Week Adjourned: 9.3.10

Top Class Actions

Dishonorable Disbursements? Prudential Financial is facing a potential class action brought by the families of six dead soldiers who allege that the life insurance company is profiteering from the deceased soldiers’ policies with various bookkeeping maneuvers. Specifically, the suit accuses the company of misrepresenting the way beneficiaries could collect lump-sum payouts, and that the company profits from this. Read on.

The lawsuit was filed by parents of soldiers who died in Iraq, Afghanistan, El Salvador and after returning to the U.S. They live in Massachusetts, California, Illinois, Maryland, and Texas. They are claiming that Prudential holds the money in a $200 billion general account which earns five percent to six percent in interest, and that beneficiaries claims are only paid into an “Alliance” account when a beneficiary requests it. The company then pays the claim out at the lower interest rate keeping the difference in interest earned. One attorney for the plaintiffs estimates that the lost interest could amount to as much as $20,000 to $30,000 for families who let the money sit in Prudential’s accounts. That’s certainly worth pursuing.

If the suit is granted class action status, tens of thousands of beneficiaries who received payments under group life insurance policies for military members and veterans created by Congress and administered by Prudential may be affected.

Top Settlements

Frown Lines for Allergan. Big news on the pharmaceutical front this week. Allergan Therapeutic Inc—you may have heard of them—they make Botox—has agreed to plead guilty and pay $600 million to resolve its criminal and civil liability arising “from the company’s unlawful promotion of its biological product, Botox Therapeutic, for uses not approved as safe and effective by the Food and Drug Administration (FDA).

The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million.”

And those uses for which Botox is not approved by the FDA? Headache, pain, spasticity and juvenile cerebral palsy.

Here’s the dirt direct from the Department of Justice: “The criminal information alleges that Allergan exploited its on-label cervical dystonia (CD) indication to grow off-label pain and headache (HA) sales. In 2003, Allergan developed the “CD/HA Initiative” as a “rescue strategy” in the event of negative results from its clinical trials to ensure continued expansion into the pain and headache markets. As part of this initiative, Allergan claimed that cervical dystonia was “underdiagnosed” and that doctors could diagnose cervical dystonia based on headache and pain symptoms, even when the doctor “doesn’t see any cervical dystonia.”

Allergan’s off-label marketing tactics also included calling on doctors who typically treat patients with off-label conditions. In 2003, Allergan doubled the size of its reimbursement team to assist doctors in obtaining payment for off-label Botox injections. Allergan held workshops to teach doctors and their office staffs how to bill for off-label uses, conducted detailed audits of doctors’ billing records to demonstrate how they could make money by injecting Botox, and operated the Botox Reimbursement Hotline, which provided a wide array of free on-demand services to doctors for off-label uses. Allergan also lobbied government health care programs to expand coverage for off-label uses, directed physician workshops and dinners focused on off-label uses, paid doctors to attend “advisory boards” promoting off-label uses, and created a purportedly independent online neurotoxin education organization to stimulate increased use of Botox for off-label indications.”

And these are just the guys who got caught. 

If at first you don’t succeed… A woman who sued her lawyer for legal malpractice has been awarded a $1.787 million settlement by a jury in Philadelphia. The plaintiff, Barbara Cox, alleged that the lawyer she had hired to represent her in a medical malpractice lawsuit, David M. Barry, was negligent in his pleading of the underlying medical malpractice case. This resulted in her settling the medical malpractice suit for $1 million despite having received a verdict of $2.5 million.

So she won after all, on both counts actually. But what a pain, not to mention expense, to have to go through.

Ok. That’s it for this week. I hear the bar calling my name…

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