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Clark v. Tap Pharmaceutical Products

October 01, 2003

ACIE C. CLARK, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLEE,
v.
TAP PHARMACEUTICAL PRODUCTS, INC., TAP PHARMACEUTICALS, INC., AND ABBOTT LABORATORIES, INC., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Williamson County. No. 01-L-132 Honorable Phillip G. Palmer, Judge, presiding.

The opinion of the court was delivered by: Presiding Justice Hopkins

PUBLISHED

The defendants, TAP Pharmaceutical Products, Inc., Tap Pharmaceuticals, Inc. (collectively referred to as TAP), and Abbott Laboratories, Inc., appeal the trial court's order certifying a nationwide class of individuals and businesses under Illinois law. On appeal, the defendants seek the decertification of the class. We affirm the trial court's decision.

FACTS

Plaintiff class representative Acie C. Clark filed a class action complaint in Williamson County. He alleged unjust enrichment and a violation of Illinois's Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2000)). Acie alleged that, as a result of the defendants' fraudulent marketing and sales scheme, he, along with thousands of individuals and entities who paid copayment or deductible amounts for beneficiaries under Medicare, overpaid for the prescription drug Lupron, which is used to treat prostate cancer.

Acie alleged that Medicare reimbursement has historically relied on the "average wholesale price" (AWP) published in Redbook, a pharmaceutical publication. Medicare reimbursed medical providers 80% of the allowable amount, and the Medicare beneficiary paid the remaining 20%, referred to as the copayment amount. Acie contended that the defendants wrongfully supplied Redbook with an inflated AWP, i.e., that the prices the defendants charged private-sector purchasers for Lupron were significantly less than the price published in Redbook and relied upon by Medicare and its beneficiaries. Acie claimed that the defendants' fraudulent scheme induced medical providers to purchase, prescribe, and administer Lupron at a low cost, bill Medicare at the inflated cost, and earn a profit from the difference. Acie claimed that, therefore, in essence, the defendants created an improper kickback for their physician customers and increased their own profits and market share. Acie alleged that as a result of the defendants' wrongful inflation scheme, he and those similarly situated substantially overpaid all or part of their 20% copayments for Lupron.

During his deposition on January 10, 2002, James Salanty, a former employee of TAP, testified that the defendants calculated the AWP of Lupron, which was reported to Redbook, by multiplying the wholesale acquisition cost, a competitive price in the marketplace, by 1.25. Salanty testified that, in response to the lowest cost alternative (LCA) program, which some states implemented in 1997 to deal with such price-fixing and which decreased the physicians' reimbursement for Lupron, TAP further discounted the price for doctors who were subject to the LCA reimbursement to maintain the spread.

The defendants submitted the affidavit of Christopher M. Gonzalez, M.D., who stated that his compensation is completely unaffected by the amount of Lupron he prescribes, that he generally was not aware of how patients pay for their services, i.e., whether they have Medicare, and that he uses Lupron because of patient preference and ease of administration, as opposed to profit incentives.

The defendants also submitted the affidavit of Stanley Weintraub, director of reimbursement for a health care consulting and advisory firm and a former senior policy advisor for the Health Care Financing Administration, who stated that to determine the relationship between the class member's Medicare copayment and the AWP for Lupron, one must define the following groups: "(a) individuals who were prescribed Lupron by participating physicians; (b) individuals who were prescribed Lupron by non[]participating physicians; (c) individuals who reside in states where a 'least costly alterative' reimbursement policy has been applied to Lupron reimbursement; (d) individuals who are 65 years or older and still employed for whom Medicare is a secondary insurer; (e) insurers, both commercial (such as Medigap insurers) and non[]commercial (such as state Medicaid agencies, including Medicaid Managed Care agencies), who paid claims for part or all of the 20% Medicare part B co[]payment and/or deductible for Lupron; and (f) individuals who are members of Medicare HMOs [who do not pay copayments]."

At Rachel and Acie Clark's depositions on December 27, 2001, Rachel testified that after reading information regarding the overcharge for Lupron, she contacted her husband's attorneys. Acie testified that his responsibility as a plaintiff in this suit was to represent the best interests of the class. Acie stated that he, his wife, and his lawyer composed the class. Acie testified that he did not expect to receive funds from the lawsuit but expected to obtain Lupron at a lower cost. Acie testified that he did not understand the claims described in the complaint and did not recognize the responses to the defendants' discovery requests that he had signed.

Acie's class counsel also represent different named plaintiffs in a nationwide federal Racketeer Influenced and Corrupt Organizations (RICO) class action based on the same factual allegations. Goetting v. TAP Pharmaceutical Products, Inc., No. 01-0703 (filed S.D. Ill. October 24, 2001). The Judicial Panel on Multidistrict Litigation consolidated the Goetting action with other federal class actions related to Lupron pricing practices. The plaintiffs' counsel's multidistrict litigation complaint includes an action under Illinois's Consumer Fraud Act and an action for unjust enrichment, in addition to five federal RICO causes of action and a common law fraud action against these defendants.

On November 15, 2001, the plaintiffs in the case sub judice moved for class certification, and on March 12, 2002, after hearing arguments, the trial court certified the following as a nationwide class: "All individuals or non-ERISA third-party payor entities in the United States who paid any portion of the 20% co[]payment or deductible amount for beneficiaries under the Medicare Part B for Lupron during the period 1993 through the present (the class period)."

On April 19, 2002, the trial court, pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308), certified the following questions to facilitate an immediate appellate review by this court:

"a. Whether common issues of fact and/or law predominate when each class member based his or its decision to use or purchase Lupron on factors unrelated to Lupron's [AWP] and when each class member was subject to one of many different reimbursement methods depending on, inter alia: (a) the state in which the class member resides or whose regulations govern the class member's reimbursement; (b) the Medicare carrier responsible for the individual class member's reimbursement; (c) the nature of the individual class member's medical care provider's reimbursement request; (d) the type of entity from which the class member purchased Lupron; (e) the type of supplemental insurance program(s), if any, in which the individual class member is enrolled; and (f) the nature of the third party-payor class member entity and the services which it contracted to provide or purchase.

b. Whether, under the United States Constitution and Illinois choice[-]of[-]law principles, the Illinois Consumer Fraud Act can apply nationwide to claims of class members who are not Illinois residents and were not billed for Lupron in Illinois, especially in light of other similar class actions pending in various state and federal jurisdictions throughout the nation.

c. Whether, assuming the Illinois Consumer Fraud Act cannot apply nationwide to each class member's claims, variations in the 50 [s]tates' consumer protections laws create individual issues of law that predominate over common issues of law.

d. Whether a plaintiff who has a limited understanding of his own claims and the purpose of his own lawsuit can adequately represent a nationwide class of individuals and third party-payor entities and serve as its class representative.

e. Whether plaintiff's counsel can simultaneously pursue this class action as well as a separate and potentially conflicting class action and still adequately protect the interests of the class in this case.

f. Whether a class action is an appropriate method for the fair and efficient adjudication of the controversy where: (a) mini[]trials will be necessary to determine whether each class member has a right to recover; (b) sub[]classification will be necessary to address critical variations in the consumer protection laws of the fifty states; and (c) multiple sets of instructions to the jury will be necessary to take into account the ...


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