Vioxx Settlement Plan Heads for Key Deadlines

posted on:
January 10, 2008

author:
Heather Won Tesoriero and Nathan Koppel

As deadlines near on the settlement Merck & Co. has proposed for cases related to its Vioxx painkiller, it looks highly likely enough plaintiffs will sign on to seal the deal.

At the same time, the number of claimants threatening to opt out of the settlement — and legal challenges to a provision aimed at preventing that — suggest Merck could face continued litigation and a higher price tag than the settlement’s advertised $4.85 billion.

Widely used Vioxx was pulled from the market in 2004 after being linked to cardiovascular problems. Under the settlement plan announced in November, Merck agreed to compensate plaintiffs who can show, under certain conditions, that they had a heart attack or stroke connected with taking Vioxx.

The deal was negotiated between Merck and six attorneys from around the country who either had large numbers of cases or worked in states with many cases.

Plaintiffs’ lawyers estimate that, depending on various age and risk factors, settlement payments would range from $50,000 on the low end to $1.5 million at the top, with an average above $200,000. Those amounts are subject to attorneys’ fees, expenses and liens from government entities like Medicaid and Medicare.

Whether the settlement goes ahead depends on if enough plaintiffs sign on. One of Merck’s major goals in settling is to avoid a situation like the one Wyeth had in its fen-phen diet-drugs litigation. In 1999, Wyetll allotted $3.75 billion for a class-action settlement to resolve litigation over the drugs, which were linked to heart-valve damage. But, because some plaintiffs opted out of the settlement, the company has paid out more than $21 billion.

To try to avoid that, Merck’s settlement offer carries a provision that aims to pressure as many people as possible to settle now, and to keep lawyers from cherry-picking cases with the best odds of winning in court. It requires any lawyer who participates in the Vioxx settlement to recommend it to all his clients who qualify — and to take legal steps to drop any clients who decline. Now the provision faces legal challenges that could change the way the settlement plays out.

The first deadline in the process is Jan. 15, when all plaintiffs with a Vioxx-related case must register — whether or not their injuries would necessarily qualify for the settlement payout. This preliminary step will establish how many cases Merck faces. Those that don’t qualify for the settlement could still go to court.

More than 28,000 of the estimated 60,800 claimants have submitted registration information so far, according to Andy Birchfield, a partner with Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. in Montgomery, Ala., and one of the plaintiffs’ attorneys who negotiated the settlement. He believes the rest will do so by Jan. 15.

"We’re very encouraged," says Merck counsel Theodore Mayer.

A more crucial deadline comes Feb. 29, when the estimated 45,000 plaintiffs with heart-attack and stroke cases that qualify for the settlement must enroll. To validate the pact, at least 85% of those must enroll. Mr. Birchfield says a strong turnout next week would indicate that threshold will be met.

But law firms representing thousands of plaintiffs have filed court papers contesting the clause that would require lawyers participating in the settlement to recommend it to all clients who qualify. They say it violates professional-ethics codes that require lawyers to give every client their "independent professional judgment." One of these motions, filed by lawyers from Missouri and Illinois, is scheduled for a hearing Jan. 18 before U.S. District Judge Eldon E. Fallon of New Orleans, who is overseeing the settlement. Another motion by lawyers from Kentucky and Indiana hasn’t yet been set for a hearing.

"The settlement’s so loaded with land mines in the attorney-client relationship," says Ann Oldfather, principal at the Oldfather Law Firm in Louisville, who is among the group of Kentucky lawyers with 200 cases who are challenging the provision. "It’s designed to put the pressure on me to look at my pocketbook as the primary concern. It’s extremely offensive to those of us who care about doing our job."

Clients who reject the settlement or whose attorneys drop them would also be hard-pressed to find experienced and capable counsel, lawyers argue. When it comes time for those who accept the deal to be paid, their lawyers must sign a document saying they don’t represent any outstanding Vioxx cases.

Some plaintiffs are concerned their lawyers have been co-opted into recommending the deal.

Virginia Pickett, a 55-year-old former blackjack dealer, says she suffered a heart attack in 2002 after having used Vioxx for three years. She says she lost her job after the heart attack and has paid more than $200,000 in medical bills. Ms. Pickett, of Baltimore, estimates the settlement would pay her about $530,000, but says she is entitled to three times that. "I won’t be browbeaten into taking this settlement," she says.

The law firm that represents her, Levin Simes Kaiser & Gornick LLP of San Francisco, recently sent her a letter stating its "strong recommendation" that she participate, detailing the challenges she would face taking on Merck in court.

A letter very similar to the one sent by Levin Simes is posted at officialvioxnsettlement.coml,a Web site sponsored by the lead plaintiffs’ firms, leading Ms. Pickett to suspect her lawyers didn’t take her particular situation into account. "If they tell me they won’t represent me because I’m dropping out, that is malfeasance," she says.

Partner William Levin says his firm is familiar with each client’s case. He says the firm recommends that clients take a "hard look" at the settlement, but that it will stick by any who object. "We’re happy to continue representing anyone who doesn’t go forward with the deal," he says.

It is impossible to gauge the precise number of hold-out plaintiffs, or to determine if there are enough to scotch the deal. A small band of them have formed discussion groups online to share information. The Fort Lauderdale-based Kelley/Uustal Law Firm, which doesn’t have significant experience with Vioxx cases, has offered to represent plaintiffs who opt out, and has been retained by fewer than 10 so far.

Last month, a group of Texas lawyers also filed a motion objecting to the recommendation provision, but later withdrew it in an attempt to work out an amicable compromise, according to lawyers at two of the firms. They say the drug maker has indicated it will soften the language at issue.

Merck litigation spokesman Kent Jarrell says the company "is not going to change any substantive language to the agreement." Mr. Mayer adds: "This is a private agreement, and we don’t anticipate any court making changes to it."

If the all-or-none clause is eventually dropped, analysts believe the settlement deal would still leave Merck better off as long as the vast majority of cases settle. "If you get this down to less than 1,000 cases, [Merck] can manage that," says Peter Bicks, a partner with Orrick, Herrington & Sutcliffe LLP who has defended product-liability cases but isn’t involved with Vioxx litigation.

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