Mary P. Gallagher
New Jersey Law Journal

A Bergen County judge last Tuesday sweetened the stakes for a diet-drug maker sued over alleged heart-valve damage, ruling that Wyeth Corp. could challenge the eligibility of plaintiffs to opt out of a federal $3.75 billion class action settlement and to bring their own suits.

Wyeth will not be bound by a determination of doctors who read the echocardiograms and found the requisite heart damage but "may challenge the medical reasonableness of that position," Superior Court Judge Charles Walsh ruled in In re Diet Drug Litigation, L-7718-03.

Under the federal settlement, the suits required timely written notice and a qualified doctor's reading of an echocardiogram as "FDA Positive." Phen-fen came off the market in September 1997 after a public health advisory from the Food and Drug Administration about a possible link to heart disease.

Walsh rejected the plaintiffs' argument that an eligibility evaluation should be limited to whether notice was timely and whether the doctor was qualified. That "mechanical gatekeeping," he said, "would effectively prevent Wyeth from successfully challenging even outright fraudulent claims until well into the discovery process."

Walsh also granted Wyeth's request for appointment of independent experts to assist the court.

Wyeth didn't get everything it wanted, though. The company wanted the plaintiffs to have to prove opt-out eligibility but instead Wyeth will bear the burden of establishing, by a preponderance of the evidence, that "the performance or the evaluation of the echocardiogram supporting the opt-out was medically unreasonable."

National Impact Possible

Walsh's holding could influence how judges across the country handle the tens of thousands of suits by plaintiffs who opted out of the settlement to file state court claims alleging heart-valve damage. In a 10-K filing on March 12, Wyeth reported that 28,000 suits had been filed nationwide as of Feb. 28. The cases continue to mount as the national May 3 opt-out deadline approaches.

There were 3,455 opt-out cases pending in New Jersey as of April 8. They have been centralized in Bergen County for case management and discovery.

Walsh's ruling comes amid allegations by Wyeth that many claims are bogus. The allegations led the federal class-action judge, Harvey Bartle III in Philadelphia, to order an independent review of every FDA-positive finding. As a result, hundreds of claims have been tossed.

Walsh based his decision on similar concerns, discussing how the settlement set medical criteria for opting out in order to winnow out meritless claims.

He also wrote he was following the view of Bartle, who, though he has declined to interpret the settlement agreement's challenge provisions, "has made it clear" that opt-out challenges "are designed to be more searching than suggested by the plaintiffs."

As Walsh noted, even class counsel acknowledged the need to screen out fake claims. Leaving medical reasonableness to be decided by a jury "would gut the animating purpose of the [settlement], render its implementing terms wholly ineffective and lead to an unreasonable result," he wrote.

As for the winnowing process, challenges to timeliness of opt-outs or qualifications of medical personnel were "straightforward" matters, Walsh said

Wyeth's request to review FDA positive status up front was more problematic because Walsh was reluctant to remove from the jury an issue going to the merits of the plaintiffs' claims.

Walsh found a middle ground, holding that Wyeth could send plaintiffs back to the class if it could show "that the performance or interpretation of the echocardiogram supporting an opt-out is so infirm that it fails the reliability prong" of Kemp ex rel. Wright v. State, 174 N.J. 412 (2002), and General Elec. Corp. v. Joiner, 522 U.S. 136 (1997).

The eligibility hearings will be conducted pursuant to N.J. R. Evid. 104(a). Each side will be allowed to submit direct testimony of two experts in the form of an affidavit or certification, and to cross-examine the other's experts.

Because of the technical issues involved, a neutral court-appointed expert, as sought by Wyeth, would be useful, wrote Walsh.

The experts, whose cost will be split by the parties, will be asked for a report five days before each eligibility hearing, based on the parties' expert reports and echocardiograms.

Last Tuesday, Walsh wrote to five experts jointly recommended by the parties to ask whether they would serve, and he met with the parties on Friday to work out procedures.

Over $1 Billion in Claims Paid

Wyeth marketed the drugs phentermine, fenfluramine and dexfenfluramine under the brand names Pondimin and Redux. (The Madison-based company was then known as American Home Products.)

An estimated six million people took the drugs before they were taken off the market in 1997.

Thousands of lawsuits were consolidated in the U.S. District Court for the Eastern District of Pennsylvania as In re Diet Drugs Products Liability Litigation, MDL 1203. Wyeth agreed to pay $3.75 billion to fund the settlement finally approved on Jan. 3, 2002.

As of the end of 2003, the Diet Drug Settlement Trust had paid out $1.105 billion on 2,786 claims, averaging nearly $400,000. It denied 11,473 claims.

The New Jersey opt-out cases have been divided into 12 groups averaging about 300 cases each. Though Walsh's decision on evaluating eligibility was in response to Wyeth's motion to bar 53 plaintiffs in Group 1 who allegedly failed to meet the opt-out criteria, it applies to all 12 groups. The roughly 182 cases in Group 1 are not expected to go to trial before spring 2005.

Esther Berezofsky, a partner with Cherry Hill's Williams Cuker & Berezofsky, who is a liaison for plaintiffs' counsel, declines comment on Walsh's ruling. Another liaison, Barry Sugarman, a partner with Woodbridge's Wilentz Goldman & Spitzer, did not return a call seeking comment.

Marc Bern, of New York's Napoli, Kaiser & Bern, who represents hundreds of plaintiffs, says he is not aware of a similar ruling elsewhere and that the result will be to hold up the cases.

Also delaying matters is a decision by Bartle last November arising out of a Louisiana opt-out suit. That ruling enjoins class members from introducing evidence that might inflame the jury and effect an end-run around the settlement's ban on punitive damages. Bern says the evidence barred, including the drug company's failure to disclose information to the Food and Drug Administration during the approval process, "emasculated" plaintiffs' cases because the evidence also bears on liability. The decision, In re Diet Drugs, 2003 U.S. Dist. LEXIS 21076, was appealed but the Third U.S. Circuit Court of Appeals has not yet ruled.

Wyeth's attorneys did not return calls seeking comment. Company spokesman Doug Petkus says Walsh's ruling will help eliminate illegitimate claims.