Another Federal Court Rejects Aggregate Proof for Third Party Payor Claims
I have written previously about the proliferation of suits brought by "third party payors" (or "TPPs") -- such as insurers and union health benefit funds -- that appear like ants at a picnic whenever a medicine is recalled, a new warning is mandated, or a pharmaceutical company is accused of marketing a medicine for "off label uses" that have not been approved by the FDA. Often such claims are dismissed at the pleading stage because it is so difficult to connect any alleged misrepresentation made by a pharmaceutical company to a prescribing doctor's decision to prescribe the medicine.
A recent decision in the Neurontin MDL makes it plain that even where such claims are allowed to progress past the pleading stage, it is next to impossible for most TPPs to actually prove causation. See In re Neurontin Marketing and Sales Practices Litig., 2010 WL 53568 (D. Mass. Jan. 8, 2010). In light of the fact that lawyers from my firm are involved in the case, I'll keep the editorializing to a minimum.
In the Neurontin case, defendants moved for summary judgment against 3 TPPs. Two of them had not implemented special restrictions on prescribing Neurontin until at the earliest 2004, and they did not allege reliance on any particular statements by the defendant. The court granted summary judgment as to these TPPs.
First, the court noted that "trial courts have almost uniformly held that in a misrepresentation action involving fraudulent marketing of direct claims to doctors, a plaintiff TPP or class must prove through individualized evidence that the misrepresentation caused specific physicians, TPPs, or consumers to rely on the fraud, and cannot rely on aggregate or statistical proof." Id. at *9 (citing 4 cases). The court observed that "[t]he Second Circuit has reached a similar conclusion, despite evidence of widespread fraudulent marketing of cigarettes to consumers, stating that 'not every wrong can have a legal remedy . . . at least not without causing collateral damage to the fabric of our laws.'" Id. (quoting McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 219 (2d Cir. 2008)).
Tellingly, the court observed that although it had presided over Neurontin-related litigation for more than 10 years, "no evidence has been presented of any doctor who states that she relied on a misrepresentation or omission in prescribing Neurontin for an off-label indication." Id. at *10.
The court held that because the 2 TPPs "cannot prove which doctor's prescriptions were caused by Defendants' alleged fraudulent misrepresentations or omissions and which were not," summary judgment on causation was appropriate. Id. "Plaintiffs must provide a damages model that segregates damages caused by unlawful conduct from damages caused by lawful conduct." The court held that the TPPs' reliance upon an expert opinion employing an aggregate damages model was insufficient as a matter of law.
(A third TPP's claims survived summary judgment, but that TPP was unusual in that it had alleged direct interactions between the defendant and the TPP's decisionmakers regarding its formulary. Id. at *2.)
The decision in Neurontin is another strong link in a long chain of decisions rejecting so-called "aggregate" methods of proof of causation and reliance in third party payor cases.
