Some Attorneys Peeved About Vioxx Windfall for Colleagues

posted on:
October 4, 2005

author:
Barbara Martinez

Attorney Christopher Seeger is putting the heat on Merck & Co. as he argues in an Atlantic City, N.J., courtroom that Merck’s Vioxx painkiller harmed his client. But he and 11 other attorneys are taking heat themselves from colleagues for their behind-the-scenes role in a different Vioxx venue.

Mr Seeger is co-leader of a federal-court panel of 12 plaintiff attorneys that is requiring fellow trial attorneys say between 3% and 6% of certain Vioxx awards and settlements they win. The panel, dubbed the Vioxx plaintiff’s steering committee, or PSCC, is part of the federal “multidistrict litigation,” which consolidated thousands of cases filed in federal court for administrative purposes.

Such panels are often created in mass litigation to centralize the tack of collecting and organizing evidence and depositions that attorneys in all cases can use. That spares defendants, such as Merck and its officials, from being deposed thousands of times and having to provide documents for each case. The judge overseeing the litigation, Eldon Fallon, of the U.S. District Court for the eastern district of Louisiana, agreed in August that the panel should set up a fund to collect a portion of Vioxx awards and settlements, including many state cases, to compensate attorneys for work they do on the panel.

But some plaintiff’s attorneys are crying foul over the arrangement. Mark Lainer, the lawyer who faces a $780,000 PSC fee for his August win in the first Vioxx trial, says “it is troublesome that the PSC gets to tax the Texas case when we used only our depositions and our depositions and out work and no work “from the multidistrict litigation panel. The $253 million jury award he won will likely be reduced to about $26 million based on Texas caps. Merck plans to appeal, so the final PSC assessment may change. Mr. Seeger says that Mr. Lainer received help from other firms, including Mr. Seeger’s. Mr Lainer responds: “I appreciate all Chris has done. I just know we work up our own cases.”

If estimates of Merck’s liability, which run as high as $50 billion, prove right, the PSC might amass one of the biggest assessment pools ever. More than 20 million Americans took Vioxx between 1999, when it was approved, and when Merck pulled it from the market in September 2004, after a clinical study found double the risk if heart attack and stroke in patients taking the drug daily for more than 18 months.

The Vioxx panel will be responsible for negotiating any global settlement, if there is one. A spokesman for Merck’s lead attorney says: “We are not entertaining any notion of a global settlement.” Panel members are from some of the most active plaintiff’s law firm across the country, including Arnold Levin of Philadelphia, Christopher Tisi of Washington, D.C., and Mark Robinson of Newport Beach, Calif.

Getting on PSC “is a big bonanza,’ says Victor Schwartz, a former plaintiff attorney and now a defense attorney with Shook Hardy & Bacon in Washington and general counsel of the American Tort Reform Association, which has worked to reduce jury awards. “They do some work, but they end up getting royalties on a lot of things where they may not have done a lot of work.”

Mr. Seeger, a former amateur boxer and construction worker, says his firm has done the “majority” of the work on Vioxx so far by handling depositions and reviewing millions of pages of Merck’s document. Even so, his firm will be subject to the assessment. And panel members bear risk: If Merck ultimately prevails, and former Vioxx users get small payouts, MR. Seeger and others who have invested many hours and their own money could be out that investment.

AS leaders of Vioxx panel, Mr. Seeger and the other co-lead counsel, Andy Birchfield of Alabama, have the most control over which firms get certain jobs. For instance, they created a science committee and picked the lawyers who will work on the science aspects of the litigation, and they discovery committee, which works on getting access to Merck’s documents. After a significant amount is collected into the fund, lawyers can submit their bills to get paid. Attorneys applied to get on the PSC and the judge chose the members. Mr. Lainer says a member of his firm applied to the panel but wasn’t chosen.

Mr. Seeger is a veteran of PSCs, including panels involving the withdrawn Pfizer Inc. diabetes drug Rezulin and Eli Lilly & Co.’s antipsychotic Zypreza. Mr. Seeger recently helped negotiate a $700 million settlement with Lilly over Zyprexa.

Critics argue that in the case of Vioxx, much of the work has already been done by a handful of attorneys who began suing Merck in state courts in 2001. Mr. Seeger says that any lawyer who has done work that benefits the plaintiff’s side of the litigation is entitled to ask the court to be compensated from the assessment fund. Ultimately, he says, the judge decides on the fees and who gets them.

PSCs and such judge-mandated assessments are common in federal mass-tort cases. Judges have the discretion to determine how much the lawyers on the panel get paid and can change the terms.

The plaintiff’s steering panel for the diet-drug combination Fen-Phen, for example, had collected an assessment from lawyers of 9% for federal cases. By 2002, as Wyeth, which made half of the Fen-Phen combo, settled cases, the fund had grown to about $120 million. The federal judge overseeing the litigation returned about $40 million to plaintiffs’ lawyers and reduced future assessments to 6% for federal cases and 4% for state cases. AS Wyeth continues to settle cases, the fund has continued to grow.

One of the Vioxx PSC’s most provocative moves is an unusual three-month time limit to sign up for a 3% assessment. After that, the assessment goes up to 6% for federal cases and 4% for state cases. Despite complainers, Mr. Seeger says, “the vast majority of lawyers in the country signed on to this deal and thought it was fair.” The assessment is mandatory on all federal Vioxx cases. Attorneys who want the limited-time-only 3% assessment have to agree to assessments on their state awards as well.

Attorneys who want to avoid the PSC fee can do so by keeping their cases in state courts exclusively. “Why bother [to file in federal court] when I can do no percent?” says attorney Paul Rheingold. He is permitted to keep his cases in New Jersey state court because Merck is based in New Jersey, and cases filed in the home state must be tried there. Cases filed in other states could be moved to federal court by Merck.

Donna Bowen, an attorney in the Austin, Texas office of Slack & Davis, which is looking at hundreds of Vioxx cases, complained to the judge in a letter that the lawyers serving on the PDC “will likely make large fees off of those cases. To propose that they also get a fee off everyone else’s cases is unfair and basically results in a windfall to a small group.”

Bill Zook, an attorney at Ted B. Lyon and Associates in Mesquite, Texas, wrote to the judge that the 6% assessment is excessive. “It just ends up being money out of client’s pockets or our pockets or both,” he says.

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