Lawyers seek to represent Missouri in lawsuit
Sunday, November 6, 2011
Several groups of lawyers from around the country, including some who have given thousands of dollars to Missouri Attorney General Chris Koster’s re-election campaign, are vying to represent Missouri in a lawsuit against pharmaceutical giant GlaxoSmithKline.
Koster’s campaign reports show he’s received at least $182,000 from firms seeking to work on the case involving the drug Avandia, which has been linked to increased risk of heart disease, The St. Louis Post-Dispatch reported Sunday.
Koster said he was investigating the company before he received a donation, and that he won’t ultimately select which firm gets the job. He also said it’s not unusual for him to get campaign donations from out-of-state lawyers and that he was already investigating the drug company before he received the donation from New Mexico.
Since the late 1990s, Missouri has avoided lawsuits where private attorneys, not state lawyers, handle the case. That was when lawyers reaped tens of millions in legal fees after just a few months of work on tobacco litigation. But Koster says Missouri is losing out by not engaging in lawsuits that offer the possibility of significant sums of money for lawyers and the state.
“The other choice is to stay in the cave and to settle these cases for nuisance value,” Koster said. “I think the state of Missouri, in a time of fiscal despair, is leaving tens of millions of dollars on the table.”
GlaxoSmithKline announced last week that it had reached a $3 billion settlement with the U.S. Justice Department to end a long-running federal probe into company practices that included the marketing of Avandia. The drug has been the source of thousands of lawsuits since a 2007 New England Journal of Medicine article associated Avandia with an increased risk of heart attack.
Attorneys filing a pharmaceutical lawsuit on behalf of an entire state can seek compensation for Medicaid funds spent on prescriptions, plus additional penalties related to the sale of the drug — creating the possibility of settlements worth tens of millions of dollars, if not more.
For states, hiring outside lawyers allows them to take on complex cases their staff might not have the expertise to handle.
The cases are taken on a contingency basis, meaning the lawyers working for the state get nothing if they lose, but are entitled to a percentage of the payout if they win or settle.
The decision to pursue a contingency case is typically made by state attorneys general — some of whom, like Koster, accept campaign contributions from law firms seeking a piece of the settlement.
The law firms “want to get paid. They want to maximize their profits and their share of the contingency fee,” said Darren McKinney, a spokesman for the American Tort Reform Association. “Are they going to seek justice and a fair settlement for everyone?”
For Missouri, Koster said the potential settlement in an Avandia suit could be much larger. Through Medicaid, the state has had $43 million in direct Avandia-related expenses. The state would also pursue, Koster said, a $1,000 fraud penalty for each of the 350,000 Avandia prescriptions issued in Missouri.
“Back of a napkin calculation,” Koster said, “let’s call it a $400 million case.”
The private attorneys assigned to the case would be entitled to up to 25 percent of the net settlement, which would not include a share of the Medicaid recovery returned to the federal government.
The Missouri attorney general’s office has two more contingency lawsuits in the works. One attempts to prove that the state, again through Medicaid, was overcharged for prescription drugs; the other involves the state’s fund for underground petroleum tank storage. Proposals from lawyers seeking to handle those two cases are due Nov. 14.
Koster says he supports requirements for selecting outside lawyers to litigate cases on behalf of the state. He said he even pushed for a cap on attorney fees that was defeated amid lobbying by the Missouri Association of Trial Attorneys.
The selection process “is more than an arm’s length transaction — it doesn’t involve me,” Koster said.