Winning the War on Opioids: A Behind the Scenes Look at The Largest and Most Complex Deal In The History of Jurisprudence
In a deal the Washington Post called “the largest civil action in U.S. history,” the terms for the formal global settlement agreement with opioid manufacturer Johnson & Johnson (J&J) and the “Big Three” drug distributors AmerisourceBergen, Cardinal Health, and McKesson were just announced.
The proposed settlement totals $26 billion dollars paid out over several years, by the “Big 3” distributors, as well as manufacturer Johnson & Johnson. The Multidistrict Litigation (MDL) Plaintiffs’ Executive Committee, States’ Attorneys General, and four major defendants are working to finalize the terms of settlements.
The opioid crisis has decimated many communities. It’s taken hundreds of thousands of lives and drained billions from local economies and the cost of this public health crisis has been placed squarely on taxpayers and communities. The multifaceted approach of the settlement will address many of the issues our communities are facing and is the first step to helping them recover and creating lasting reform.
The settlement is comprised of three parts, designed to address very specific issues.
- Monetary compensation of $26 billion. The money will flow back into the communities that were so deeply affected and will be earmarked exclusively for treatment and education programs. Money cannot be diverted for other purposes.
- Injunctive relief to ensure this won’t happen again. A new sophisticated tracking system will reform the way prescription painkillers are distributed in the United States. This reform package includes the creation of a groundbreaking clearinghouse through which the Big Three will be required to account not only for their own shipments, but also the shipments of the other distributors, in order to detect, stop, and report suspicious orders. Florida law firm Levin Papantonio Rafferty Proctor Buchanan O'Brien Barr & Mougey, P.A. led the charge, processing, and organizing almost a billion lines of data tracking every pill from the manufacturer, to the distributor, to the pharmacy. This created the roadmap for the clearinghouse and gave it to every federal, state, and local law enforcement officer in the country. In addition, J&J and all of its subsidiaries have agreed to a 10-year prohibition on the manufacture, sale, and distribution of their opioid products.
- A nationwide solution. If you impose serious restrictions in one community, but not the next, offenders simply move their operations. By getting all states and all communities on board, it created a truly nationwide solution to a nationwide public health crisis.
“Having this three-pronged approach was critical,” says Peter Mougey, whose firm Levin Papantonio Rafferty was at the forefront of the litigation. “Without it, it might have been more of a short- term band-aid and we really wanted long-term transformative change. Getting treatment relief and education to our communities, ensuring that the behavior can’t continue and getting nationwide buy are like a three-legged stool. Long-term change can only happen if all three things are working together.”
The Settlement Journey: A Seemingly Impossible Task.
For years, law firms have tried to solve this case and hold the pharmaceutical industry accountable. Unfortunately, it has always been a knot too complex to unravel. The actions of manufacturers, distributors, and dispensers were all entangled and intertwined and it was nearly impossible to make any headway. Finally, however, a mix of collaboration with highly competent specialists, old-fashioned detective work, big data analysis, and a very innovative legal strategy will help deliver the largest financial proposed settlements in tort history.
A unique collaboration of law firms led by Florida’s Levin Papantonio Rafferty was at the forefront of the litigation with its large base of city and government clients who demanded the pharmaceutical distributors and manufacturers to clean up the path of devastation they caused by failing to fulfill their obligations under federal law. The National Opioid team was led by Mike Papantonio, Troy Rafferty, and Peter Mougey.
Settlement negotiations on behalf of over 3,000 communities comprising the federal opioid litigation were led by Peter Mougey of Levin Papantonio Rafferty, Joe Rice of Motley Rice LLC, Elizabeth Cabraser of Lieff Cabraser, Paul Geller of Robbins Geller, and Chris Seeger of Seeger Weiss. Mougey was the architect of the settlement structure that broke through the stalemate and got the settlement to the finish line. This settlement almost imploded earlier this year and if it wasn’t for the teamwork of all parties, this announcement wouldn’t be happening.
“We have always recognized at our firm that walking into massive fights like this is risky and expensive, but we’ve also always recognized that part of our jobs as consumer lawyers is to put it all on the line for American consumers and that’s exactly what we did in the opioid litigation,” says Papantonio. “We felt so strongly about finding a resolution in the interest of public health and safety that all the lawyers involved significantly lowered their fees to get the deal done.”
“The settlement proposal is a landmark event for several reasons,” Rafferty explains. “First, is the nature of the case: after decades of governmental litigation with very little results we’ve finally been able to expose how badly the American people were failed by the distributors. They have distinct obligations under the Controlled Substance Act but they totally disregarded their duties and focused on profit. Hundreds of thousands died as a result. Now, it is up to our clients to determine if this proposal does enough to make their communities whole again.”
Besides the distributors, the regulators failed. In fact, the entire system failed. And it was all spiraling out of control until this group of private attorneys put the opioid crisis on the front page by filing hundreds of lawsuits against the distributors beginning in early 2017, while the majority of the other lawsuits focused purely on the manufacturers, like Purdue says Rafferty
“How we did it is the other big story,” adds Mougey. “We leveraged creative legal strategies to build our case. Inside our firm, we brought together some overlapping but separate areas of expertise. Mike Papantonio is the country’s premiere mass tort attorney. Troy Rafferty is one of the country’s leading trial lawyers. And I had the background representing the cities and counties and the big data expertise.”
And it wasn’t just a matter of internal teamwork. External cooperation played a huge role too. Levin Papantonio Rafferty put together a consortium of law firms, with offices around the country—essentially creating a mega law firm—using the strengths of each to expose the world’s largest pharmaceutical distributors. By representing such a large and diverse set of communities, the “National Consortium” was able to drive the litigation toward a more successful resolution.
“The culture of our firm served us incredibly very well in this case,” says Mougey. “We know and understand how to successfully manage big data. We foster a culture of information sharing with other law firms despite the fact they are often competitors. We promote a very open vs. proprietary model by sharing our work product to work together for a common goal. This is the absolute key to getting the best outcomes, particularly in a very complex case.”
Eight Foundational Principles That Were Instrumental In Settling The Case:
• Unprecedented use of Big Data. Mougey, who leads the securities division of Levin Papantonio Rafferty, and his team analyzed hundreds of millions of lines of data to find the story hidden inside. It was his expertise in Big Data that really broke up the black box and brought transparency to the supply chain that showed probable cause.
The data had been gathered from manufacturers and distributors via the Automated Reports and Consolidated Ordering System (ARCOS), designed to help the government track the sale of controlled substances. ARCOS was supposed to be a failsafe. Yet what it actually showed was collusion: drug companies were marketing directly and aggressively to the pharmacies selling the most opioids, and distributors were allowing it to happen. This had been nearly impossible to prove before, but there was no denying the data.
“Not only is Peter extremely skilled in analyzing complex data, but he’s also skilled at taking data, turning it into knowledge,” says Rafferty. “He simplified it in a way that really told a story and allowed people to get their hands around what was actually happening. This was invaluable in getting the drug companies to the table.”
• Cooperation and collaboration. In an unprecedented show of cooperation, law firms from across the country joined forces to ensure that cities, towns, and counties are compensated for the public health crisis imposed on them by the manufacturers and distributors of opioids. While Farrell Fuller Law in Huntington, West Virginia and Barron & Budd in Dallas, Texas were the main players along with Levin Papantonio Rafferty, 6 total firms made up the consortium. By working together as a team these attorneys knew they were stronger as a group.
The consortium got in early in 2017 and within the next year had filed over 250 cases on behalf of cities and counties. In fact, by March of 2018, they ran roughly 50% of all the opioid cases filed in the country, including all of the cases that settled between the “big three.” Ultimately, the consortium of law firms filed lawsuits on behalf of almost 800 cities and counties representing almost 28% of the U.S. population.
“There was also an incredible amount of collaboration between the States Attorneys General, city and county governments and plaintiff firms,” says Mougey. “This level of cooperation helped solidify the nationwide approach that is so critical to the settlement creating transformational change and reform.”
• Specialized expertise to make it manageable. For a long time, the opioid problem felt overwhelming. The defendants were some of the largest companies in the US with deep pockets and impressive legal teams. Plus, initial litigation (before the consortium stepped in) was focused on the manufacturers at the top of the distribution chain. Ironically, these attorneys failed to notice companies with the biggest market share (like Mallinckrodt and Activas). Also ironically, none of these early cases focused on the integral role of the distributors who had the most visibility and access to data.
As it turned out, specialized expertise and collaboration were needed to connect all the dots. The Levin Papantonio Rafferty attorneys broke the case apart and zeroed in on big targets. Troy Rafferty acted as co-liaison counsel and took lead on the McKesson case along with partner Brandon Bogle. Mike Papantonio was co-lead on AmerisourceBergen. Peter Mougey was co-lead on the distributor case and on the executive committee while taking point on developing over 1 billion lines of ARCOS data tracking every opioid pill from the manufacturer to pharmacies around the country. It was the deep knowledge of these experts working together that finally untangled the knot. Rafferty, Papantonio, and Mougey were all on the Trial Team.
The other Consortium firms were instrumental in filing countless complex briefs, sifting through nearly 40 million documents, working closely with renowned experts, and managing clients from around the country. A case this large could not have been this successful without an unprecedented collaborative effort from some of the country’s most preeminent attorneys.
“The nature of our business leads to the most successful and talented attorneys (rightfully) possessing strong egos and big personalities,” says Rafferty. “To see all of that set aside for a common goal was crucial to taking on a project of this magnitude. This is truly an All-Star team.”
• Unconventional claim strategy. Once data analysis proved intent, legal team was able to pursue a public nuisance legal strategy. The distributors internalized opioid profits while shoving the costs from the epidemic on the cities and counties. The glut of opioids in our communities went unchecked by the distributors overwhelming emergency responders, child welfare court dockets, and treatment facilities. The lawsuits successfully shifted the cost burden back to the defendants where it belongs.
• MDL approach for speed and firepower. By filing hundreds of lawsuits, against over 100 defendants from every step of the opiate supply chain, the Consortium was able to fight for the creation of the MDL (multidistrict litigation), a consolidated way of trying a large number of similar cases at once. Not only did this improve efficiency, it allowed the case to pack a bigger punch. Plus, this strategy led to the public release of the DEA’s ARCOS database.
• Location analysis for better targeting. Of the roughly 3,500 cases filed on behalf of local governments around the county, the Levin Papantonio Rafferty “National Consortium” represents over 750 cities and counties. Rafferty says their approach was to ensure that the areas of the country that were hardest hit had the very best representation.
“There is no corner of this country untouched by the opioid epidemic,” he says. “Areas like Kentucky, Alabama, and our home in Northwest Florida which have been disproportionately affected by this crisis deserved a prominent seat at the table, so that’s where we started. Now, we represent a very diverse group of clients, from some of the most populous counties to the small hometowns most devastated by these pills.”
• A tenacity for making it happen. At one point, the deal was DOA. Both sides wanted a level of certainty that was nearly impossible to achieve with the terms of the initial deal. The defense wanted global peace (no more lawsuits) and the plaintiffs wanted to secure the full amount of the settlement (which couldn’t be secured without promise of no more lawsuits from every single person involved, which included all the AGs, cities, counties, etc.) This seemed nearly impossible, but Mougey knew there had to be a way forward, as both sides really wanted the same outcome.
Mougey managed a resourceful and creative reset. By getting everyone focused on commonalities and not differences, he leveraged the trust that had been built along the way to get everyone aligned. It took three months, but Mougey was able to create a complex tiered settlement that satisfied the concerns of both sides and allowed the deal to move forward. This created a win-win for everyone and was another example of unprecedented collaboration amongst unlikely parties.
• Segmentation of responsibility for a “time release” effect. This settlement proposal is among the first wave of expected settlement offers from the many other pharmaceutical companies also facing litigation. According to Papantonio, while the “Big 3” played a major role in the opioid crisis, others also played a role. "Defendants such as Walgreens, Walmart, and CVS were just as responsible for this national catastrophe,” he says. “Trials against those companies will be scheduled over the next twelve months.
"This is simply the first phase in the firm's effort to find closure in this sad saga," adds Rafferty. "It was all about profits with these drug companies. They created a crisis that cost American taxpayers hundreds of billions of dollars."
Papantonio says he is grateful to be able to strike a blow against greed and bring a modicum of justice to Americans who’ve been abused by this industry for decades. “The sophistication of corporate America makes it hard to get this kind of justice,” he notes. “You have to have a way to hold them accountable.
Mass tort can take on that challenge, but it requires innovation and new ways of working,” Papantonio adds. “I am so excited to see how the lessons we learned in this trial ends up shaping the future of our industry.”
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About Levin, Papantonio, Rafferty, Proctor, Buchanan, O'Brien, Barr & Mougey P.A.
Founded in Pensacola, Florida, in 1955, the Levin Papantonio Rafferty Law Firm has earned a reputation as one of the most successful law firms in the nation. The Law Firm’s attorneys handle lawsuits throughout the country involving prescription drugs, medical devices, medical malpractice, car accidents and business litigation. Levin Papantonio Rafferty has earned more than $4 billion in jury verdicts and settlements, litigating against some of the largest corporations in the world. To learn about the Levin Papantonio Rafferty Law Firm, visit www.levinlaw.com.
About Mike Papantonio
Mike Papantonio is a senior partner with the law firm of Levin Papantonio Rafferty. He has received numerous multi-million dollar verdicts on behalf of victims of corporate malfeasance. His award-winning work handling thousands of mass tort cases throughout the nation has helped make Levin Papantonio Rafferty one of the largest plaintiff law firms in the country.
Mr. Papantonio is a Board Certified Civil Trial Lawyer by the Florida Bar and the National Board of Trial Advocacy. He is a fellow in the International Academy of Trial Lawyers and the International Society of Barristers. He is a member of The National Trial Lawyers (past president), American Board of Trial Advocates, the American Association for Justice, the Southern Trial Lawyers Association, and the Florida Justice Association (where he served on the board of directors for five years). Mr. Papantonio is one of the few living attorneys inducted into the Trial Lawyer Hall of Fame. He is listed in the publications Best Lawyers in America and Leading American Attorney.
About Troy Rafferty
Troy Rafferty is a senior partner at Levin Papantonio Rafferty. He litigates mass tort, pharmaceutical, and major personal injury cases throughout the country.
Mr. Rafferty has been appointed to handle some of the nation’s largest pharmaceutical and mass tort cases. He has been appointed to serve on many Plaintiffs’ Steering Committees including the national Vioxx Litigation which resulted in a $4.7 billion settlement and the national Zyprexa Litigation which resulted in a $700 million settlement.
Mr. Rafferty was also one of the leading attorneys in the national Rezulin Litigation. He and his partner obtained a $40 million judgement for a woman who took this diabetes drug. Mr. Rafferty has successfully tried numerous complex pharmaceutical cases throughout the country and currently serves as the Plaintiff’s Co-Liaison Counsel in the National Prescription Opiate Litigation MDL.
About Peter Mougey
Peter Mougey is a senior partner and the Chair of Levin Papantonio Rafferty’s Securities and Business Litigation department. Mr. Mougey has dedicated his career to championing individuals’ rights against the world’s largest companies. Mr. Mougey concentrates his practice in the areas of complex litigation, financial services and securities litigation, and whistleblower or qui tam litigation. Mr. Mougey has represented over 1,500 state, municipal, and institutional entities, as well as tribal sovereign nations, in litigation and arbitration around the globe. In addition, he has represented more than 3,000 individual fraud victims in state and federal court and arbitrations.
Most recently, in the National Prescription Opiate Litigation MDL, he was selected to serve as Co-Lead of the Distributor case and serves on the Plaintiff’s Executive Committee in what has been called “the largest and most complex case in the history of juris prudence” by the Washington Post.
Mr. Mougey has served as both the past President and member of the Board of Directors of the national securities bar, PIABA. Currently, Mr. Mougey serves on the PIABA Foundation and was recently approved to serve on FINRA's National Arbitration and Mediation Committee (NAMC). In recognition of his long-term and sustained dedication to promote the interests of investors, he received the PIABA Lifetime Distinguished Service Award from his peers.