Pari delicto

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Today’s case isn’t about prescription drugs, but rather illegal drugs. More specifically, whether a user of illegal drugs can recover in a civil action against someone who failed to prevent the user from obtaining the drugs. While this is outside our usual field of focus, we have posted about the in pari delicto doctrine before and believe the decision could be analogously useful to drug companies in at least some types of opioid litigation and therefore worthy of notice.

You won’t find that fancy Latin phrase in Hollywood v. Superior Court, 2018 Cal. App. LEXIS 190 (Cal. App. Ct. Mar. 8, 2018), but that is what the case is about. Plaintiff voluntarily checked himself in to a rehabilitation facility and then proceeded to smuggle in heroin and overdose. Id. at *2-3. He then brought a negligence action against the rehab facility alleging it failed to take reasonable steps to make sure residents could not get illegal drugs. Id. at *3-4. So the question is whether plaintiff’s own misconduct bars his right to recovery in tort for his injuries – in pari delicto or “wrongful conduct” rule. The case also discusses whether the claim is barred on statutory grounds.

The court examined defendant’s statutory defense first. The statute at issue is the Drug Dealer Liability Act (DDLA) which is based on the Model Drug Dealers Liability Act which has been adopted in some version in more than 20 states. Id. at *8. The primary goal of the DDLA is to provide a civil remedy for damages to those who are injured as the result of someone else’s use of illegal drugs – parents, employers, insurers. Id. at *9. Such parties are entitled to both economic and non-economic damages and can recover from both the person who actually sold the illegal drugs to the user and anyone “who knowingly participated in the marketing of illegal controlled substances.” Id. at *12. In other words, the DDLA imposes a broad market share liability “in order to deter drug traffickers with potentially high civil damages awards.” Id. at *11.

The DDLA also allows an illegal drug user to bring a more limited claim, if certain conditions regarding cooperation with law enforcement and non-use of illegal drugs are met. The claim can be brought only against the direct supplier/manufacturer/importer of the actual drugs used and only economic damages can be recovered. Id. at *12-13. The DDLA goes on to state: “An individual user of an illegal controlled substance may not bring an action for damages caused by the use of an illegal controlled substance, except as otherwise provided in this section.” Id. at *13. In Hollywood, the rehab facility argued that that sentence precluded plaintiff from bringing his negligence claim against it as it was not the supplier of the drugs that caused his injury. Now all of this should sound like preemption to our DDL blog readers, but because we are talking about co-equal state law (state statute and state common law), the question is framed as whether the enactment of the statute displaced the existing common law. Id. at *8n.7. And yes, California’s general rule is a presumption against displacement. Id. at *15-16.

First, in construing the sentence limiting the claims a drug user can bring, the court noted that the DDLA defines “individual user” as “the individual whose use of a specified illegal controlled substance is the basis for an action under this division.” Id. at *15. Therefore, the DDLA did not need to repeat “under this division” when talking about the claims an individual user could bring because it was already limited by definition to claims under the act. Id. Second, the court found no legislative intent to “supplant common law” as to the circumstances of when a drug user could pursue claims against a third-party. Since the primary goal of the DDLA was to expand the class of potentially liable parties, the court was unwilling to interpret the act to restrict or bar other common law remedies.

Application of that common law to plaintiff’s claim, however, found it was lacking any legal support. In its analysis of the “wrongful conduct” doctrine, the court examined the development of the law in relation to liability for furnishing alcohol. After some back and forth in the courts, the California legislature enacted a statute to limit the liability of those who serve alcohol finding the consumption of alcohol should be the proximate cause of injuries to the intoxicated person or injuries caused be the intoxicated person, with exceptions for serving minors. Id. at *19-21. Similar laws exist protecting hosts who furnish alcohol. Id. at *22. Some plaintiffs have argued that because these laws confer immunity on those who serve/furnish alcohol, “persons less directly responsible for the intoxicated state of another may be liable under nonstatutory theories.” Id. We had to quote it because we couldn’t think of another way to state such a ridiculous concept. Fortunately, California courts have found it just as ridiculous. In this case, the court concluded that the rehab facility took reasonable steps such as a search upon arrival and periodic room checks to prevent residents from using illegal drugs. It was not required to take extraordinary measures. Such a claim is not supported under the law, nor would public policy favor burdening the very facilities who are trying to help addicts with potential liability for “their residents’ foreseeable but unpreventable predilection to obtain and ingest drugs.” Id. at *28.

The Hollywood court could not find a single case “suggesting that liability could be predicated on the mere failure to undertake affirmative efforts to stop the user from ingesting drugs.” Id. at *25. In other words, there is no viable “general failure to thwart drug use” claim.  Id.  The same logic should apply to claims against manufacturers of prescription opioid drugs for failure to monitor distributors and retail sellers.

We know that our blogposts are carried by legal aggregating services, such as Lexology and JDSupra.  Some of you may even be reading this post via one of these services.  In addition to writing for them, we actually read them, too.  Sometimes we find interesting things on them – like last week.

A bit of background, first.  Other than providing readers with:  (1) a post on how the municipal cost recovery rule is useful against municipal/county attempts to recover the cost of governmental services (actually, so can the economic loss and derivative injury rules, but we haven’t blogged about those − yet); and (2) some other posts on how the in pari delicto doctrine can be employed to defeat suits by individuals harmed by their own criminal activity, we haven’t had all that much to say about the “opioid epidemic.”  It’s a fast moving area, and to some extent it resembles the spate of litigation over firearms marketing (where Bexis became familiar with municipal cost recovery) a couple of decades ago.  In other ways it resembles something much more sinister – how the states ganged up to extort money from various cigarette companies after the companies had consistently prevailed in ordinary product liability litigation.

So while we feel we should have something to say about this “opioid epidemic” litigation threat to our clients, it’s difficult to decide what.  We were very interested to read – on JDSupra – a recent thought-provoking article entitled “De-Bunking the Opioid Litigation Epidemic.”  That blogpost is mostly about how overheated “opioid epidemic” rhetoric (and litigation) has outrun any basis in science.  Briefly, it makes the following points:

We compliment the Kelley Drye folks for this effort, and encourage our readers to read the whole article.

So what can we add?  We point out that, as to the last bullet point, injuries from illegal opioid use are precisely the sort of injuries that the in pari delicto doctrine was designed to preclude from being recovered in litigation.

Well, what about the states as plaintiffs?  In general we’re big fans of off-label use.  We never tire of pointing out that off-label use is 100% legal under the FDCA, and that the FDA cannot prevent physicians from prescribing FDA-approved drugs (which include opioids) for any therapeutically appropriate treatment, whether or not that indication appears on a drug’s FDA-approved labeling.  As the Supreme Court has held, “‘off-label’ usage . . . is an accepted and necessary corollary of the FDA’s mission to regulate in this area without directly interfering with the practice of medicine.”  Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341, 350 (2001) (citing Beck & Azari, FDA, Off-Label Use, & Informed Consent: Debunking Myths and Misconceptions, 53 Food & Drug L.J. 71, 76-77 (1998)) – yes, that Beck, as in Bexis.

So who can restrict the rights of physicians to prescribe drugs for off-label uses?  That would be the states, in their traditional roles of regulators of medical practice.

It is elemental that a state has broad power to establish and enforce standards of conduct within its borders relative to the health of everyone there.  It is a vital part of a state’s police power.  The state’s discretion in that field extends naturally to the regulation of all professions concerned with health.

Barsky v. Bd. of Regents, 347 U.S. 442, 449 (1954).

We recognize that the States have a compelling interest in the practice of professions within their boundaries, and that as part of their power to protect the public health, safety, and other valid interests they have broad power to establish standards for licensing practitioners and regulating the practice of professions.

Goldfarb v. Virginia State Bar, 421 U.S. 773, 792 (1975).

“The State, in the performance of its duty to protect and preserve the public health, has the power, within constitutional limitations, to regulate the practice of medicine by those engaged therein.”  Comm’n on Medical Discipline v. Stillman, 435 A.2d 747, 755 (Md. 1981).  “[P]rofessional licensing and regulation is a traditional area of state power.”  Edinboro College Park Apartments v. Edinboro University Foundation, 850 F.3d 567, 577 n.9 (3d Cir. 2017).  “It is well established that a state can legitimately impose broad regulations on the practice of medicine through its police powers to protect the health, safety, and welfare of its citizens.”  People v. Rogers, 641 N.W.2d 595, 605 (Mich. App. 2001).  “States retain the police power to regulate professions, such as the practice of medicine.”  Betancur v. Florida, 296 F. Appx. 761, 763 (11th Cir. 2008).  The “the valid police power the legislature exercise[s] when it regulate[s] the practice of medicine” is widely recognized. State v. Pacific Health Center, Inc., 143 P.3d 618, 626 (Wash. App. 2006).

These general propositions apply to controlled substances, such as opioids. “[E]nforcement of the Controlled Substances Act to prevent illegal or illegitimate drug trafficking by registered medical professionals does not intrude upon the states’ ability to regulate the practice of medicine in accordance with their police powers.”  United States v. Brickhouse, 2016 WL 2654359, at *7 (Mag. E.D. Tenn. March 30, 2016), adopted, 2016 WL 2350137 (E.D. Tenn. May 4, 2016).  They also apply to off-label use.  “[R]egulation of the practice of medicine generally lies within the States’ police powers.”  United States v. Kaplan, 2014 WL 4402586, at *4 (D. Nev. Sept. 5, 2014) (off-label use case).

However, except for unusual forays such as informed consent relating to diet drugs (Utah), performance enhancing drugs in sports (Ohio, and probably others), and constitutionally questionable attempts to harass those seeking drug-induced abortions by prohibiting an off-label use that’s actually safer than the outmoded FDA-indicated use, see Cordray v. Planned Parenthood Cincinnati Region, 911 N.E.2d 871, 878 (Ohio 2009) (affirming such a provision), the states have generally not regulated medical practice and off-label uses.

In general, that’s a very good thing.

But if the states are now going to sue drug manufacturers, wholesalers, and others in the chain of sale over what are legal, FDA-approved drugs properly prescribed by state-licensed medical doctors, and properly filled by state-licensed pharmacists, then the states should be required to look in the mirror.  And if counties and other municipalities that are creatures of the states are going to sue over off-label uses that their sovereign states have not seen fit to prohibit, they may find themselves preempted from doing so – by state law.

States could ban precisely the off-label uses they are complaining about, but they haven’t.

Off-label use of prescription opioids (assuming the requirements set by FDA REMS and federal controlled substances regulations are complied with) is by and large perfectly legal under state law.  If the states believe that the risks of particular off-label uses outweigh the benefits, then they have the power to act to prohibit such uses outright.  Where the FDA has actually approved an indication, the result would be different – federal preemption would prevent such action.  But off-label use is state rather than federally regulated.  We thus believe that, for states to sue to recover, say, the costs off-label opioid prescriptions, without having exercised their own authority to prevent the underlying conduct, at minimum runs squarely into the defense of failure to mitigate damages.

So the question is, how much is that argument worth?  That depends on how much opioid use is off label.  We’ll take a look at that question.

It appears the argument might be worth quite a bit. A New England Journal of Medicine article from earlier this year asserts that “the risk-benefit profile of opioids used for chronic pain remains unknown” with “no studies lasting longer than 1 year that evaluated pain, function, or quality of life as a primary outcome.”  Assuming the statement is accurate, it suggests to us that long-term opioid use doesn’t have the level of scientific evidence behind it needed to obtain FDA approval, since “[g]enerally, the agency expects that the drug maker will submit results from two well-designed clinical trials” before approval can be granted.”  Another recent article states:

The FDA doesn’t have the statutory ability to limit the amount of pills or the duration of prescriptions.  However, the agency could deem prescriptions off-label if they’re too large.

Likewise, the FDA believes that “[m]ost analgesic use in pediatric patients is off-label.”  So that’s a second category of opioid prescription that could be off-label and thus regulated by states, rather than by the FDA.

Another place to look is for judicial admissions.  Most complaints (to hype plaintiffs’ damages) can be expected also to allege widespread off-label use, and thus conduct that the relevant state could have regulated, but hasn’t.  In the litigation context, it fits in with a possible narrative against state AG or parens patriae suits – that the plaintiff state, which has legal authority, has done nothing to curb off-label opioid prescriptions, while the FDA, which lacks this authority, has at least tried.

The DEA also appears to have stepped up scrutiny of at least some off-label opioid prescribing, according to this recent (11/9/17) alert from the Academy of Integrative Pain Management:

The Drug Enforcement Administration has recently taken criminal and administrative action against physicians who prescribe transmucosal immediate-release fentanyl (TIRF) off-label for the treatment of breakthrough pain.  Historically, prescribing medications off-label has been a decision left to the discretion of the prescriber based on the specific needs of the patient; therefore, physicians prescribing these products off-label for noncancer breakthrough pain should be aware of this increased scrutiny.

An editorial in the National Review addressed part of this equation, stating “opioids are harmful primarily when they are not used as directed, are cleared for sale by the federal government, and come with government-approved warning labels explaining the risks — all factors that will make judges skeptical of suits” by states.  But it’s even worse than that, since the states are suing, at least in significant part, over the consequences of their own governmental sloth.  Perhaps, having utterly failed to hold up their end, either legislatively or by regulation, a state should be estopped from trying to recover from drug companies for legal activities.

Thus, while we strongly support the right of physicians to prescribe off-label, and the right of everyone – including drug manufacturers – to provide truthful information about off-label uses, we recognize that off-label prescribing is ultimately subject to the police power of the states.  If a state has come to the conclusion that a particular off-label use is doing more harm than good, it has the legal authority (within constitutional parameters) to prohibit that use.  Unless and until a state does so, however, it should not engage in the hypocritical practice of suing over a legal medical practice that it could have stopped but has chosen not to.

Thus, to the extent that the “opioid epidemic” is an off-label use issue, in that respect it is a problem created largely by the failure of the states to utilize their existing police powers.

New Mexico is called the Land of Enchantment, but when it comes to law it is the Land of You Can’t Make this Up.  You might think it weird that New Mexico’s state constitution (Article VII, section 1) specifies that idiots aren’t allowed to vote, but maybe it’s the other 49 states that have it wrong. Then again, New Mexico did give us the McDonald’s hot coffee case, which ranks right up there with poor Mrs. Palsgraf’s conked noggin among significant injuries in the history of American tort law.  If you don’t remember the facts of Palsgraf v. Long Island R.R., please enjoy this Lego version.  We’ve heard rumors (we haven’t bothered to scour the New Mexico statutes) that New Mexico law frowns on letting ladies pump their own gas, and one can apparently get in trouble with the authorities there by dancing either around or under a sombrero.  And let’s not forget that tv-dom’s number one lawyer is no longer Perry Mason, Ally McBeal, or any of the denizens of the McKenzie Brackman law firm in LA – no, it’s Saul Goodman of Albuquerque.  We first met Saul on Breaking Bad.  Saul had his charms, but it is hard to imagine a sleazier lawyer. Now he is the protagonist (?) in one of the best current shows, Better Call Saul.  If you haven’t yet taken a look at the show, do yourself a favor and give it a try.  The writing, the acting, the camera work — s’all good, man.
It’s good to know that idiots can’t vote in New Mexico.  Can they bring lawsuits?  Ponder that question.  Don’t ponder too long.
Today’s lesson centers on the recent case of Inge v. McClelland, ___ F. Supp. 3d ___, 2017 WL 2829696, 2017 U.S. Dist. LEXIS 98386 (D.N.M. June 26, 2017). The plaintiffs alleged that the defendant pharmacy wrongly sold them opioids, and that the result was that the plaintiffs got addicted and suffered all the terrible sequelae of said addiction.  The plaintiffs lost their jobs and lost custody of their children. The legal theories included federal RICO, various New Mexico common law torts, as well as violation of New Mexico’s Unfair Practices Act.  The factual assertions are rather arresting: the pharmacy dispensed thousands of opioid pills at potency levels given to end-stage cancer patients – which these plaintiffs most certainly and obviously were not.
Pretty strong case, right?
Oops, we left something out.  You see, the plaintiffs had conspired with a nurse practitioner to write up fraudulent prescriptions.  The plan was to find a pharmacist with flexible professional ethics or an exceedingly limited attention span. The plaintiffs would then procure the pills and split them with the nurse practitioner.  It’s not clear whether getting addicted and descending into a hellish fog was part of the plan, but that’s what happened.  Somehow the plaintiffs were able eventually to rouse themselves from their opioid torpor and file this lawsuit.
The defendant moved to dismiss the case because the claims were barred by the wrongful conduct rule and its corollary, the in pari delicto doctrine.  Anytime we can hearken back to our high school Latin days, we will.  In pari delicto is short for the phrase “in pari delicto melior est conditio possidentis,” which means, roughly, “in equal fault, better is the condition of the possessor.”  Great Caesar’s ghost, what does that mean?  Well, all is made crystal clear in a post that Bexis wrote nearly ten years ago setting forth the in pari delicto rule and supplying a list of cases from several jurisdictions.  (We wondered whether it was high time to update that list, but then Bexis told us that a reasonably current list of in pari delicto cases resides in his book.  Tell your librarian to get that book!)  The rule is based on a public policy to preclude anyone who injures him or herself in the course of criminal activity from recovering in tort for those injuries.  Put another way, perhaps more appetizing for those of you who delight in legal jargon, criminal conduct is an intervening act that cuts off liability.  In drug cases, that criminal activity usually involves plaintiffs who obtain prescription drugs under false pretenses. The drugs obtained are almost always some form of narcotics, as was so in the Inge case.

New Mexico law has a version of the wrongful conduct rule, and it operates as a complete bar to a plaintiff’s case.  Acquisition of narcotics through fraudulent prescriptions is a violation of both federal and state law.  So is narcotics trafficking, which the plaintiffs admitted to when they said they were going to split the pills with the nurse practitioner.  Most versions of the in pari delicto rule limit application to instances where the harm suffered is one that the violated criminal law was intended to avoid. In Inge, the alleged injury – addiction – was precisely the harm at which the criminal laws were aimed.

This case is a laydown, isn’t it?

Yes, it is.  But that’s not to say that the plaintiffs in Inge offered no resistance.  The plaintiffs argued that merely presenting false prescriptions was not, in itself, illegal.  Even assuming there is any force to that argument, the plaintiffs admitted that the scheme was to share the drugs with the prescribing nurse practitioner.  That is straight-up illegal.  (We prosecuted drug cases long ago.  We harbored no love for the crazy-long federal mandatory minimum sentences, but it was hard to shed a tear for the drug-dealers.  We wouldn’t have felt any sympathy for the Inge plaintiffs, and, based on the facts set forth in the court’s opinion, we would not even have considered a plea agreement that did not lock in some jail time.)  The Inge plaintiffs also argued that their conduct was less culpable than the defendant pharmacist, since nothing would have come to fruition without the defendant’s alleged agreement to fill obviously bogus prescriptions.  They also offered the inevitable argument that the defendant’s misconduct, as a licensed pharmacist, was worse than the misconduct of [supply your own epithet for drug-abusers and/or drug-dealers].  The court did not buy these arguments.  It is not as if the pharmacist forced the plaintiffs to concoct and follow through on this opioid abuse and distribution scheme. Moreover, however serious the pharmacist’s alleged breach of professional ethics was, it did not make the plaintiffs’ illegal conduct somehow legal.

Interestingly, the Inge plaintiffs also argued that, rather than operate as a full-blown bar to their action, the in pari delicto rule should come into play as an element of comparative fault that the jury could consider.  In support of this argument, the plaintiffs cited a case from West Virginia, which allowed a case very like the Inge case to proceed.  West Virginia, of course, has a significant opioid problem.  See Talbot, “The Addicts Next Door,”  The New Yorker (June 5/12, 2017).  You could quarrel with the West Virginia decision, and you could quarrel with the public policy view underlying such decision, but none of that mattered to the Inge court, because it wasn’t the law of New Mexico.
As a final, and somewhat comical point, the court dismissed the unfair practices claim along with all the others, because whatever else you might say about the defendant pharmacist, he did not make any misleading, false, or deceptive statement in dispensing the pills to the plaintiffs.  Nope, they got exactly what they asked for — and then they got into trouble.  But what they didn’t get was an opportunity to recover damages, including treble RICO damages, in a frivolous lawsuit.

Naturally, anytime you hear of a drug dealer case in New Mexico, you probably think of Breaking Bad.  This time, it’s more like Breaking Stupid.