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Category: Historic / Landmark Case

$1.2B Valeant Settlement Earns Robbins Geller $157M Fee Award

February 2, 2021

A recent Law 360 story by Dean Seal “Final OK on $1.2B Valeant Deal Earns Robbins Geller $157M”, reports that a New Jersey federal judge gave final approval to a $1.2 billion settlement of an investor action against Valeant Pharmaceuticals, landing lead counsel Robbins Geller Rudman & Dowd LLP a hefty payday.  U.S. District Judge Michael A. Shipp overruled objections from two investor plaintiffs when he granted a special master's recommendation to approve the deal reached in December 2019 between investors and the pharmaceutical company that became known as Bausch Health Cos. Inc. in 2018.

The nearly five-year-old lawsuit claimed Valeant used a clandestine network of pharmacies to push high-priced drug prescriptions, sending the stock plummeting once price-gouging allegations surfaced.  Investor plaintiff Cathy Lochridge had lodged an objection to the 13% attorney award for Robbins Geller and local lead counsel Seeger Weiss LLP, arguing that the $157.3 million request was too high considering that the settlement "captures just 3% of class damages," but Judge Shipp said it was also the ninth-largest securities class action recovery ever.

"As Lochridge correctly notes, 'what is important is that the district court evaluate what class counsel actually did and how it benefited the class,'" the judge said.  "Here, lead counsel obtained a $1.21 billion all-cash recovery for the benefit of over 400,000 members."

The stock-drop litigation represents consolidated claims by investors who saw Valeant's stock price slide from more than $250 a share in 2015 to below $10 two years later.  The company has been fined by regulators and sued by investors who said it defrauded the market.  Investors claimed that Valeant had employees work under aliases for a company called Philidor Rx Services LLC that used deceptive practices to block generic alternatives from competing with Valeant's branded drugs.  Valeant allegedly duped insurers by changing prescription codes to ensure they were filled with Valeant-branded drugs and making claims for unrequested refills, investors said, and covered up the scheme by lying about the pharmacies' ownership and issuing a series of false statements to investors.

In December 2019, Bausch announced that it had agreed to resolve the case with a $1.21 billion settlement while admitting no liability and denying all wrongdoing.  Last June, a special master issued a report recommending final approval of the settlement, plan of allocation and attorney fees and expense reward, leading to objections from two plaintiffs.

The first, from brokerage firm Timber Hill LLC, objected to the settlement itself as well as the plan of allocation, arguing against the plan's imposition of an "arbitrary" 5% recovery cap on options investors while permitting common stock and debt investors to take the remaining 95%.  The cap demonstrated that options investors were not adequately represented in the settlement, Timber Hill said, asking that the cap be increased to around 9.5%.

Judge Shipp overruled the objection, saying that Timber Hill's expert had originally supported an options cap in the 5% range and that he found the plan to be "fair, reasonable and adequate."  The second objector, Lochridge, had asked that the attorney fee award be reduced to 6% of the settlement fund, or around $72.6 million, arguing that "this is the lowest ever return on class damages for a billion-dollar securities settlement."

Judge Shipp disagreed, saying Lochridge's low recovery argument was based on "new and inconsistent" analysis from Timber Hill's expert and speculation that Valeant could have agreed to a higher settlement amount despite its uncertain financial position.  The judge also found that the hefty settlement fund and low number of objectors and opt-outs weighed in favor of approving the award, as did the complexity and duration of the litigation and lead counsel's devotion of more than 75,000 hours to the case.

$11M Fee Request in Home Health Care FCA Case

January 19, 2021

A recent Law 360 story by Sarah Jarvis, “Attys Want $11M After Record Home Health Care FCA Deal,” reports that a whistleblower is seeking more than $11 million in attorney fees and costs for a $57 million deal in his suit alleging the Visiting Nurse Service of New York defrauded the government, saying the figure is reasonable for the scope and outcome of the case.

Former VNSNY executive Edward Lacey asked a New York federal court for an order requiring the agency to pay him more than $11,147,000 in fees, costs and expenses incurred in Constantine Cannon LLP's successful litigation of the case, which resulted in a record deal last June to resolve Lacey's False Claims Act suit.  Lacey had claimed that VNSNY, the largest not-for-profit home health care agency in the U.S., billed for services it never provided and disregarded patients' formal treatment plans.

"Relator is seeking payment for a total attorneys' fee lodestar of $10,110,337.50," Lacey said.  "This amount is reasonable by any objective measure based on [Constantine]'s hourly rates and the hours the firm worked to secure this historic result."  Lacey said the firm spent 17,374 hours in attorney and legal support time on the case and used the smallest team possible to avoid duplicating resources, noting that only two lawyers worked on the case for its first 18 months.  After that, another lawyer joined in October 2015 and another in January 2016, but that principal team didn't expand again for almost two years to handle an accelerated schedule, according to Lacey's memorandum.

In support of his request, Lacey also noted the quality of the result, saying the $57 million settlement is one of the largest home health care fraud settlements ever and the only one to successfully challenge the failure to comply with patient plans of care.  Lacey said the settlement "hopefully remedies — or at least turns a regulatory spotlight on — a practice that adversely affects millions of sick and elderly patients across the country."

June's settlement ended Lacey's claims that VNSNY billed Medicare and Medicaid for therapy and services that doctors never provided and maintained an "accept all referrals" policy regardless of capacity constraints. VNSNY did not admit liability as part of the deal and maintains that it didn't bill for visits doctors never provided.  As part of the settlement, the federal government was stipulated to receive $50.1 million of the settlement, with New York state getting about $6.8 million.  Lacey was then awarded a 29% share of the total $57 million award, his counsel said, and Lacey noted in his memo that this amount was the outer limit of what the government was allowed to award.

Fees Capped at 25 Percent in $2.67B BCBS MDL Settlement

November 17, 2020

A recent Law 360 story by Jeff Montgomery, “Ala. Judge Wary of Second-Guessing $2.67B BCBS Deal,” reports that a federal judge in Alabama cautioned an attorney for non-consenting class members about second-guessing "the tactical decisions of class counsel" in a proposed $2.67 billion multidistrict class settlement for alleged overpayments to Blue Cross-Blue Shield insurers.

U.S. District Judge R. David Proctor made the point during a video-conference preliminary approval hearing in the Northern District of Alabama for the settlement of a suit filed in January 2013, targeting allegations that the insurers divvied up the nation and conspired to restrain competition among themselves and from other insurers, causing damages estimated at between $19 billion and $38 billion.

The settlement, reached after more than eight years of battling, would provide proportional payouts to tens of millions of business and individual BCBS subscribers, while also establishing court-ordered reforms prohibiting anti-competitive conduct, including ending a Blues practice of requiring members to derive at least two-thirds of their revenues from "Blue branded" services.

Attorneys for the class hailed the deal as historic — potentially reshaping competition in the health insurance industry and increasing consumer choice.  But attorneys for three Blues customers told the judge their clients declined to support the deal based on a "lack of openness" in negotiations and requirement to release individual claims in order to participate in the settlement.

"I feel like I'm dealing with a college football team that has 70 players and the flag comes from the sideline and three of the players don't like the coach's call and want to see the playbook, which is all well and good," Judge Proctor said, "but I've got to make a decision here in the near future about whether to give preliminary approval."

Under the settlement, individual class members and their past costs for Blue Cross coverage, either through workplace or individual plans, will be developed from insurer records, with protection for sensitive information. Individuals will also have an opportunity to submit individual claims if they choose.

No more than 25% of the $2.67 billion will go toward attorney fees and expenses, with 93.5% of an estimated $1.9 billion in payouts expected to go to fully insured individuals or business premium-payers and the balance to self-insured individuals.

$2B in Attorney Fees Offered in $26B Opioid MDL Settlement

November 5, 2020

A recent Law 360 story by Emily Field, “$26B Opioid Deal Offer to Include $2B in Atty Fees,” reports that the $26 billion settlement proposal from Johnson & Johnson and McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. will include a separate $2 billion fund to pay attorney fees and costs for the local governments that have sued over the opioid epidemic in multidistrict litigation, a source confirmed.

A source with knowledge of the settlement negotiations confirmed that the fund will be $2 billion and will be used to pay the plaintiffs' attorney fees, including the private counsel hired by the state attorneys general who have claimed that the companies fueled the opioid crisis.  The fund will be administered by an arbitration panel, the details of which have yet to be worked out with U.S. District Judge Dan Polster, who is overseeing the multidistrict litigation over the crisis in Ohio federal court, the source said.

The source also noted that the $2 billion was less than the $3 billion that had initially been reported.  In February, drug companies told Judge Polster that a proposal for 7% fee against a global settlement could be more than $3.3 billion, potentially jeopardizing negotiations.  The plaintiffs' executive committee in the MDL said in a statement that they supported the deal, which includes $4 billion more than an initial offer of $22 billion in cash in the fall of 2019.

"While no dollar figure can restore the lives and families already devastated by the crisis, these settlement dollars are desperately needed in areas that have been hardest hit by this man-made epidemic, particularly as they now grapple with COVID-19," said Paul T. Farrell Jr. of Farrell Law, Paul J. Hanly Jr. of Simmons Hanly Conroy and Joe Rice of Motley Rice LLC in a joint statement.  "Addiction prevention, education and treatment is critical to the recovery of our families and communities. We need to get these resources out to them as fast as we can — this settlement does that."  The committee also noted that the attorney fees fund is intended to replace the collection of contingency fees so that money can reach communities faster.

In a filing with the U.S. Securities and Exchange Commission McKesson said it would pay up to $8 billion over 18 years, and Cardinal and AmerisourceBergen would pay the rest over that time.  In October, J&J disclosed that it's offering up to $5 billion to end the litigation, a 25% increase from an earlier settlement proposal.

The MDL contains 3,000 cases filed mostly by cities and counties that want money for health care and law enforcement costs related to opioid abuse.  Some MDL attorneys also represent cities and counties with similar cases in state courts.  The attorneys general of virtually every state have also filed cases in state courts.

Second Circuit Rejects Fee Request After Landmark SCOTUS Ruling

September 30, 2020

A recent Connecticut Law Tribune story by Tom McParland, “2nd Circuit Blocks Attorney Fees for Troopers Who Recovered Union Dues After Landmark SCOTUS Ruling,” reports that a Manhattan-based federal appeals court rejected an appeal from a group of Connecticut state troopers who petitioned for attorney fees after securing a refund of collective bargaining dues in the wake of the U.S. Supreme Court’s landmark Janus decision, finding that it lacked jurisdiction to determine if they were “prevailing parties” to the litigation.

The ruling, from a three-judge panel of the U.S. Court of Appeals for the Second Circuit, left in place, for now, a district court’s ruling that the case was moot because the Connecticut State Police Union had refunded the current and former officers the full amount they had paid into collective bargaining, plus interest.  In a six-page summary order, the Second Circuit said the lower court’s ruling, which dismissed the case without prejudice, was not a final judgment that could be appealed, and noted that more litigation was likely in the U.S. District Court for the District of Connecticut.

“Having reviewed the record, we find that there has been no final, appealable judgment entered in the district court.  Therefore, we do not have jurisdiction over this appeal and must remand to the district court for further proceedings,” the panel wrote.

The plaintiffs, who declined to join the union, filed their lawsuit before the Supreme Court held in Janus that the First Amendment bars public employers from withholding agency fees from workers who opt out of a collective bargaining union.  Following the Janus decision, the union stopped collecting fees, and eventually provided a full refund after the officers moved for summary judgment.

U.S. District Judge Victor A. Bolden denied the motion as moot, and later found that the plaintiffs did not qualify as “prevailing parties” to the litigation.  Though the case was “administratively closed,” it did allow the plaintiffs to petition the court for post-judgment attorney fees and costs.

The Second Circuit panel said that its jurisdiction was limited, with few exceptions, to appeals from final judgments by a district court.  The administrative closure, however, did not meet that threshold, and the judges said Bolden would still need to rule on the plaintiffs’ motion for declaratory judgment on remand.  “In short, we see no indication that a final order has been entered in this case,” the court said.