We have another guest post today, from Reed Smith‘s own Erica Yen.  This one is about a recent, interesting decision concerning the interaction between the Health Insurance Portability and Accountability Act (“HIPAA”) and the common law – with a good result this time.  As always, our guest bloggers are 100% responsible for their posts, and Erica deserves all the credit (and any blame) for what follows.


As noted in our post last month, the fact that HIPAA does not provide for a private right of action has not stopped some state courts from allowing negligence claims using HIPAA to define a standard of care. That post discussed the Connecticut Supreme Court’s questionable creation of a new tort of “unauthorized disclosure of confidential medical information” by a healthcare provider.

When the plaintiff in the recent case of Haywood v. Novartis Pharmaceuticals Corp., No. 2:15-CV-373, 2018 WL 437562 (N.D. Ill. Jan. 16, 2018), first filed her complaint in state court, she probably was hoping that the same expansive reasoning used in the Connecticut case would extend to the alleged disclosure by a pharmaceutical company of her private medical information to her employer. In federal court, however, her unusual negligence claims were not allowed to proceed, under HIPAA or otherwise.

In Haywood, the plaintiff had applied for a co-pay assistance program administered by the defendant to help offset the cost of purchasing that defendant’s prescription medications. Id. at *1. Despite an alleged written request that no information be sent to her workplace, the defendant allegedly faxed information that became available to the plaintiff’s co-workers. The information allegedly included her social security number, date of birth, income, Medicare number, disease, treatment, and medical providers. Id. The relevant (amended) complaint alleged negligence and negligent training and supervision in violating duties owed to her under (1) the defendant’s Privacy Notice and Privacy Statement, (2) Indiana state law, and (3) HIPAA. Id. She also claimed punitive damages based on supposed reckless indifference by disclosing the information against her written request not to do so. Id.

The end result? The court held that the defendant drug manufacturer did not owe the plaintiff any duty for the following reasons, and the plaintiff was not entitled to any punitive damages.

First, the court was not persuaded by the plaintiff’s argument that the defendant’s Privacy Notice and Privacy Statement, posted on its website, created a duty of privacy to her as a customer. Id. at *4. The privacy policies posted online concerned dissemination of information to business partners who were prohibited from using customers’ personal data for marketing purposes. Dissemination to plaintiff’s place of employment had nothing to do with third-party marketing. The defendant’s privacy policies did not set forth any obligations with respect to general non-disclosure, and the court found that the plaintiff’s unilateral request not to send information to her workplace could not, by itself, create a legal duty. Id.

Second, the section of the Indiana Code the plaintiff cited, Ind. C. §25-26-13-15(b), failed to create a duty either. While facially applicable to the defendant, as the specific statute applied to “any ‘person’ with patient information,” the court held that as a whole it regulated “Pharmacists, Pharmacies, and Drug Stores.” The defendant was not any of those, nor did the statute purport to regulate the manufacture of pharmaceuticals or the administration of co-payment assistance programs. That the defendant was a “provider of pharmaceuticals” was not enough to bring it within the purview of a statute addressed to other types of entities and conduct. Therefore, no statutory duty could be owed to the plaintiff. Id.

Third, the court dismissed the plaintiff’s attempt to allege a negligence per se theory that the defendant violated HIPAA standards. Id. at *7. Given that HIPAA does not provide for a private right of action and enforcement was intended to be solely under the authority of the Department of Health and Human Services, allowing state law claims that rely on HIPAA would allow plaintiffs to sidestep those enforcement mechanisms. Id. That sounds a lot like how the FDCA works.

Lastly, the court noted that there was no precedent in the jurisdiction to suggest that a pharmaceutical company has a general duty to safeguard an individual’s personal information from disclosure. Id. at *8. The court could have stopped there but went further to explain the reasons why it concluded a duty should not be imposed at common law, after examining (1) the relationship between the parties, (2) the reasonable foreseeability of harm, and (3) public policy concerns:

    • The relationship between a potential customer and co-pay assistance company, as in the case here, was not similar to the relationship between a pharmacist and consumer “mainly because the direct contact, expertise, reliance, and counseling aspects of the relationship are wholly lacking.” Id.


  • Given that much of an employee’s personal information was likely already available to his or her employer anyway and was unlikely to cause adverse consequences, the foreseeability of legally actionable harm was minimal. Id. at *8-9.
  • Given the growing amount of sensitive personal information generally being made available to third parties in today’s digital society, even if a pharmaceutical company could theoretically bear the liability from inadvertent disclosures, “[a]ssigning significant moral blame to a pharmaceutical corporation in this situation is disproportionate to the actual acts performed (i.e., negligently disclosing information to an employer during a routine application process) . . . Imposing a duty to safeguard information from all possible disclosures upon any party or entity who happens to be in possession of the personal information of another would expand liability in a way that has the potential to stifle the collection of data and the routine processing of information.” Id. at *9. A Seventh Circuit decision analyzing the Indiana data disclosure statute had found no private right of action against a database owner for negligently disclosing information; rather the database owner only had to disclose the breach to customers and let the state attorney general handle enforcement. Id. (citing Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 636-637 (7th Cir. 2007)).

Based on this reasoning, and exercising appropriate restraint under the Erie doctrine, Haywood concluded that the plaintiff failed to state any viable claim for negligence, negligent training and supervision, or punitive damages. Notwithstanding the importance of protecting health information, and even assuming the defendant’s handling of the plaintiff’s information was done in error, the court acted reasonably in not opening the gates to the kind of expansive duty and liability the plaintiff sought. The unsatisfied plaintiff filed an appeal to the Seventh Circuit just a few weeks ago. See Case No. 18-1328 (filed February 24, 2018). It would be surprising if the Seventh Circuit did not agree with the district court’s analysis and conclusion.

This is from the non-Reed Smith side of the blog.

Looking back at our posts on innovator liability, it’s becoming more and more difficult to title them. According to the DDL blog, innovator liability has been rejected, abolished, denied, refused, disallowed. You get the idea. With the news from earlier this summer that the California Supreme Court is going to consider the issue – which will hopefully spell the demise of Conte – we may be nearing the end of the chapter on innovator liability. In the meantime, we’ll keep bringing you the wins as they stack up.

Today’s case was actually decided right around the time the California Supreme Court decided to take on the issue. Gillette v. Boehringer Ingelheim Pharm., Inc., 2016 WL 4217758 (Mag. D. Minn. Jun. 16, 2016). The decision didn’t come to our attention, however, until the magistrate’s report and recommendation was adopted last week. See 2016 WL 4203422 (D. Minn. Aug. 9, 2016).

The Gillette decision comes out of the Mirapex MDL and involves the application of Indiana law. Indiana products liability claims are governed by the Indiana Products Liability Act (“IPLA”) which provides a single cause of action subsuming all common law strict liability and negligence claims, as well as tort based warranty claims. Gillette, 2016 WL 4217758 at *3-4, *6. So, plaintiff in this case had one cause of action based on her allegations that her use of Mirapex caused her to gamble compulsively.

But was it Mirapex that plaintiff was taking at the time she suffered her injuries? According to her pharmacy records, plaintiff was prescribed Mirapex from 2001 until 2015. Id. at *1-2. It appears that from 2001 until April 2010, plaintiff’s pharmacy filled her prescriptions with brand name Mirapex. In April 2010, when her prescribing physician increased plaintiff’s dosage, her pharmacy began filling her Mirapex prescriptions with its generic equivalent – pramipexole dihydrochloride. Id. at *1. From April 2010 until late 2015, plaintiff received the generic version of the drug manufactured by a succession of four different generic drug manufacturers. Id. at *1-2.

Continue Reading Brand Defendants Thwart Another Innovator Liability Claim

The imminent retirement of David Letterman sent our mind back to all those grim law school days that foreclosed any smiles until after midnight, when Letterman’s velcro suit, random items heaved off a roof, and stupid pet tricks helped us forget the indignities of Torts class or the opacities of Justice Blackmun.  Letterman was not shy about highlighting his Indiana upbringing.  Come to think of it, Indiana has produced an astonishing amount of talent. The Jackson 5 hailed from Gary, Indiana.  John Mellencamp is from Indiana.  (That hardly matters to us, but since Eric Alexander insisted on a Mellencamp shout-out, we obliged.)  Two all-time icons of cool – James Dean and Steve McQueen – strolled out of Indiana.  Sports is another area where Indianans have excelled.  There are more NBA players per capita from Indiana than any other state.  Larry Bird and Oscar Robertson played high school basketball in Indiana, and they both belong on the hoops Mt. Rushmore.  Robertson’s high school team lost to tiny Milan High in the 1954 Indiana single-class high school state basketball tournament.  Milan went on to win the championship.  That remarkable run was the basis for Hoosiers, possibly the greatest sports movie ever.  With Rudy and Breaking Away, that means that Indiana is the setting for three of the top ten sports movies.  If you want to add Knute Rockne, All-American to the list, giving Indiana four of the top ten, we would not argue. Indiana also knows how to host a big-time sports event.  The recent NCAA Final Four in Indianapolis was masterfully run.  More important, it vindicated our prediction at a recent DRI conference that Duke would prevail.  The NFL combine is conducted at Lucas Oil Stadium.  If you ever get the chance to do a grounds tour of the Indianapolis Speedway, take it.  You can do a lap around the brickyard, following the treadmarks of Johnny Rutherford, Mario Andretti, and AJ Foyt.  Our tour guide was positively bursting with pride over the Speedway’s heritage.  He pointed out that the first left turn on the French LeMans race course is named Indianapolis.  The first left turn (they are all left turns) on the Indy Speedway is named … turn one.

One of our law school buddies was from New York.  He tried and tried to get a job with one of the big Wall Street firms for the summer after his first year, but could not get a foot (white-shoed or not) in the door.  He ended up working in Indianapolis that summer, and promptly fell in love with it.   Your correspondent had the same reaction the first week in law school upon encountering a certain someone eight rows down in Property class.  She was from Indiana.  All of which is to say that we love pretty much everything about Indiana. When the Indiana Governor showed up on the Sunday morning talk shows a couple of weeks ago trying to defend a controversial statute, he kept saying that people from Indiana are relentlessly friendly.  You can debate whether that friendliness had anything to do with the merits or demerits of that statute, but that friendliness is a fact.  The next Hoosier we meet who is unfriendly, unkind, or unfunny will be the first.   Moreover, putting our lawyer hat on (finally!), we have always found Indiana laws, judges, jurors, lawyers, and, last but certainly not least, clients, to be smart and sensible.

Why would any defendant not want to be in Indiana?

Well, litigation takes on a life of its own. All sorts of variables are in play as to where one would want a litigation to take place.  Sometimes we argue about whether a court can exercise personal jurisdiction over our client.  With the recent Bauman decision, that argument has renewed vigor.  Sometimes we argue forum non conveniens – a term that means exactly what it sounds like, that a particular court is not sufficiently convenient for the parties.  We’ve been on different sides of the forum non conveniens issue, sometimes arguing that the trial should be where our client is located, and sometimes arguing that the trial should be where the alleged injury took place.  The latter is probably slightly more common, but we cheerfully admit to our flexibility.  For that reason, we are usually careful in making pronouncements on forum non conveniens decisions, because we never know which side of the issue we will be on in any particular case.  In the recent case of Depuy Orthopaedics v. Brown, 2015 Ind. LEXIS 319 (Indiana Supreme Court April 24, 2015), the defendants argued that their home jurisdiction of Indiana was less convenient than courts where the plaintiffs lived, in Virginia and Mississippi.  The trial court disagreed with the defendants, but the Court of Appeals reversed and ordered the cases to be sent south.  The Indiana Supreme Court then got the last word, and its word favored the plaintiffs and affirmed the trial court’s original decision keeping the case in Indiana.

Continue Reading Hoosier Daddy? Indiana Supreme Court Defers to Trial Court Forum Non Conveniens Decision

On Friday, we posted about a Florida court that allowed negligence claims against a pharmacy that did nothing more than fill prescriptions as they were written (Oleckna).  As you can imagine, we had some reservations about the ruling.  Well, those reservations were driven home when we happened upon another recent pharmacy liability case, this one in Indiana – Kadambi v. Express Scripts, 2015 U.S. Dist. LEXIS 13607 (N.D. Ind. Feb. 5, 2015).

If we call Oleckna a “damned if you don’t” case, then Kadambi is the example of “damned if you do.”  Which leaves the question – what is a pharmacy to do?

Plaintiffs in Kadambi are an endocrinologist, Dr. Kadambi, and 8 of his patients for whom he prescribed human growth hormone (HIGH).  While plaintiffs allege that the prescriptions were medically necessary, the defendant pharmacies refused to fill HIGH prescriptions from Dr. Kadambi because they believe the prescriptions might violate federal law making it a “crime to knowingly distribute HIGH” for improper purposes.  Id. at *3.  Defendants alleged that they had a good faith belief that Dr. Kadambi was prescribing HIGH for non-medically acceptable reasons and/or that he was affiliated with organizations that advocate
off-label use of HIGH.  Id. at *4.

Plaintiffs advanced essentially two causes of action against the pharmacies – violation of Indiana’s statute governing pharmacies and defamation.   While the court dismissed the statutory claim, it allowed the defamation action.  We’ll go through the court’s ruling, but our real interest lies in the fact that both Kadambi and Oleckna are moving forward.

Continue Reading The Flip Side of Pharmacy Liability

As one of our other bloggers have recently revealed, Bexis recently went on vacation for two weeks.  He was diligent, however, and pre-wrote two posts (not time sensitive) that appeared in his absence.  As for the co-blogger’s quip about Bexis’ “active, muscular vacations” well, in this instance that’s probably right.  For most of Bexis’ two-week absence, he was rafting through the Grand Canyon.

With Bexis otherwise occupied, the blog’s other denizens did an admirable job of keeping up with current developments in case law, but nonetheless items piled up in Bexis’ inbox awaiting his return.  Most of them weren’t even judicial opinions.  It’s time to empty that inbox.

Perhaps the most important development was the approval, on May 29, by the full Federal Judicial Conference’s Standing Committee on Rules of Practice and Procedure, of the discovery-related rules changes that we’ve been covering on the blog.  Bexis has been heavily involved in this effort through the Lawyers for Civil Justice (“LCJ”), and LCJ sent him notice of the approval. We’d pass it along, except it includes internal LCJ business as well.  So we’ll just hit the highlights.

First, there were no changes to the language of the proposed amendments themselves, which we have previously discussed.  The only changes from the version published in the subcommittee’s agenda book were:  (1) a new sentence in Note for Rule 26(b)(1) encouraging computer search technology (that is to say, predictive coding), and (2) modifying the Note for Rule 37(e) concerning the role of prejudice in subsection (e)(2).  Thus, the main benefits of the amendments from our perspective remain:

  • enshrinement of proportionality in Rule 26(b)(1);
  • curtailment of the capacious “reasonably calculated” standard for the scope of discovery in the same subsection;
  • Explicit rejection of the negligence-based standard for ediscovery sanctions in Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), and thus by necessary implication of other precedent in that circuit following that standard (this means you, Zubulake); and
  • Requiring a finding of specific “intent to deprive another party of the information’s use in the litigation,” under Rule 37(e)(2) before any federal jury can be instructed on evidentiary presumptions from loss of electronic information.

Continue Reading Bexis’ Inbox 2014

We start June with a fabulous two-fer:  yes, that is two cases discussed in the same post. But wait, there’s more.  The two cases each discuss civil RICO claims against drug companies and state law claims.  For an unknown, but surely exorbitant, cost to the defendants, the courts, and maybe even the third party payors who brought these suits, the RICO claims are exposed as unsupported nonsense and most—maybe all, eventually—of the state law claims go the same way.  By acting now, the judge in the second case maybe signaled the end to an eight year old case.

Like some of the state AG cases proceeding against drug companies in state court under false claims act type statutes or consumer protections statues, which have been the subject of a number of posts (like this), we suspect that these cases started with a fast-talking sales pitch from plaintiff lawyers to the TPP plaintiffs. We find it hard to believe that the plaintiff in Indiana/Kentucky/Ohio Regional Council of Carpenters Welfare Fund v. Cephalon, Inc., No. 13-7167, 2014 U.S. Dist. LEXIS 69526 (E.D. Pa. May 21, 2014), decided to sue over its payments for one particular painkiller with fairly narrow use—even with the allegations of off-label promotion—and sought lawyers from other states to do so. Louisiana joined the fray late in Sergeants Benevolent Association Health & Welfare Fund v. Sanofi-Aventis US LLP, No. 08-CV-179 (SLT) (RER), 2014 U.S. Dist. LEXIS 65714 (E.D.N.Y. May 12, 2014), and certainly has experience trying to line its coffers through deals with plaintiff firms, but the original three plaintiff Funds seem unlikely to have decided to have sought out lawyers to sue over payments for a single antibiotic.  Like many schemes promising big money with no risk to you, it looks the plaintiffs will end up making nothing in these two cases.  We can only hope that the costs of litigating will be borne by the plaintiff firms that made the sales pitches rather than the Funds that probably actually need money to pay for health care for their members.

Ind./Ky./Ohio is a no nonsense decision on a motion to dismiss from a no nonsense judge.  As far as we can tell, the plaintiff will not get a chance to re-plead its dismissed claims, meaning the case would have only lasted a few months (at the district court level) and never got to discovery.  This would be an efficient result compared to many cases where allegations of off-label promotion seem to be enough to keep them going.  The basic story in IKO—we can take liberties with abbreviations—is that defendant’s prescription painkiller was approved only for “breakthrough pain” in cancer patients who already take maximum opioids, but the defendant allegedly promoted it for other types of breakthrough pain, which the Fund claims caused it to pay extra for painkiller prescriptions for its members.  Plaintiff alleged that FDA rejected an attempt to add indications for the drug, but the defendant nonetheless promoted off-label—as it had allegedly done (and been busted for) with another painkiller years before—so effectively that 93% of prescriptions filled in the drug’s first three years on the market were off-label.  2014 U.S. Dist. LEXIS 69526, **8-9.  This, it said, entitled it to relief under two sections of the RICO statute and Indiana common law unjust enrichment.

There were three basic hurdles for plaintiff’s RICO theories.  First, the court understood the FDA regulatory scheme as to off-label use. Other than a questionable statement that physicians “frequently rely on information supplied by drug manufacturers before” they “exercise [] their independent professional judgment” in prescribing off-label, the court makes many statements about how off-label prescriptions are common and legal and manufacturers can provide information about off-label use under certain situations.  Id. at **5-6.  Second, RICO claims must be predicated on “some sort of fraudulent misrepresentations or omissions reasonable calculated to deceive persons of ordinary prudence and comprehension.”  Id. at *14.  Third, RICO claims have to be pled with particularity under Fed. R. Civ. P. 9(b), which means that the complaint needs “the ‘who, what, when, where, and how’ of the events at issue,” must “inject[] precision and some measure of substantiation into their allegations of fraud,” and “must allege who made a misrepresentation to whom and the general content of the misrepresentation.”  Id. at **12-13 (citations omitted).

The court’s analysis started off with the statement that “off-label marketing is not per se fraudulent.”  Id. at * 15.  Even off-label promotion in violation of the FDCA and FDA regulation is not automatically fraudulent.  Id. at * 17.  Thus, the court had to look for specific allegations about specific communications that “could reasonably be interpreted to be a fraudulent misrepresentation or omission calculated to deceive the audience.”  Id. at *16.  Not surprisingly to anyone who has read many complaints, the “voluminous” complaint here only identified three specific communications amidst “sweeping” allegations about defendant’s conduct.  Id. at **15-16.  The closest the complaint came to identifying a fraudulent misrepresentation was a statement in a journal supplement that the drug “has been shown to be effective” for breakthrough pain beyond the approved indication, “but this statement neither contradicts nor conceals the limits of the FDA’s approval of the drug.”  Id. at **16-17.  In light of the drug’s Black Box warning on death in improper patients, contraindication for acute and post-operative pain, and warnings on misuse, abuse, and diversion, the court saw nothing about these three communications that suggested fraud.  General allegations about the defendant’s marketing “message” or “theme” being fraudulent did not suffice.  Id. at *19.  So, the two RICO claims were dismissed—you need a substantive claim to get a conspiracy claim—and the court did not even reach the issues of whether plaintiff had pleaded injury and causation with sufficient specificity.

The unjust enrichment claim also fell quickly. Without detailed fraud allegations, the lack of Indiana law supporting “the proposition that payments for a drug that has been promoted off-label, without more, present the sort of ‘circumstances . . . such that under the law of natural and immutable justice there should be a recovery.’”  Id. at * 28 (citation omitted).  The court did not even have to reach whether such a claim would be preempted if based on purported violation of federal law. RICO, as a federal statute, may not be subject to preemption—just primary jurisdiction—but state court claims like unjust enrichment can be.

The much longer decision in Sergeants focused on the causation and injury issues that IKO had not addressed.  Not only was this decision on summary judgment, but the case had a much more complicated and longer history with multiple complaints, state consumer fraud claims, four plaintiffs, and a prior denial of class certification. The court also utilized the magistrate judge for a report and recommendation, which added another two layers to any discussion.  While some readers may want to delve into the thorough discussion of the nuances of RICO law, we will focus on the parts of the decision about which we care.  The basic facts underlying the various claims was that defendant’s antibiotic was approved to treat acute bacterial sinusitis, acute exacerbation of chronic bronchitis, and community-acquired pneumonia, after FDA required a further clinical study in rejecting the initial New Drug Application.  Plaintiff claimed there was a conspiracy in relation to this further study, which was itself saddled with misconduct by multiple investigators, and defendant misrepresented the results of the study to FDA.  Thereafter, defendants allegedly marketed the drug off-label, there was a FDA public health advisory and labeling change about a risk of liver failure, FDA withdrew the sinusitis and bronchitis indications, and the defendant stopped promoting the drug in the U.S.  Within this relatively short period of time, the plaintiff Funds and Louisiana each claim they paid extra for their members’ antibiotics, although they have different methods of determining what drugs they cover and how they pay for them. The plaintiffs, of course, do not decide whether a member should be prescribed a drug or which drug should be prescribed.  2014 U.S. Dist. LEXIS 65714, *11.

The defendant made two related arguments for why plaintiffs’ RICO claims lacked of proof of causation:  (1) there was no proof that the alleged fraud made plaintiffs pay for more prescriptions of the drug and (2) there was no proof that the alleged fraud caused a greater payment for the member’s care given the availability of other drugs.  Id. at **25-26.  After a lengthy discussion of what is required to show causation for RICO claims and the meaning of the decision in UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010), the court turned to plaintiff’s theory of causation:  “Plaintiffs have to establish that Defendants’ fraud resulted in FDA approval for additional indications, that Plaintiffs placed Ketek on their formularies as approved drugs, that Defendants represented to physicians and consumers that Ketek had valid regulatory approval for broad antibiotic uses, that these representations resulted in ‘excess’ prescriptions for Ketek, and that Plaintiff paid for these excess prescriptions.”  Id. at 59-60.  Even though this causal theory was “interrupted by the independent actions of prescribing physicians,” the plaintiffs sought to rely on “generalized proof to determine the injury to Plaintiffs caused by Defendants’ misconduct.” Id. at **60-62.  In other words, the plaintiffs had not even tried to muster proof on a prescription-by-prescription basis.  This is predictable because the lawyers’ get-rich-quick scheme pitched to the named plaintiffs would not work if they had to prove up their case without some major shortcuts.  Noting the role of physicians, that safety considerations “are not necessarily determinative of doctor’s decision regarding what to prescribe,” and prescriptions of the drug kept being written after new liver failure information was broadcast, the court ruled that “individualized proof would be necessary to establish RICO causation in this case.”  Id. at **61-65.  We would have liked this even more without the “in this case,” but we can add this case to the list of those that have rejected generalized proof of liability and causation in cases about drugs, devices, and healthcare decisions/billing.  And it did not even discuss the First Circuit’s Neurontin decision.  Being ignored can be even more telling than being rejected explicitly.

The court then turned to plaintiff’s state law claims and things got a bit hairy.  The plaintiffs asserted consumer fraud (our shorthand) claims under 43 different state statutes and unjust enrichment under unspecified state law.  Defendants only argued there should be summary judgment under the law of the states where the three plaintiff Funds were based—apparently, Louisiana did not assert all the claims—because they contended that the location of the physicians who wrote the prescriptions (and were subject to the alleged misrepresentations and omissions) was irrelevant since the decisions on drug coverage and benefits were only made in those three states. The court disagreed and invited another round of argument after the plaintiffs amend their state law counts “to clarify the state laws under which they actually seek to recover.”  Id. at **74-76.  The ensuing discussion of New York, Massachusetts, and Illinois law on consumer fraud and unjust enrichment involves some nuances we will not highlight, but results we will—summary judgment was granted on each issue decided. Even with a fairly low bar under New York consumer fraud law, plaintiffs could not support the “highly dubious proposition” that they “would not have had to pay for any antibiotics at all had no misrepresentations been made,” which eliminated causation.  Id. at *82.  There was no injury under the Massachusetts consumer fraud law because there was no proof that the plaintiffs ever paid for a drug that caused injuries or that was ineffective.  Id. at **87-88.  There was no proof of damage or causation under Illinois consumer fraud law because generalized proof says nothing about individual physician reliable or decision making.  Id. at **91-92.

When the last part of this gets cleaned up, the same principles that doomed the RICO and state law claims should make it very difficult to prove cognizable injury or causation except under the most lenient (or punitive, depending on your view) of state consumer fraud laws.  (The unjust enrichment should pretty much be a dead end everywhere.)  If any claims sneak by, they should be facing our old friend preemption.  As the court noted, the claims here were predicated on the defendant defrauding on the FDA in connection with the approval of its prescription drug.  Plaintiffs may keep chasing good money after bad on these claims, but they might as well be trying to buy a bridge in Buckmanland.

This post is from the non-Reed Smith side of the blog.

As we pointed out earlier this week, we are typically more interested in defense victories on this blog.  But every once and a while, we find cases that go the other way that we believe merit a mention. Sometimes that is because the decision is too significant to ignore.

Sometimes it is because of the court that renders the decision. Sometimes – like yesterday and today – it is because we want to remind our readers of issues that while not common, are nonetheless real.  Unfortunate issues that crop up from time to time. Yesterday, that was about a loss on fraudulent joinder involving claims against a sales representative.  As we mentioned then, more often than not – defendants win that issue.

Today’s case continues the sales representative theme.  A couple of years ago, we posted a cumulative piece on cases dealing with sales representatives who are present in the operating room.  It isn’t something that we come across very often and from our review, the decisions are split (largely based on the particular facts) as to whether the actions of a sales representative create a cause of action against the device manufacturer.  The issue, boiled down to basics, is whether the sales rep got too involved in the actual treatment of the patient or use of equipment during surgery. It was on that basis that the plaintiff in Medtronic, Inc. v. Malander, 2013 Ind. App. LEXIS 499 (Ind. Ct. App. Oct. 11, 2013) brought a negligence claim against the manufacturer of her husband’s defibrillator.  The defibrillator, a Class III PMA medical device, was implanted in 1997 and upgraded in 2004.  In 2006, plaintiff’s husband began experiencing a problem with the device known as V-V intervals.  Id. at *3.

During another upgrade surgery, one of defendant’s “clinical specialists” was present to assist with testing the device.  The test revealed no problems.  During the procedure, plaintiff’s surgeon also called defendant’s “technical services department” requesting information on V-V intervals and lead failures.  Id. at *4.  Defendant’s technicians responded: “Don’t worry about that; it doesn’t mean anything . . . I don’t think that’s a problem . . .”  Id. The surgeon did not replace the device. Plaintiff’s husband died a month later, following more episodes of V-V intervals. Plaintiff’s claims against the defendant included design defect, failure to warn, failure to recall, and failure to recommend removal during the 2006 surgery.  Id. at *5.

Continue Reading Another Sales Representative Cautionary Tale

The Indiana Court of Appeals recently issued an opinion applying the section of Indiana’s Product Liability Act (IPLA) that, under certain circumstances, creates a rebuttable presumption against a finding of defect or negligence in product liability actions.  See Gresser v. Dow Chem. Co., 2013 Ind. App. LEXIS 204 (Ind. Ct. App. Apr. 30, 2013).  The case involved a termiticide (termite treatment) and the EPA, but the opinion applies equally to cases involving drugs, medical devices and the FDA. 
We’ve talked about statutory presumptions recently.  Last week, we posted on New Jersey’s statutory “super-presumption” (meaning virtually dispositive), which creates a rebuttable presumption that a warning about a drug or medical device is adequate if the warning was approved by the FDA.  As far as we know, Indiana’s presumption isn’t a “super-presumption.”  But in a number of ways it sweeps more broadly than New Jersey’s presumption.  For instance, it not only applies to drugs and medical devices, but to any product involved in a product liability action.  And if that product is regulated by the federal or Indiana government, compliance with those government regulations creates a presumption that the product is not defective and the manufacturer was not negligent – in other words, it addresses more than just failure-to-warn claims.  Here’s the statutory language:
Rebuttable presumption
Sec.1. In a product liability action, there is a rebuttable presumption that the product that caused the physical harm was not defective and that the manufacturer or seller of the product was not negligent if, before the sale by the manufacturer, the product:
. . .  
(2) complied with applicable codes, standards, regulations, or specifications established, adopted, promulgated, or approved by the United States or by Indiana, or by an agency of the United States or Indiana.
Ind. Code § 34-20-5-1.
Gresser involved the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), which required Dow to register its termiticide with the EPA.  Such registration meant that the “EPA must make an official agency determination that the product does not pose any ‘unreasonable risk to man or the environment, taking into account the economic, social, and environmental costs and benefits of [its] use.’”  2013 Ind. App. LEXIS 204, at *10 (quoting FIFRA).
 And guess what?  Dow had registered the termiticide with the EPA.  Id. at *11.  It also submitted data in support of its registration that fully complied with Indiana law. Id.  And it distributed the termiticide with the current EPA-approved labeling.  Id.  Accordingly, the court concluded that Dow was “entitled to the statutory presumption.”  Id.  That presumption was against any defect claim, including both failure-to-warn and design defect.  And the court’s discussion of the policy reasons underlying the presumption would apply just as well to the FDA:
[C]ompliance with FIFRA and Indiana law has a significant impact under IPLA’s consumer expectation-based product liability regime because the risk of harm has been evaluated by agencies charged with the duty of monitoring the effects of [the product]. Furthermore, [the product’s] labeling and warnings have been approved by agency experts.
Id. at *10-11.  The court, accordingly, held that Dow was entitled to judgment on plaintiffs’ failure to warn and design defect claims.  Id. at *13. 
Plaintiffs’ arguments to rebut the presumption didn’t work.  In some ways, what the plaintiffs argued hurt them.  For instance, they were also suing the contractor who applied the termiticide and alleged that “their injuries would not have occurred absent the contractor’s negligence.”  Id. at *12.  Well, that position seemed to undercut their claim that a defect in the product caused their injuries, something that wasn’t lost on the court.  Id.  Similarly, plaintiffs’ argued that Dow entered into settlements with the EPA and, as part of that, strengthened the product’s warnings.  True, it seems, but that all happened before the termiticide was used on their property.  The court also found that this argument, once again, undermined plaintiffs’ claims.  Id.
So there seem to be a lot of possibilities with this “government compliance” presumption in Indiana.  It may be quite useful, particularly at the summary judgment stage, in drug and device cases in which plaintiffs have little to no evidence that the defendant hadn’t complied with FDA regulations, and in which the defendant was using FDA-approved labeling.

This guest post comes courtesy of Scott Kaiser at Shook Hardy.  He deserves all the credit and all the blame, as the case may be – but it looks like credit to us.


Indiana now has its first appellate decision concerning MDA preemption. McGookin v. Guidant Corp., ___ N.E.2d ___, No. 71A04-1001-CT-101, Slip op. (Ind. Ct. App. Jan. 21, 2011).

The decision is a straightforward affirmation of two familiar themes: that Riegel (not Wyeth or other non-medical device cases) provides the preemption rules governing Class III medical devices; and that “may” does not mean “must” when determining what constitutes a federal requirement under the MDA’s express-preemption clause.

McGookin involved the unfortunate and unexplained death of a 14-month old infant born with complete heart block.  According to the medical records and product testing introduced at trial, the “device provided therapy at all times.” Slip op. at 3. The crux of Plaintiffs’ case was not a design or manufacturing defect. Rather, Plaintiffs’ theory of defect was that the pacemaker’s labeling did not adequately warn that the pacemaker had not been tested on infants or in the particular implantation configuration in this case – i.e. abdominal implant with a unipolar epicardial lead.

The case was tried in August 2009. The jury returned a defense verdict.

Plaintiffs appealed, complaining that the trial court’s preemption ruling erroneously prevented Plaintiffs from arguing that Guidant could have and should have offered a different label than the one approved by the FDA:

Although Guidant’s label complied with the FDA requirements of its premarket approval, other FDA regulations gave Guidant the ability to add to or strengthen those regulations without prior FDA approval.  The Indiana Product Liability Act incorporates a “reasonableness” component in determining whether warnings are inadequate.  Therefore, it becomes a jury question as to whether Guidant acted reasonably in failing to add to or strengthen its warnings pursuant to 21 C.F.R. § 814.39(d).  The label, for example, could have informed consumers and physicians that the pacemaker had not been tested in infants or with epicardial leads, or with an abdominal implant.  The label could have stated that use with epicardial leads in infants was contraindicated.  The trial court therefore erred in granting Guidant’s motion for summary judgment and ruling that any attempt to impose liability on Guidant under substantive legal theories . . . predicated on challenges to conduct of Guidant allowed by and not in violation of any applicable federal requirements are preempted.

The Court of Appeals of Indiana rejected Plaintiff’s argument and affirmed the judgment.  Noting that Plaintiffs “do not allege that Guidant violated federal requirement,” the Court of Appeals of Indiana described what Plaintiffs were really alleging:  “they contend that Guidant should be liable for its failure to add warnings that are permitted, but not required, by federal law.  We cannot imagine a plainer example of an attempt to impose a standard of care in addition to the FDA’s specific federal requirements.”  Slip. op. at 13.

We see so many cases alleging “illegal” promotion of off-label use that when we find one where the plaintiffs don’t make that sort of allegation, it makes us sit up and take notice. That’s the case with Meharg v. I-Flow Corp., No. 1:08-cv-184-WTL-TAB, slip op. (S.D. Ind. March 1, 2010). It’s a pain pump case – the allegations being that these pumps, which are used after shoulder surgery, continuously “infused” various types of anesthetics intended to (evidently successfully) reduce post surgical pain, but that the continuous exposure (or anything else a creative expert might come up with to blame on defendants) caused long-term deterioration (“chondrolysis”) of shoulder cartilage.

The pumps (which are FDA approved) are machines, and of course machines don’t care what you put in them – they’ll infuse it. Thus, the most interesting aspect of pain pump cases we’d seen prior to Meharg had to do with product identification. That is, plaintiffs have been trying to sue various drug companies without even being able to allege the the defendant’s drug was actually used. That’s a no-no, and it’s produced some favorable decisions reaffirming the rule that a plaintiff can only sue the manufacturer of a product s/he actually used. Timmons v. Linvatec Corp., ___ F.R.D. ___, 2010 WL 476661, at *3-4 (C.D. Cal. Feb. 9, 2010); Haskins v. Zimmer Holdings Inc., 2010 WL 342552, at *2 (D. Vt. Jan. 29, 2010); Gilmore v. DJO Inc., 663 F. Supp.2d 856, 860-61 (D. Ariz. 2009); Combs v. Stryker Corp., 2009 WL 4929110, at *2-3 (E.D. Cal. Dec. 14, 2009); Dittman v. DJO, LLC, 2009 WL 3246128, at *3 (D. Colo. Oct. 5, 2009); Sherman v. Stryker Corp., 2009 WL 2241664 at *5 (C.D. Cal. March 30, 2009). These pain pump cases are yet another reason why we like Twombly/Iqbal.

We expect that the pain pump litigation will continue producing decisions on weird points, because the plaintiffs will be suing the wrong defendants, the manufacturers of the drugs used in the pumps, over injuries that were caused, not so much by the drugs, but by how the drugs were continuously infused by the pumps – if there’s any causation at all, that is. In fact, we can almost guarantee it.

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