’s business, vocation, or occupation, the person….Represents that goods …have…. benefits, or quantities that they do not have …or Represents that goods are … of a particular standard, quality …if they are of another
Remedies include: “Past Direct, Incidental, and Consequential Economic Losses”; “Future Direct, Incidental, and Consequential Economic Losses” ; and Punitive.
1.3 Ohio Consumer Sales Practices Act
Under O.R.C. 1345.03 (A), “No supplier shall commit an unconscionable act or practice in connection with a consumer transaction. Such an unconscionable act or practice by a supplier violates this section whether it occurs before, during, or after the transaction.” (B) In determining whether an act or practice is unconscionable, the following circumstances shall be taken into consideration…. Whether the supplier knowingly made a misleading statement of opinion on which the consumer was likely to rely to the consumer’s detriment;
Remedies include: “Past Direct, Incidental, and Consequential Economic Losses”; “Future Direct, Incidental, and Consequential Economic Losses”; Treble Damages and Punitive.
1.4 Fraud
Under Ohio law, to maintain a claim of fraud, the plaintiff must plead: (a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance. [2]
Remedies include: “Past Direct, Incidental, and Consequential Economic Losses”; “Future Direct, Incidental, and Consequential Economic Losses” ; and Punitive.
1.5 Unjust Enrichment
Under Ohio law, provided that no other cause of action is viable for recovery , the plaintiff by proving three elements, may recover for a claim of unjust enrichment: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment.
Remedies include: “Past Direct, Incidental, and Consequential Economic Losses”; “Future Direct, Incidental, and Consequential Economic Losses”. Equitable remedy of disgorgement of profits.
2 SUMMARY CHART OF CAUSES OF ACTION
The below chart outlines summarizes the possible available causes of action and types of damages, as well as includes the applicable statute of limitations to initiate a claim. Please know that the statute of limitations depends on many factors, and these are general time frames. Tolling of the statues is available in some case. [3] These time frames should not be relied on without having an attorney review the case in detail to offer a comprehensive opinion. The law can be confusing to many lawyers and judges in this area because of the overlap between contract and tort law damages. The most conservative approach should be taken in order to preserve all potential claims.
CAUSE OF ACTION
AUTHORITY
DAMAGES
STATUTE OF LIMITATIONS
Breach of Express Warranty
(Sale of Goods)
O.R.C 1302.26
Past and Future direct, incidental, consequential
4 Years from date of breach[4]
Breach of Implied Warranty of Merchantability (Sale of Goods)
O.R.C 1302.27
Past and Future direct, incidental, consequential
4 Years from date of breach
Breach of Implied Warranty for Fitness for a Particular Purpose
(Sale of Goods)
O.R.C 1302.28
Past and Future direct, incidental, consequential
4 Years from date of breach
Fraud
Common Law
Past and Future direct, incidental, consequential, and Punitive
Four Years From Act or Discovery
Unjust Enrichment
Common Law
Equitable remedies available of reimbursement or disgorgement of profits.
Four Years from breach [5]
Deceptive Trade Practices Act
4165.02
Past and Future direct, incidental, and consequential
Two Years from act[6]
Consumer Sales Practices Act
1345.02;1345.03
Past and Future direct, incidental and consequential, Treble Economic Damages
Two Years from act[7]
2.1 The Phases of Case Development
In the event the Fund decides to retain counsel to litigate a TPP claim, the Three firms will form a committee to develop and assign the various tasks. Prior to engaging in formal litigation, the case or cases will be thoroughly investigated to outline all available claims and damages.
Phase One is an internal investigation to gather the specific facts related to your Plan and how it was adversely affected by the product at issue. This phase will include, but is not limited to:
1. Researching all available causes of action on elements of proof, damages, and statutes of limitations for all available venues;
2. Identifying any privacy issues that may complicate the review;
3. Interviewing Plan coordinators and administrators to identity the most efficient manner to search documents and databases;
4. Interviewing any specific medical consultants or physicians involved in selecting the drug/ or device for the plan;
5. Securing any necessary releases to review the relevant materials;
6. Gathering all relevant medical and business records and other materials;
7. Identify the number of prescriptions paid;
8. Identifying the primary costs of the prescriptions or devices;
9. Identifying the wholesale price of the product and whether this compares to other Plans;
10. Identifying alternative products and analyzing the costs difference;
11. Identifying the number of claimants who may have suffered adverse events and have had and/or will require health care to treat the adverse events;
12. Consideration of the value to your plan and strategy of a class action and adding other similarly situated plans to your claim.
13. Identifying any other expense incurred for the particular product.
Once the preliminary information is gathered, and we have a more comprehensive understanding of the value of a claim, we will present a formal paper outlining the value and research that was discovered in the first phase. Assuming the review identifies a valuable claim, will move to Phase II, which is formal litigation. Formal litigation will include:
1. Selecting the most favorable venue.
2. Filing initial pleadings and overcoming various Motions to Dismiss;
3. Issuing discovery and overcoming protective orders and motions to compel;
4. Coordinating our efforts with similar actions in other venues;
5. Obtaining all discovery that has been conducted in other litigations;
6. Issuing formal Discovery for corporate documents and depositions of designees and other corporate witnesses;
7. Presenting the financial impact through retained experts and conducting expert depositions;
8. Presenting the defective aspects of the drug/ device and failure to warn though retained experts and conducting expert depositions;
9. Presenting the related specific adverse events and cost of care for affected individuals though retained experts and conducting expert depositions;
10. Prevailing on Motions for Summary Judgment;
11. Preparing the case for Trial.
12. Engaging in formal mediation or other alternative dispute mechanisms to resolve the case.
13. In the event all settlement efforts fail, successfully presenting the case to a Jury.
[1] LaPuma v. Collinwood Concrete, 75 Ohio St.3d 64, 661 N.E.2d 714, Ohio,1996.
The law could very well be a shift in the courts through TPP cases. The policy considerations for applying strict liability in cases of defective products are consistent with the goals of TPP cases – i.e., that human life and safety are promoted by subjecting manufacturers of defective products to strict liability, to recognize that manufacturers are in a better position than those injured to internalize and redistribute the cost of injuries. Extending strict liability to TPP claims would have a strong deterent affect on the actions of the companies. Moreover, although the entity cannot experience harm, company is composed of its individual members who have suffered harm.
[2] Delahunt v. Cytodyne Technologies, 241 F.Supp.2d 827 (S.D.Ohio,2003.)
[3] Ohio recognizes , American Pipe, where the United States Supreme Court found that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.”
[4] A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. O.R.C. 2305.10
[5] An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. 1302.98 Statute of limitations in contracts for sale:
[6] Discovery does not extend to Deceptive Trade Practices claims; Plumbing and Pipefitting Industry Local 219 Pension Fund v. Buck, Slip Copy, 2007 WL 4287870 (N.D.Ohio,2007).
[7] Discovery rule applies only for Recission. There is no Discovery for money damages or treble Damages. Bales v. Isaac, Not Reported in N.E.2d, 2004 WL 1949419 (Ohio App. 2 Dist.,2004) . Rosenow v. Shutrump & Assoc.163 Ohio App.3d 500, 839 N.E.2d 82 (Ohio App. 7 Dist.,2005)
