Why Should We Do This?
The opioid epidemic currently plaguing the U.S. is responsible for more fatalities than either car crashes or gun deaths.
As Public Entities Are Paid, A Degree of Guilt is Assumed, Corporate Policy Is Changed And Public Awareness Is Increased
The opioid epidemic currently plaguing the U.S. is responsible for more fatalities than either car crashes or gun deaths. Drug overdoses now kill more Americans than guns. The New York Times predicts that the number of overdose deaths last year exceeded 59,000. Drug Deaths in America Are Rising Faster Than Ever. In addition to the loss of life, the epidemic is costing cities, counties, and states millions of dollars every year in costs ranging from additional law enforcement to healthcare and rehabilitation. Costs of US Prescription Opioid Epidemic Estimated at $78.5 Billion. In recent years, public entities and private individuals have filed lawsuits taking pharmaceutical companies to task for their significant role in the epidemic, by misleading the public about the high risk of addiction associated with opioid prescriptions, deliberately failing to monitor and report suspicious orders, and actively encouraging physicians to over-prescribe opioids to patients. Some of these lawsuits have resulted in multi-million dollar settlements and fines levied against Big Pharma, and public entities continue to file suit against pharmaceutical companies.
Texas counties now have the burden of shouldering the economic and social costs of the epidemic. Litigation to recoup these costs not only benefits counties economically but it also changes drug company behavior in much the same way that criminal prosecution can change an individual’s behavior. The use of litigation as a law enforcement tool is socially beneficial in two respects. First, plaintiffs act as sort of “private attorneys general” and thereby help to increase the number of wrongdoers who are properly “brought to justice”.This assistance is important, for many serious misdeeds deserving of punishment are beyond the reach of the criminal law and the public prosecutor. Second, litigation helps to implement the various rules of substantive law. Few laws are obeyed or enforced in all instances. Violations are apt to be especially prevalent, when the unlawful activity is profitable for the violator. When other potential wrongdoers perceive a reduction in the profitability of misconduct, violations should be deterred and enforcement of the rules of substantive law improved.” David G. Owen, Punitive Damages in Products Liability Litigation, 74 Mich. L. Rev. 1257 (1976).
Many states and counties are now filing suit against Opioid manufacturers. Previous litigation in this area has been successful. For example, in 2012, West Virginia’s Attorney General filed suit against Cardinal Health Inc., AmerisourceBergen Corp., and other healthcare distributors, alleging that these companies failed to report suspicious orders from high volume pharmacies. From the period 2007-2012, 780 million opioids were sent to West Virginia, an amount that, if divided equally, would provide each resident with 433 opioids. During the same time period, 1,728 fatal overdoses were reported. In December 2016, Defendant Cardinal Health Inc. and the State reached a $20 million settlement. McDowell County, which has the highest rate of prescription drug abuse-related deaths in West Virginia, has a lawsuit still pending against Cardinal Health. Cardinal Health to pay West Virginia $20M to settle opiates lawsuit.
The U.S. Department of Justice (DOJ) has also successfully brought legal action against pharmaceutical companies for failing to report suspiciously large volume opioid orders. In December 2016, Cardinal Health agreed to pay fines in the amount of $44 million for failing to notify the U.S. Drug Enforcement Agency (DEA) of suspicious orders. In 2008, the DEA accused McKesson, the nation’s largest drug distributor, of failing to report hundreds of suspicious orders from online pharmacies in violation of Controlled Substances Act. As a result, McKesson paid $13.25 million in fines and agreed to set up monitoring system to track suspicious orders. However, according to a 2013 DEA investigation, McKesson failed to properly design and implement a monitoring system and did not report suspicious orders during the period 2008-2012. For instance, McKesson filled 1.6 million controlled substance orders in the state of Colorado in the same period but only reported 16 orders from a single customer as suspicious. The DOJ announced in January 2017 that a settlement was reached wherein McKesson will pay $150 million in fines, employ an independent monitor to assess compliance with tracking suspicious orders in the future, and suspend sales from four of its distribution centers (located in Colorado, Florida, Ohio, and Michigan). McKesson, nation’s largest drug distributor, to pay $150 million in fines in opioid settlement.
In addition to claims for failure to report suspicious orders, public entities have successfully sued opioid distributors for deceptive and/or misleading marketing practices. In 2007, former Kentucky Attorney General Greg Stumbo filed suit against Purdue Pharma alleging that the company misled the public about the addiction risks associated with the opioid OxyContin. Purdue allegedly offered the State $500,000 to settle the lawsuit, but AG Stumbo rejected the offer, stating that case was worth $1 billion if presented to a jury. In December 2015, Purdue agreed to a settlement paying Kentucky $12 million plus an additional $12 million over the course of the next eight years. The Court ordered Kentucky to use this money to fund addiction treatment centers. Kentucky settles lawsuit with OxyContin maker for $24 million.
The DOJ also sought recovery from Purdue Pharma over its drug OxyContin. The DOJ accused Purdue of misleading the public about the risks of dependency, claiming that OxyContin was less addictive than other painkillers. In 2007, Purdue Pharma’s president, top attorney, and former chief medical officer pled guilty and agreed to pay $634.5 million in fines. These fines were to be paid to state and federal law enforcement agencies, the federal government, federal and state Medicaid programs, a Virginia prescription monitoring program, and individual plaintiffs who sued the pharmaceutical company. In addition, at least $5 million was set aside for a 6-year company program to monitor compliance with the agreement. In a separate 2007 case, Purdue Pharma paid $19.5 million to 26 states and the District of Columbia for encouraging physicians to over-prescribe OxyContin. Purdue Pharma, Execs to Pay $634.5 Million Fine in OxyContin Case.
Why Not Wait
A case filed by the State of Texas through its Attorney General should not stay a county’s case if the county case was filed first. The law of abatement, or dominant jurisdiction, dictates that later-filed cases involving interrelated claims be abated. The key is to file the county case sooner rather than later.
The court in In re Volkswagen Clean Diesel Litig., addressed whether to abate later-filed cases brought by various counties against Volkswagen to enforce the Texas Clean Air Act where the State had already filed suit against Volkswagen to enforce the Texas Clean Air Act.1 2017 Lexis 7070, at *4 (Tex. Ct. App. – Austin, no pet.). The court cited the general rule that the court in which the first suit is filed acquires dominant jurisdiction and the court in which a second suit is filed must abate where inherently interrelated suits are pending in two counties and venue is proper in either county. Id.
The court further explained that dominant jurisdiction applies where cases are “inherently interrelated because they ‘involve the same parties and the same controversy,’ and requires that the later-filed cases ‘be dismissed if a party to that suit called the second court’s attention to the pendency of the prior suit by a plea in abatement.’” Id., citing Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974) (emphasis added). The first court’s jurisdiction must be exclusive because two different courts cannot have the power to make final determinations between the same controversy and the same parties. Id.
Although the State and the counties were arguably “different” parties, they were all seeking to enforce the same environmental law and impose penalties on the same parties for the same violations. Id. This identity of parties and issues sufficed for abatement to apply and the Court mentioned no priority of the State of Texas over counties other than the fact that the State filed its lawsuit first.
This case follows a similar line of reasoning found in Boyett v. College Station in which a later-filed case was abated even though there was a slight difference of parties and claims. 465 S.W.2d 203 (Tex. App. – Houston [1st Dist.] 1971, no pet.). In Boyett, A.P. Boyett, Sr. and others filed suit in Travis County against Robert S. Calvert, Comptroller of Public Accounts of the State of Texas, and six members of the City Council of the City of College Station seeking declaratory judgment as to whether the State Comptroller was prohibited by Article XVI, Section 33, of the Texas Constitution from paying people serving both as members of the faculty or staff of A&M and as members of the City Council of College Station. 465 S.W.2d at 204. Approximately one month later, a similar suit was filed in Brazos County in a class action. Id. The trial court overruled the plea in abatement. Id.
In determining that the trial court erred in overruling the plea in abatement, the Court explained that abatement does not rest solely on the idea of the “same” cause of action, but whether the judgment in the first action would dispose of the issues in the second action. Id. at 204. All the issues do not have to be the same, however, as long as the “crucial, determinative issues are identical”. Id. In other words, once jurisdiction attaches in the first suit, the pleadings may be amended to add additional claims and parties, and therefore jurisdiction cannot be taken away by a later-filed suit. Id.
In Boyett, there were different defendants involved and even slightly different claims, but the essential questions raised in both cases were almost identical. 465 S.W.2d at 206. Moreover, as the Travis County District Court had proper jurisdiction, the court had the power to allow additional claims and/or defendants to be added. Id.
To sum this up, we truly have a race to the courthouse as the first-filed case should have dominant jurisdiction. In the Volkswagen case, the only difference between the first and later-filed cases involve the party bringing the suit – the State of Texas vs. several counties. The defendants were the same and the statute was the same. If Live Oak County was to file a lawsuit against the manufacturers of opioids and later the State of Texas filed a lawsuit against the manufacturers of opioids relying on the exact same causes of action, the later-filed suit should be abated.
We know that the causes of action available to Live Oak County and the State of Texas may differ, however, which puts the analysis more in line with Boyett. There are two different possibilities that could result from a later-filed case by the State of Texas: 1. The State of Texas case has claims that Live Oak County cannot bring and the lawsuit filed by Live Oak County has claims that the State of Texas cannot bring, and therefore the Court concludes that abatement does not apply and both lawsuits may proceed or 2. The first case filed by Live Oak County has dominant jurisdiction and the case filed by the State of Texas is abated, but the Live Oak County case is required to add any additional claims and/or parties necessary, including an intervention by the State of Texas for claims Live Oak County cannot make. The most important aspect of abatement, however, is to file first to have the strongest argument no matter the individual facts we may face at a later date.
1 Note that one unique aspect of this case is that the counties’ later-filed suits had been placed into a MDL and the court discusses whether the fact that the suits were pending in the MDL should play a part in whether the cases should be abated. Ultimately it did not, and therefore I am not incorporating that language herein.