Drugmaker’s attorney fee: $181 million

Award goes to Texas firm for winning Risperdal case

— Pulaski County Circuit Judge Tim Fox on Thursday ordered “wrongdoers” Johnson & Johnson to pay nearly $181 million in fees to the attorneys who won a record $1.21 billion fine for Medicaid fraud against the drugmaker on behalf of Arkansas.

In his 18 pages of findings, Fox said the party that harmed Arkansas taxpayers should foot the legal bill as provided by state law.

“It is the court’s opinion that it is reasonable for the entirety of the responsibility for payment … to be shifted under the [Arkansas Medicaid Fraud False Claims Act] to the wrongdoers in this litigation, and that no portion of such attorney’s fees should be borne by the citizens of the State of Arkansas or the Arkansas Medicaid Trust Fund,” the judge wrote. “The taxpayers are not to be out any monies incurred in bringing [deceptive trade or Medicaid fraud] actions against wrongdoers.”

The $180.85 million award represents about 15 percent of the $1.21 billion fine Fox imposed on the company last year after a jury determined that the New Jersey based manufacturer, through its Janssen Pharmaceutica subsidiary, had committed Medicaid fraud and violated the state Deceptive Trade Practices Act in its labeling and marketing of the anti-psychotic drug Risperdal.

The fine - the largest in state history, according to Fox - represents 238,874 instances of Medicaid fraud - one for every Medicaid funded Risperdal prescription written between December 2002 and June 2006 - and 4,569 deceptive-trade practice counts, one for every copy of a November 2003 “Dear Doctor” letter that falsely described Risperdal as having no significant link to diabetes.

Johnson & Johnson attorneys who challenged the demand for fees argued that $2.2 million to $3.8 million would be appropriate based on the amount of time the prevailing lawyers devoted to the litigation.

That argument was without merit, Fox wrote.

The jury verdict is already on appeal before the Arkansas Supreme Court, and the company said Thursday that it would also appeal the decision on legal fees.

“We continue to firmly believe Janssen did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute, and, therefore,no fees should be awarded,” Teressa Mueller with Janssen Pharmaceutica said Thursday.

“The $180 million fee awarded today is not a ‘reasonable’ fee. Risperdal continues to help patients around the world who suffer from the debilitating effects of schizophrenia and bipolar mania.”

The fees will go to the Texas law firm Bailey Perrin Bailey of Houston, hired by Attorney General Dustin McDaniel with approval from Gov. Mike Beebe and the Legislature. In a statement Thursday, McDaniel spokesman Aaron Sadler commended the judge.

“We are grateful that Judge Fox agreed with our position as it relates to costs and fees in this matter,” Sadler said. “We intend to vigorously defend this decision and the $1.2 billion verdict on appeal.”

Tasked with determining whether the amount of legal fees sought by the state was “reasonable,” Fox wrote that he relied not only on factors required by the Arkansas Supreme Court but also on the intent of the Legislature as expressed in the Medicaid fraud law and the state’s Deceptive Trade Practices Act.

Lawmakers specifically empowered the judiciary to order violators of those laws to reimburse the state for legal fees and expenses, Fox wrote, noting that the statutes use the word “shall” in describing how those violators can be made to pay state expenses. The General Assembly clearly wanted fines and damages recouped under the law to be returned to state coffers in their entirety, Fox wrote.

“The purpose … being that the taxpayers will recover all costs incurred by the attorney general,” his findings state. “Applied to the present case, the clear legislative intent is that every dollar of the penalties set prescribed by the Arkansas General Assembly should go to the Medicaid Trust Fund.”

Fox also awarded the Texas attorneys $298,800 in expenses after deducting $12,980 they had sought for one of their expert witnesses. The defense shouldn’t have to pay for that witness, since he was not allowed to testify at the trial, the judge wrote.

Arkansas, Pages 11 on 02/01/2013

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