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Fairness questioned in $72.1 million Courtney drug-dilution settlement

Updated: 2013-06-06T13:29:24Z

By MARK MORRIS

The Kansas City Star

New financial information on the decade-old settlement between pharmaceutical manufacturers and the victims of Robert Courtney’s drug-dilution scheme suggests why some plaintiffs want the case reopened.

Families who filed suit soon after authorities arrested the Kansas City pharmacist in August 2001 received substantially larger settlements than those who sued later, according to a document filed Monday night with a Missouri appeals court.

Plaintiffs also were required to agree to the settlement without knowing how much they would receive, how the amounts would be determined or how many other victims were in the settlement pool. That lack of basic information made it impossible for the plaintiffs to make informed decisions about their settlements, lawyers now contend.

The suits against the drug companies said they were negligent in failing to uncover Courtney’s dilution scheme, which allowed him to make inflated profits off each prescription. The companies denied the charges but agreed to settle the claims for $72.1 million.

Some plaintiffs began pushing to reopen the case in 2003, about a year after the settlements.

Georgia Hayes — the first of Courtney’s victims to file claims against drug makers Eli Lilly and Co. and Bristol-Myers Squibb Co. — settled with the drug companies shortly before a scheduled trial in October 2002. More than 300 plaintiffs who filed after Hayes received substantially smaller settlements, according to court records filed by victims and their families who hope to reopen the settlement.

Hayes received drug company settlements totaling $2.9 million, according to the filing. More than 300 cases on file at the time of her settlement received average payouts of $199,500, the filing claimed. A group of 84 plaintiffs who filed after the Hayes settlement notched an average recovery of about $23,200, court records said.

“From the perspective of the Courtney plaintiffs, the most salient factor governing the size of any given award was the filing date of the complaint against Lilly and BMS,” the filing said.

Although Hayes settled her cases against the drug-makers, she took her case against Courtney to trial. There, jurors heard that Hayes had twice beaten back ovarian cancer while receiving full-strength doses of the chemotherapy drug Taxol.

However, when the cancer returned in 2001, her physician began using drugs from Courtney’s pharmacy. Unlike her previous experiences with the drug, Hayes suffered none of the usual side effects, and the drug didn’t seem to be working. Doctors removed a cancerous tumor from her large intestine that spring.

Hayes prevailed against Courtney, winning a largely symbolic $2.3 billion jury award, which a judge later reduced to $315 million.

She died in December 2007 of complications from cancer.

Although lawyers defending the drug companies have not filed their response, which is due in July, Monday’s pleading noted that they previously have argued that Hayes received the best settlement simply because she had the best case, both from medical and financial perspectives.

Kansas City lawyer Arthur Benson, who filed the appeals court brief, declined to comment on it Wednesday. A lawyer for for Lilly declined comment. An attorney representing Squibb could not be reached.

A spokeswoman for Lilly said Wednesday that the settlement process was fair and that all of the original plaintiffs had been represented by counsel.

“All parties agreed that the specifics of the original settlement would remain confidential,” said Carla Cox, director of Lilly Oncology Communications. “The original settlement was agreed to by all parties and approved by the court.”

Authorities arrested Courtney, now 60, in 2001 after an oncologist for whom he mixed cancer drugs had some samples tested and discovered that they had been watered down. He pleaded guilty early the next year to adulterating cancer drugs he prepared for 34 patients between March and June 2001.

Courtney later told law enforcement that he had been diluting chemotherapy drugs since at least 1992 and that he had diluted scores of other drugs as well. He is serving a 30-year federal prison term and is not eligible for release until November 2027.

His drug-dilution scheme sparked the biggest mass-tort litigation in Jackson County since the Hyatt Regency skywalks collapse in 1981.

An important complaint among 23 parties who last year asked to reopen the case is that they received too little information a decade ago to make an informed decision about whether their settlements were fair.

The appeals court filing said victims and their families never were told details of a “points system” that so-called special masters, appointed by the judge, used to score their claims. Special masters are authorities — experts or even judges — appointed by a judge in a case to assure that his orders are followed carefully.

Although details of the points system remain unclear, lawyers said in the filing that it could have skewed settlement amounts.

The 34 victims whom Courtney specifically identified in his plea agreement received points that were worth about $6,200 for that distinction. But a victim having a spouse received points worth $40,000, the filing alleged.

A victim who received diluted chemotherapy drugs after 1998, the year in which plaintiff’s lawyers said drug companies somehow were “on notice” about his dilutions, could receive up to 500 points, worth about $100,000, in the scoring. But having many children could net a claimant up to $200,000, this week’s filing alleged.

“When the time came for claimants to object to their awards, the only information they had was a single number representing the court-determined dollar amount for their cases, without knowledge of how this figure was reached or whether it was fair compared to similar cases,” Monday’s filing said.

Lilly was not involved in the apportionment process, Cox said.

“It is important to note that Lilly had no say in how the funds were distributed,” she said.

Much detail about the settlements has remained under court seal for a decade. When a small minority of Courtney’s victims and their families sought to reopen the case last year, drug company lawyers strenuously argued that those records should remain secret.

In November, a Jackson County judge denied the victims’ request to reopen the settlement in a sealed order, but said many of the arguments needed review by an appeals court.

The Missouri Western District Court of Appeals has scheduled oral arguments for July 17.

The filing Monday is not likely to signal a new openness about the case. After receiving a request from Benson on Wednesday, the court restricted public access to the filing, effectively putting the document under seal.

To reach Mark Morris, call 816-234-4310 or send email to mmorris@kcstar.com.

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