Appeals court sets back effort to reopen the Robert Courtney drug dilution case

Robert Courtney
Robert Courtney

A yearlong effort to reopen civil lawsuits stemming from the Robert Courtney drug dilution scheme suffered a body blow Tuesday when an appeals court declined to throw out $72.1 million in settlements.

In its ruling, a three-judge panel of the Western District Missouri Court of Appeals rejected arguments from some victims and family members that their settlements with two drug companies were improper and should be voided.

A lawyer representing those victims said he was disappointed with the court’s decision but planned to continue the appeals. However, no guarantee exists that the full appeals court would agree to rehear the case or that the Missouri Supreme Court would accept it.

Eli Lilly and Co. expressed its satisfaction with Tuesday’s ruling through spokeswoman Carla Cox.

“The criminal case against Courtney, who put hundreds of patients in danger by diluting the very medicines that could have helped them, was resolved years ago,” Cox said. “Four courts, including the Missouri Court of Appeals, have now upheld the validity of these settlement agreements.”

A spokeswoman for Bristol-Myers Squibb Co. declined to comment.

The appeals court’s ruling affirmed the decision of a Jackson County circuit judge, who last year denied a request to reopen the case.

Authorities arrested Courtney, a former pharmacist, in August 2001 after an oncologist for whom he mixed cancer drugs tested some samples and discovered they had been watered, allowing Courtney to make inflated profits off each prescription. Courtney pleaded guilty in federal court and told authorities that he had been diluting chemotherapy medications and scores of other drugs since at least 1992.

In response, hundreds of area cancer patients and family members sued Courtney and the pharmaceutical makers in 2001 and 2002, alleging that the drug companies were negligent in failing to uncover his scheme.

In its ruling, the appeals court explained that it could not throw out the settlements because the original judge overseeing the case never entered a final, formal “judgment.” Instead, the parties concluded their litigation with a contract based on a private settlement.

Later the victims and their families voluntarily dismissed their cases against the drug companies.

“Once the appellants voluntarily dismissed their cases, there was nothing more the circuit court could do in these cases,” the appeals court ruled.

In fighting to reopen the cases, lawyers representing the victims argued that the settlement of more than 300 individual claims was improper. They alleged the settlements did not contain detailed disclosures from the original lawyers and consent statements from clients to avoid conflicts of interest for lawyers representing multiple claimants.

Ruling in a related legal malpractice case, the Kansas Supreme Court noted in 2009 that the structure of the settlement appeared to violate the law, but it said that issue needed to be resolved in a Missouri courtroom.

In a written statement, lawyer Arthur Benson, who represents victims seeking to reopen the settlements, said the Kansas court reached the proper conclusion whether or not the original judge issued a formal judgment.

“In light of the Kansas Supreme Court’s decision that the settlement process then prevented victims from making an informed choice to settle, we believe our clients should not today be denied a fair process simply because of the labels and titles their former lawyers placed on legal paperwork hastily submitted to the court without their clients’ informed consent,” Benson said.

The appeals court also ruled that most court paperwork related to the settlements should remain under seal, noting that the victims and their families agreed more than a decade ago to keep the records private.

One document that briefly was public prior to being placed under seal suggested why some plaintiffs wanted the case reopened.

According to an appeals court filing in June, victims and families who filed suit soon after Courtney’s arrest received substantially larger settlements than those who sued later.

Georgia Hayes, the first of Courtney’s victims to sue the drugmakers, received settlements from them totaling $2.9 million, the filing alleged.

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 recovered an average of $23,000, court records alleged.