In re Zyprexa Products Liability Litigation, 04-MD-1596 (JBW).

Decision Date11 September 2006
Docket NumberNo. 04-MD-1596 (JBW).,04-MD-1596 (JBW).
Citation451 F.Supp.2d 458
PartiesIn re ZYPREXA PRODUCTS LIABILITY LITIGATION. This Document Relates To: All Actions.
CourtU.S. District Court — Eastern District of New York

Seeger Weiss, LLP by Christopher A. Seeger, Donald A. Ecklund, Milberg Weiss by Melvyn I. Weiss, Douglas & London by Michael A. London, Lather Law Firm, PLLC by Richard D. Meadow, Weitz & Luxenberg by David L. Rosenband, Perry Weitz, Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP by Jayne Conroy, New York City, The Garretson Law Firm by Matt L. Garretson, Cincinnati, OH, Hersh & Hersh by Nancy Hersh, Alexander Hawes, & Audet, LLP, by William M. Audet, San Francisco, CA, Richardson, Patrick Westbrook & Brickman, LLC by H. Blair Hahn, Thomas D. Rogers, Mt. Pleasant, SC, Abraham, Watkins, Nichols, Sorrels, Matthews & Friend by David P. Matthews, Fibich, Hampton & Leebron, LLP by Tommy Fibich, Reich & Binstock by Deborah Lepow Ziegler, Bailey Perrin Bailey LLP by Michael W. Perrin, Houston, TX, Heninger Garrison Davis LLC by Lew Garrison, Whatley Drake & Kallas, LLC by W. Todd Harvey, Hollis & Wright PC by Kathryn S. Harrington, Birmingham, AL, Burg Simpson Eldredge Hersh Jardine, PC by Seth A. Katz, Michael Burg, Englewood, CO, Parker & Waichman by Jason Mark, Jerrold S. Parker, Herbert L. Waichman, Great Neck, NY, Hagens Berman Sobol Shapiro LLP by Thomas M. Sobol, Cambridge, MA, Simmons Cooper LLC by Eric Terry, Tor A. Hoerman, East Alton, IL, Miller & Associates by Michael Miller, Christopher Ide, Alexandria, VA, Levin, Papantonio by Kimberley Lambert, Troy Rafferty, Pensacola, FL, The Beasley Firm by Nancy G. Rhoads, Philadelphia, PA, Ashcraft & Gerel by Michael Heaviside, Washington, DC, Robinson, Calcagnie & Robinson by Mark Robinson, Lopez, Hodes, Restaino, Milman & Skikos by Ramon Rossi Lopez, Newport Beach, CA, for Plaintiffs.

Pepper Hamilton, LLP by Andrew R. Rogoff, George A. Lehner, Nina Gussack, Philadelphia, PA, McCarter & English by Samuel J. Abate, Jr., New York City, for Defendant.

Office of the United States Attorney by Michael Goldberger, Centers for Medicare and Medicaid Services by Barbara Wright, for Federal Government.

State of Alaska by Jeff Stone, Arkansas Department of Health and Human Services by Richard Dahlgren, Little Rock, AR, California Department of Health Services by Diana Ghilarducci, David R. Miller, State of California Department of Justice, Office of the Attorney General by Eliseo Sisneros, Brian V. Frankel, San Diego, CA, State of Connecticut by Robert B. Teitelman, District of Columbia Medicaid Fraud Control Unit by Jane Drummey, Joel Armstrong, Office of the Florida Attorney General by Mark S. Thomas, Tallahassee, FL, State of Indiana Attorney General by Edward A. Miller, Daniel Miller, Indianapolis, IN, Kansas Health Policy Authority by Robert R. Hiller, Jr., Topeka, KS, Office of the Kentucky Attorney General by C. David Johnstone, Frankfort, KY, Louisiana Department of Health and Hospitals by Lavon Raymond-Johnson, Weldon Hill II, Maryland Department of Health and Mental Hygiene, by Lorie Mayorga, Baltimore, MD, Office of the Attorney General of Michigan by Bill Morris, Lansing, MI, Office of the Mississippi Attorney General by Chuck Quarterman, Jackson, MS, New York State Department of Health by Gregor N. MacMillan, Albany, NY, New York State Office of the Attorney General by Marie Spencer, New York City, State of North Carolina by Susannah P. Holloway, Raleigh, NC, Ohio Attorney General by Drew Duffy, Columbus, OH, Ohio Department of Jobs and Family Services by Juliane Barone, Katherine Benedict, Oregon Department of Justice by Marilyn K. Odell, Public Consulting Group by Katherine Benedict, South Carolina Department of Health and Human Services by George Burnett, Tennessee Attorney General's Office by Michael K. Bassham, Peter Coughlan, Nashville, TN, Commonwealth of Virginia Office of the Attorney General by Erica Joanna Bailey, Tracey Stith, Angela Benjamin-Daniels, Richmond, VA, Wisconsin Department of Justice by Richard A. Victor, Madison, WI, for the States.

Kenneth R. Feinberg, The Feinberg Group, Washington, DC, for the Special Masters.

MEMORANDUM ORDER & JUDMENT REGARDING LIENS AND DISBURSEMENT PROCEDURES

WEINSTEIN, Senior District Judge.

                TABLE OF CONTENTS
                      I. INTRODUCTION ............................................................ 461
                     II. FACTS AND. PROCEDURAL BACKGROUND ........................................ 462
                         A. Procedural Background ................................................ 462
                         B. Allegedly Related Medical Costs Paid by Medicare and Medicaid ........ 462
                         C. Medicare and Medicaid Liens .......................................... 462
                    III. MEDICARE AND MEDICAID LIENS ON TORT SETTLEMENTS ......................... 464
                         A. Medicare Liens ....................................................... 464
                         B. Medicaid Liens ....................................................... 467
                         C. Arkansas Department of Health and Human Services v. Ahlborn .......... 469
                     IV. GLOBAL RESOLUTION OF THE MEDICARE LIENS ................................. 470
                      V. GLOBAL AND "TRADITIONAL" RESOLUTION OF THE MEDICAID
                          LIENS .................................................................. 472
                         A. Global Resolution .................................................... 472
                         B. Traditional Resolution ............................................... 472
                         C. Resolution of the Remaining States' Liens ............................ 473
                
                     VI. START OF PAYMENTS ........................................................ 474
                    VII. DISBURSEMENT PROCEDURES ................................................... 474
                   VIII. CONTESTED ISSUES RELEVANT TO THE MEDICAID LIENS ........................... 476
                         A. Payment of Attorneys' Fees ............................................. 476
                            1. States Agreeing to Pay a Share ...................................... 476
                            2. States Not Agreeing to Pay a Share .................................. 476
                            3. All States Must Pay a Share ......................................... 477
                         B. Non-Inclusion of the Cost of Zyprexa in the Lien Amounts ............... 479
                     IX. CONCLUSION ................................................................ 480
                         A. Medicare Liens ......................................................... 480
                         B. Medicaid Liens ......................................................... 480
                         C. Delay of Entry ......................................................... 481
                APPENDIX: STATUS OF LIEN RESOLUTION ................................................ 481
                
I. INTRODUCTION

Settlement of mass tort litigations for personal injuries have become extraordinarily complex and difficult as a result of the attempts by the United States to collect on Medicare liens and of the states to enforce their Medicaid liens. The settlement techniques utilized in the instant litigation may provide a model for the handling of Medicare and Medicaid liens in future mass actions on a uniform, national basis. Although complete uniformity was not achieved, the parties, the federal government, and many of the states demonstrated that they can work together for the benefit of taxpayers, injured plaintiffs, and industry. The experience in this case suggests the desirability of a more uniform statutory approach to lien resolution in the Medicaid program, either by uniform individual state legislation devised by the Commission on Uniform State Laws or others, or by national legislation.

In this mass tort multidistrict litigation, a unique series of agreements have been reached among the Plaintiffs' Steering Committee ("PSC") and representatives of the federal government and twenty-three states to resolve outstanding Medicare and Medicaid liens on the recoveries of plaintiffs who have entered into a settlement of their claims. Payments to settling plaintiffs who received neither Medicare nor Medicaid, who received only Medicare, and who received Medicaid from these twenty-three states have begun. Payments will continue expeditiously until all are paid.

The Medicaid liens of twenty-seven states, the District of Columbia, and Puert Rico remain partially or completely unresolved, because of disputes over (1) the amount of the liens; (2) the division of attorneys' fees and costs between the settling plaintiffs and the states seeking to recover Medicaid disbursements from those plaintiffs; and (3) whether the cost of the drug Zyprexa should be included in the states' liens. Payments to settling plaintiffs who received Medicaid from these jurisdictions have not yet begun.

This memorandum and order describes the terms of the agreements entered into by the PSC, the federal government, and the states. It rules on two disputed issues, holding: (1) all states, regardless of specific state policies on the matter, shall pay a portion of the settling plaintiffs' attorneys' fees and costs; and (2) the cost of Zyprexa shall not be included in the states' Medicaid liens. The method of disbursement of funds is specified.

II. FACTS AND PROCEDURAL BACKGROUND
A. Procedural Background

In April 2004, pre-trial proceedings were consolidated in actions against defendant Eli Lilly & Company ("Lilly") for injuries alleged to have been caused by the prescription drug Zyprexa. See letter of April 14, 2004 from the Multidistrict Litigation. Panel to the Clerk of the Eastern District of New York. After discovery and negotiations overseen by a court-appointed special discovery master and four special settlement masters, in November 2005 the defendant, without conceding liability, entered into a settlement covering some 8,000 individual plaintiffs. See In re Zyprexa Prods. Liab. Litig., No. 04-M1596, 2005 WL 3117302 (E.D.N.Y. Nov. 22, 2005). As a result of the settlement agreement, a significant sum was placed in an escrow...

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