New York Opioid Cost Recovery Litigation Moves Forward

New York Opioid Cost Recovery Litigation Moves Forward

June 21, 2018 | Opioid Crisis

In a thirty-six page ruling, New York Judge Jerry Garguilo declared that the plaintiffs had presented more than enough evidence for their lawsuit to go forward.

This action related to the ongoing opioid crisis. This crisis has already cost the lives of thousands of people, mostly through overdose deaths. Cash-strapped local governments in the Empire State have been forced to respond. They have spent millions in services like emergency responses and drug rehabilitation clinics. None of these costs would have been necessary, they argue, had opioid manufacturers not created this crisis.

 

Roots of the opioid Lawsuit

Some say that the current opioid crisis began with a mere 100 words. In a 1980 letter to the editor in the New England Journal of Medicine, a group of doctors asserted that “despite widespread use of narcotic drugs in hospitals, the development of addiction is rare in medical patients with no history of addiction.”

That blanket assessment turned out to be a monumental miscalculation. The words may have been true in 1980, when most opioids were not much more than very strong analgesic pain relievers. But when later opioids hit the market, the 1980 pronouncement no longer applied. Fentanyl is a good example. According to the government, fentanyl is up to 50 times more powerful than heroin. So, modern opioids like fentanyl may be addictive even if patients take them as directed.

In spite of the growing crisis, opioid manufacturers have been very slow to make changes. The reason is probably simple economics. Weaker pills would mean lower prices and lower profits. The only meaningful responses have occurred after lawsuits were filed. So, government units from around the Empire State banded together to file this action.

 

Overcoming Procedural Obstacles in a Legal Claim

Lawsuit defendants commonly argue that the plaintiff failed to dot an “i” or cross a “t.” The legal process involves very strict rules, and the same rules apply to everyone. So, assertions like these often work. If the defendant cannot stop the action altogether, the defendant often at least forces the plaintiff to fall back and regroup. But despite an array of highly technical arguments, neither of those things happened in the New York opioid case.

 

Preemption

The U.S. Constitution’s Supremacy Clause is in Article Six, Clause Two. It simply states that federal law “shall be the law of the land.” So, once Congress makes rules, states cannot undercut these rules in any way. Preemption arguments often come up in environmental litigation matters. The opioid defendants tried to use this doctrine in their favor. They argued that once the Food and Drug Administration approved opioids, which it did, that no state could make laws restricting their sale.

Technically, that’s correct. For example, the New York State Department of Health cannot declare that Tylenol is unsafe and prohibit its sale. It does not matter how much evidence the Department has. But in the opioid case, no one says that the drugs are unsafe. Instead, the plaintiffs argue that the manufacturers deceptively marketed these drugs.

Safety and advertising are two different things. The federal government has ruled that opioids are safe, but it has said nothing about marketing practices. So, the Supremacy Clause does not apply.

 

The Municipal Cost Recovery Rule

This rule basically prohibits taxation by litigation. The argument goes like this: If a government must spend money to deal with a disaster or crisis, such as an earthquake or the opioid crisis, that government cannot sue people to get its money back. Such a tactic would run afoul of the well-established principle that public emergency response services are free other than the taxes which pay for them.

Once again, this argument has some force. But notice the examples given above. There’s a big difference between an earthquake and the opioid crisis. Normally, earthquakes are acts of nature which no one can prevent. But the opioid crisis began with a misstatement and ended with fraud.

In his ruling, Judge Garguilo correctly observed that extending the municipal cost recovery rule in this way would “distort the doctrine beyond recognition.”

Statute of Limitations

In a continuing pattern, the opioid defendants were once again not entirely off-base. The limitations period on a fraud claim of this type is usually six years. Arguably, the opioid crisis began way back in 1980. Obviously, that window has long since closed.

In this case, some long-standing doctrines aid the plaintiffs instead of the defendants. According to the continuing wrong doctrine, injury sometimes increases with each wrongful act. If things keep getting worse, as is clearly the case with opioids, the statute of limitations does not cut off claims. Furthermore, damages are an element of a fraud claim. The statute of limitations is inapplicable until all elements of the claim are fully accounted for.

Res Judicata

The defendant’s final major procedural argument is that these claims have already been resolved in another court. In 2013, the New York Attorney General commenced an action against certain opioid manufacturers. In 2016, some of these manufacturers promised to make some changes in the way they sold and marketed these drugs.

But there is a big difference between a promise and a court order. “There is no legal basis for Endo’s argument that the assurance of discontinuance is the equivalent of a stipulation of discontinuance with prejudice,” Judge Garguilo flatly stated.

 

Making Substantive Claims Early On

The plaintiffs just filed this action a few months ago. They have uncovered no incriminating documents and do not have any damaging witness statements. That’s because the discovery process, which is the primary information-gathering vehicle in a lawsuit, has not yet begun. So, the opioid plaintiffs need only establish a preliminary claim for relief. They accomplished that objective in all phases of the case.

  • Negligence: The opioid defendants argued that they had no legal duty to limit the distribution of a legal product or protect against the misconduct of third parties. In this case, these “third parties” are the opioid distributors. But since the manufacturers were in the best position to prevent harm, they had a duty to prevent such harm.
  • Fraud: As mentioned above, a plaintiff need only lay out the outline of the complaint at this phase. The pleadings state that the defendant’s marketing statements “were intended to, and did, knowingly and intentionally distort the truth regarding the risks, benefits and superiority of opioids for chronic pain relief resulting in distorted prescribing patterns.” At this early stage, the court accepts all the statements in the pleadings as true unless there is a very, very good reason to discount them. The defendants provided no such reason.
  • Deceptive Marketing: This claim is the big one. Sections 349 and 350 of the General Business Law prohibit such practices. These claims are quite common in consumer goods cases. Almost all manufacturers exaggerate the truth to pump up sales. Sometimes, such behavior crosses the line. Judge Garguilo noted that the plaintiffs’ petition contains some very specific allegations. One such allegation, which the defendants did not entirely refute, is that manufacturers created “front groups” with official-sounding names like American Academy of Pain Medicine. These groups were simply industry mouthpieces that spread false and misleading information.

Judge Garguilo made similar findings with regard to all the plaintiffs’ other claims, such as unjust enrichment and public nuisance.

The next big legal test in the opioid lawsuit may come sometime in 2019. Usually, once discovery is complete, one or both sides ask for summary judgment. This motion basically states that the evidence is so one-sided that only one outcome is possible at trial, so that procedure would be unnecessary. In other words, since the plaintiff (or defendant) has no chance of winning, the judge should declare a winner early.

In complex claims like this one, and in simple claims like a car crash, it’s important to keep fighting until the end. For a free consultation with an experienced personal injury attorney in New York, contact Napoli Shkolnik PLLC. There are no upfront legal fees.

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