6 Third-Party Payers Settle Zyprexa Claims For $4.5Million After Class Vacated

6 Third-Party Payers Settle Zyprexa Claims For $4.5Million After Class Vacated

BROOKLYN, N.Y. - (Mealey's) The Zyprexa multidistrict litigation judge on Jan. 12 approved a $4.5 million settlement between Eli Lilly and Co. and six third-party payers who had their Racketeer Influence and Corrupt Organizations Act (RICO) class action vacated and who couldn't find any other health benefit providers to join their individual suits, the parties told Mealey Publications (In Re:  Zyprexa Products Liability Litigation, MDL Docket No. 1596, No. 04-md-1596, UFCW Local 1776 v. Eli Lilly and Company, Nos. 05-5115, E.D. N.Y.).

Thomas Sobol of Hagens Berman Sobol Shapiro in Cambridge, Mass., told Mealey Publications that the third-party payers will each receive more than 40 percent of each client's single damage amount.  He said plaintiffs counsel "will receive less than 15 percent of the fees and expenses they put into the case." 

At a Dec. 19 hearing, Laura Barnes of Hagens Berman told Senior Judge Jack Weinstein of the U.S. District Court for the Eastern District of New York that the third-party payers agreed to a formula to distribute the settlement funds that would amount to about 43 percent of the plaintiffs' single damages. 

At the same hearing, Sobol told the judge that under the distribution agreement, the third-party payers would receive one-third of the recovery and their counsel would receive two-thirds.  He acknowledged that "opposite" of what "you normally would expect." 

'Positive Outcome For Lilly' 

In a statement, Lilly said:  "This settlement represents a positive outcome for Lilly, and allows us to return our focus to the patients and healthcare professionals who rely on our medications." 

At the Dec. 19 hearing, Sobol also noted that the law firms have spent millions of dollars prosecuting the six-year-old case and that there is a "huge amount of expenses and lawyer time that's being uncompensated for." 

In answer to a question from Judge Weinstein, Sobol said the recovered attorney costs and lodestar is about 16 percent of the total amount. 

The settlement resolves only the claims of the six third-party payers and their counsel. 

Started Out As RICO Action 

The original parties in the third-party payer class action were United Food and Commercial Workers Local 1776, Participating Employers Health and Welfare Fund, Local 28 Sheet Metal Workers, the Mid-West National Life Insurance Co. of Tennessee, Sergeants Benevolent Association Health and Welfare Fund, American Federation of State, County and Municipal Employees District Council 37 and the United Federation of Teachers Welfare Fund.   

In 2005, the third-party payers filed a class action complaint in the MDL court alleging that Lilly violated RICO by marketing the atypical antipsychotic drug for off-label uses and concealing the risk of diabetes, thereby causing them to pay more for Zyprexa than they would for cheaper prescription antipsychotics. 

In 2008, Judge Weinstein certified a RICO class action and immediately certified it for appeal to the Second Circuit U.S. Court of Appeals.  In 2010, the Second Circuit reversed class certification.   

In June, the U.S. Supreme Court denied the third-party payers' petition for a grant of certiorari

Circuit's Interpretation Disputed 

Sobol told Mealey's that the Second Circuit "indicated that two approaches to recovery under RICO were not available under the panel's interpretation of RICO."   

On remand, Judge Weinstein in November dismissed the class action and ordered the creation of individual cases for each third-party payer. 

According to a report filed Dec. 9 by the third-party payers, they contacted 16 law firms that represented health benefit providers to determine their interest in joining them in prosecuting aggregated claims against Lilly.  Despite "multiple calls" and "numerous meetings," they said they found no takers. 

"The parties have agreed to a dismissal of all remaining individual claims, along with a waiver of all appellate rights in this litigation, with a minimal payment by Lilly," the third-party payers said.   

Ends Federal Claims 

In their report, the third-party payers said the Second Circuit's decision "effectively ended the federal claims in this case."   

The third-party payers fired a shot at the Second Circuit's ruling:  "In essence, it is hard to see how reasonable litigants can pursue these claims given the Second Circuit's ruling that private payers cannot recover for fraud, waste and abuse unless they show that payors and doctors share the same motivation."   

The payers said "the litigation costs associated with individual (i.e. non-class) litigation make impractical further pursuit of the case.  Since the litigation began more than six years ago, counsel for the putative class has incurred millions in hard expenses and many more millions in lodestar.  No single payer can afford to assert claims with these kinds of expenses."


The third-party payers are represented by Davis S. Nalven, Kristen Johnson Parker, Barnes and Sobol of Hagens Berman in Cambridge, Mass., and James R. Dugan II and Doug Plymale of the Dugan Law Firm in New Orleans. 

Lilly is represented by Anthony Vale of Pepper Hamilton in Philadelphia. 

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  • 01-17-2012

PTSD treatment for Veterans found ineffective. Eli Lilly Zyprexa can cause diabetes. This is a powerful drug that can damage a young person physiologically for life. Please take with caution and learn as much as you can about side effects. *FIVE at FIVE* The Zyprexa antipsychotic drug,whose side effects can include weight gain and diabetes, was sold for "children in foster care, people who have trouble sleeping, elderly in nursing homes. *Five at Five* was the Zyprexa sales rep slogan, meaning *5mg dispensed at 5pm would keep patients quiet*. WARNING- If a drug Risperdal (Zyprexa) lists anything about the pancreas among the side effects, it probably means it can cause diabetes. Zyprexa is glorified Thorazine at ten times the price. -- Daniel Haszard Zyprexa victim activist. FMI Google--Haszard Zyprexa *Tell the truth don't be afraid*