Show the jury ‘plain old fraud’

posted on:
June 16, 2008

author:
Emily Heller

In a 2003 fraud trial, co-lead counsel Jere L. Beasley helped persuade a jury to slam Exxon Mobil Corp. with an $11.9 billion verdict for royalties owed to the state of Alabama.

Beasley’s back for another round of litigation as lead counsel for his home state.

Who’s the plaintiffs’ lawyer’s unlucky target now? A total of 72 drug companies that he alleges deliberately defrauded Alabama’s Medicaid program that pays for health care for the poor and disabled.

In the first of those cases to go to trial, a Montgomery state court jury in February awarded Alabama $40 million in compensatory damages and $175 million in punitive damages against AstraZeneca Pharmaceuticals L.P.

Common threads

To Beasley, the Exxon Mobil and Medicaid drug cases have several common threads. “It’s just plain old fraud and corporate greed,” he said. In Exxon Mobil, Beasley argued that internal company documents showed that high-level executives created the alleged scheme to defraud the state. The company cheated the state by intentionally underpaying royalties, he argued. Exxon Mobil Corp. v. Alabama Dept. of Conservation and Natural Resources, No. CV-99-2368 (Montgomery Co., Ala., Cir. Ct.).

With the Medicaid litigation, “It’s all basically the same type of fraud,” said Beasley, who founded Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery.

In the trial against AstraZeneca, the jury found that, from 1991 to 2004, the company had intentionally and falsely inflated the prices of its drugs on state price lists. Testimony showed that AstraZeneca put one price on Medicaid purchase lists – which the state was obligated to pay – yet charged wholesalers a much lower price. Under Medicaid, drug companies are required to price their medicine much lower than for commercial customers, he said.

Leading off the plaintiff’s case in chief were AstraZeneca officials, called as adverse witnesses, he said. In addition, a former AstraZeneca employee testified via video deposition that he told company officials the pricing scheme was unethical and possibly illegal, but that his protests were ignored. He left the company. “We used their own people to make our case,” Beasley said. In re Alabama Medicaid Pharmaceutical Average Wholesale Price Litigation, No. CV-05-219. (Montgomery Co., Ala., Cir. Ct.).

Beasley’s next Medicaid-related case for trial is against Novartis Pharmaceuticals Corp. and GlaxoSmithKline PLC, set for mid-June. Beasley said he will ask a jury to award the state $70 million against Glaxo and $30 million against Novartis in compensatory damages.

The issues in that trial are expected to parallel those raised in the AstraZeneca case, he said. Is he using a cookie-cutter approach?

“It’s close,” he said. “We might lose it, but it sure is similar to the same case.”

Defense lawyers aren’t fazed by Beasley’s big verdicts because they expect the appellate courts to strike down his large awards, he said.

Indeed, the Exxon Mobil verdict – reversed by the Alabama Supreme Court, which found no basis for a finding of fraud – remains on appeal.

The lead trial lawyer for AstraZeneca, Thomas W. Christian of Birmingham, Ala.’s Christian & Small, could not be reached for comment. The company has criticized the verdict and lawsuit as legally unfounded and announced its plan to appeal.

In the AstraZeneca defense, an expert testified that the pricing method was an industry standard, which made the jury mad, Beasley said.

Jurors told him after the verdict that they were incensed with the company’s plan, he said. “They were really just shocked that this company would do this – that they had a scheme and it was not just by happenstance.”

Beasley said he likes studying juries and has served as a juror himself twice, on a criminal case and a paternity suit. “I really kind of enjoyed it, seeing how jurors react to everything,” he said. “I learned that lawyers better be straight with that jury. Don’t mislead ‘em, don’t con ‘em. Don’t be too slick. Don’t be slick at all.”

Beasley also said he has learned that jurors don’t like it when opposing lawyers chat and laugh together during trial. “Don’t let those defense lawyers come over and talk to you during the trial,” Beasley advised.

Jurors would think “you are not as serious about your client’s case as you ought to be,” he said, adding that some defense lawyers try make nice with plaintiffs’ counsel, with jurors watching.

Beasley hasn’t always had an easy time cajoling juries, even in drug company cases.

In four products liability trials over the painkiller Vioxx, he won one plaintiffs’ verdict, one case ended in mistrial and two others were defense verdicts. Causation is hard to prove if the plaintiff has pre-existing conditions, he said. Ultimately, about 50,000 Vioxx cases settled in November 2007 for $4.9 billion in a deal Beasley helped negotiate.

Don’t fear losing

To win cases, a lawyer shouldn’t think about a loss. “If you have a fear of losing you are not going to win,” he said. “You show me a lawyer who is afraid to lose a lawsuit and he or she’s going to try to settle all of them.”

As for the Medicaid drug litigation, it will be keeping Beasley busy for a while. Alabama is one of a half-dozen states Beasley represents in Medicaid drug-price litigation. He said he is negotiating with several others who want to get aggressive against drug manufacturers.

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