In what an assistant U.S. Attorney said signals the start of a second wave of arrests in the Mississippi fen-phen fraud affair, Gregory P. Warren of Lafayette, La., is cooperating with authorities and is expected to plead guilty to charges arising from his role in recruiting fen-phen clients for the law firm of Schwartz & Associates in Jackson, which has not been charged. According to the AUSA’s office, Warren recruited claimants who had never in fact taken the drug; he “also is accused of failing to report on his tax return nearly $200,000 he was paid by attorneys in 2000 for recruiting Fen-Phen plaintiffs.” (Jimmie E. Gates, “More guilty pleas in Fen-Phen case”, Jackson Clarion-Ledger, May 4). For more on the scandal, see Feb. 12, Jan. 9, etc. (& letter to the editor, May 10).
Posts Tagged ‘fen-phen’
“The Fen-Phen Follies”
Comprehensive and damning coverage in the March American Lawyer by reporter Alison Frankel, who terms the annals of the diet-drug litigation a “veritable catalogue of ignominy”:
Law firms allegedly attempting to fleece a lawyer-built victims trust fund. Doctors working for contingency fees, filing questionable supporting reports. Corporate executives, facing the prospect of ruin, hurling money at claimants. The fen-phen class action approved in 2000 was supposed to be a new paradigm of how to resolve a mass tort equitably. Instead the iron law of unintended consequences has ruled. Misconduct has not been punished, but rewarded. Some uninjured people have been paid to go away while thousands of claimants alleging real injuries still wait for compensation.
Lawyer advertising and generous settlement standards drew claimants “like ants to a picnic”, and some law firms figured out how to game the system by arranging echocardiograms that would diagnose supposed heart troubles in entirely uninjured patients: “in one horrifying case, a patient whose condition was overstated for the sake of obtaining payment through the trust ended up having unnecessary heart valve replacement surgery.” Frankel quotes Michael Fishbein, a plaintiff’s attorney who helped negotiate the initial settlement:
“…We all believed it would be done in an honest way, that doctors would not endanger the health of their patients by making phony diagnoses.”
Says Fishbein: “I guess we were naive.”
Also see Jim Copland, Point of Law, Mar. 1. We’ve covered the fen-phen saga extensively, and nearly nine years ago I was sounding the alarm about the medical dangers that arise from litigation-driven diagnoses.
Update: NY Fen-Phen Fee Fracas
Parker & Waichman referred fen-phen cases to Napoli Bern; Napoli Bern negotiated a fen-phen settlement with the manufacturer. Now, Parker & Waichman is charging that Napoli Bern’s lump-sum settlement was distributed in such a way to favor Napoli Bern’s direct clients, thus increasing the total attorney fee take for Napoli Bern and decreasing the amount it would have to share with referring law firms. Napoli Bern denies the allegations. (Jonathan Glater, “When Law Firms Collide, Things Sometimes Get Ugly”, NY Times, Feb. 12) (via Bashman). Previous coverage: Dec. 28, 2001.
Update: Mississippi pharma-suit scandal
Two more guilty pleas, which means all twelve of the Fayette residents arrested have now pleaded guilty. “More arrests are expected in six weeks in the FBI and IRS investigation.” Attorneys’ fees and expenses are said to have absorbed about $100,000 apiece of the $250,000 that each defendant received from the settlement fund, which would make $1.2 million in all reaped by the law firms and their helpers for representing the dishonest claimants. (Jimmie E. Gates, “Fen-Phen case expected to net more guilty pleas”, Jackson Clarion-Ledger, Feb. 12). See Jan. 9, etc.
Update: Yet more fen-phen guilty pleas
Another two defendants pleaded guilty in the Fayette, Miss. fen-phen fraud case (see Nov. 14, Oct. 20 and links from there), including one who’d previously been vocal in proclaiming her innocence. Eva Johnson, 55, “allegedly bought a Jaguar with some of the $2.75 million she helped relatives claim” from makers of the diet-drug combination; she “told [federal judge William] Barbour [Jr.] she takes medication for schizophrenia.” (Jimmie E. Gates, “Two more plead guilty in Fen-Phen fraud case”, Jackson Clarion Ledger, Dec. 29; “2 charged in Fen-Phen case plead guilty”, Dec. 30). Another participant in the scheme, Lillie M. Walker, was sentenced to ten months in federal prison and restitution of $250,000 for her role. (Jeremy Hudson, “Woman sentenced in Fen-Phen scam”, Dec. 22).
Update: first jail time in fen-phen fraud
Mississippi: “A Fayette minister and a teacher are going to prison for their role in submitting phony Fen-Phen drug settlement claims in Jefferson County.” John Frye, a minister, and Lizzie Hammett, a teacher, are to report to prison Feb. 1 to begin serving sentences of one year and one day. There have thus far been six guilty pleas among twelve Fayette residents charged in a joint FBI and IRS criminal investigation of fraudulent claims of injury from the diet drug, many of which resulted in $250,000 payments from the drug’s manufacturers. (Jimmie E. Gates, “Two will serve jail time for role in Fen-Phen settlement fraud”, Jackson Clarion-Ledger, Dec. 3). See Nov. 14, Oct. 20 and links from there.
Update: more guilty pleas in fen-phen fraud
“Five of 12 Fayette residents charged in a joint FBI and IRS criminal investigation have pleaded guilty, and one more is expected to plead guilty this week, U.S. Assistant Attorney John Dowdy said. … Each resident received a $250,000 settlement from the drug maker. Court documents show some of the defendants purchased automobiles, including a new Jaguar, and one bought a mobile home.” One of the defendants — not the one who bought the Jag — is described by her lawyer as just your ordinary Sunday School teacher. (Jimmie E. Gates, “Fraud pleas may mean jail, forfeiture”, Jackson Clarion Ledger, Nov. 7). See Oct. 20 and links from there.
Three guilty pleas in Miss. fen-phen fraud case
Not long after federal authorities arrested twelve Fayette, Mississippi residents on charges of fraud relating to the fen-phen settlement (see Sept. 1, 2004 and Oct. 3, 2003), three of the arrestees agreed to plead guilty and cooperate with the probe. All of the twelve “are accused of receiving at least $250,000 [each] in settlement funds through false prescriptions, netting about $150,000 after attorney fees and expenses.” (Jimmie E. Gates, “3 plead guilty in Fen-Phen probe”, Jackson Clarion-Ledger, Sept. 22). “A Jefferson County jury had awarded $150 million to five people who claimed fen-phen gave them heart and lung problems,” and there had followed a $400 million settlement with nearly 800 people nationwide. Included in that sum were high payments to many claimants from Jefferson County, which includes Fayette, who said they had taken the diet compound. (Denise Grones, “12 Charged With Fraud in $400 Million Fen-Phen Settlement”, AP/Law.com, Sept. 2). At least one of the twelve has protested her innocence and says she really did take the drug (Jerry Mitchell, “Fen-Phen arrests revive rap on county”, Jackson Clarion-Ledger, Sept. 5).
Another tidbit from the last-mentioned article: “A few years ago, the roof collapsed at the Family Dollar store in Fayette. A handful of people were shopping there at the time, but dozens who weren’t showed up in the emergency room for treatment.”
New at Point of Law
Dozens of new posts at our sister site, including: plagiarism on the Harvard Law faculty; bill to revive Rule 11 sanctions for meritless litigation moving through House; more coverage of a lawyer’s attempt to collect “referral fee” of more than $140,000 from Illinois widow; Steve Bainbridge on attorney campaign donations and scoundrel Joe Kennedy; a sonnet on scientific evidence; class action fees in the InfoSpace and Ameritech cases, plus a paper on coupon settlements and an in-production Madison County movie; in praise of the Michigan Supreme Court; big fees in the really old days; public environmental suits, including the one on global warming; and Home Depot co-founder Bernard Marcus urges philanthropists to support legal reform.
For employment-law buffs, there are new posts on legal protection for messages on employee T-shirts, California and federal overtime regulations, and the Wal-Mart class action. For those who follow product liability there’s coverage of fen-phen fraud arrests, firearms liability and asbestos bankruptcies. Plus election-year politics, including Jim Copland, Ted Frank and more. Shouldn’t you bookmark it today?
Ten arrested in probe of Miss. fen-phen verdict
Jefferson County, Mississippi:
Ten people were arrested in Fayette on charges related to the $150 million verdict in 1999 in Jefferson County against the manufacturer of the diet drug fen-phen, FBI special agent Bob Garrity said Tuesday.
Garrity said in a statement that the arrests came after an 18-month investigation that began in November 2002 into large jury awards. The FBI started the investigation to learn how individuals became part of these lawsuits and, perhaps, how juries were picked from an area where many people are kin or acquaintances.
(“Ten charged with fraud in fen-phen case in Jefferson County”, AP/Biloxi Sun-Herald, Aug. 31; “10 arrested in probe of $150M fen-phen verdict”, Jackson Clarion Ledger, Aug. 31; WLBT-TV. See Oct. 3 and links from there. Update Oct. 20: three defendants plead guilty.