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Pfizer Settles Fee Dispute in $785M FCA Deal

May 10, 2017 | Posted in : Fee Agreements, Fee Allocation / Splitting, Fee Dispute, Fee Dispute Litigation / ADR, Fee Request, Hourly Rates / Hourly Billing, Quantum Meruit, Statutory Fees

A recent the Law 360 story by Brian Amaral, “Pfizer Settles Fee Dispute in $785M FCA Deal,” reports that Pfizer Inc. and a relator who blew the whistle on false claims have agreed to resolve their dispute over how much in attorneys’ fees the company should pay after its $785 million settlement.

Details of the arrangement between the company and Dr. William St. John LaCorte in Massachusetts federal court were not made public; on Tuesday, Senior U.S. District Judge Douglas Woodlock signed a stipulation dismissing LaCorte’s motion for attorneys’ fees because of a settlement.

LaCorte had asked for $7.7 million for his attorneys at the Sakla Law Firm for thousands of hours of work on the case, which alleged that Pfizer unit Wyeth had overbilled Medicaid for the heartburn drug Protonix.  Pfizer said previously that LaCorte’s lawyers were not intimately involved in the development of the suit, in which the government intervened, and that LaCorte’s attorneys therefore didn’t need $7.7 million.  The fees are called statutory fees, paid out by Pfizer to a successful qui tam plaintiff as part of the False Claims Act.

The suit alleged that Wyeth, in a scheme that ended three years before Pfizer acquired it, misrepresented to the government how much it gave in discounts to hospitals to buy Protonix.  Wyeth had to tell the government its “best prices” and would pay rebates to state Medicaid programs for the difference so that the program for poor and disabled people would get the best price possible.  Wyeth avoided paying hundreds of millions of dollars between 2001 and 2006 by misreporting the discounts it gave hospitals, the government said.

The government stepped into the case and settled it.  Lauren Kieff, a former hospital sales representative for AstraZeneca Pharmaceuticals LP, and LaCorte, a frequent qui tam plaintiff who practices medicine in New Orleans, split $100 million in service awards for their help blowing the whistle.

That set the table for another fee dispute, separate from the one that was settled Tuesday.  LaCorte and his attorneys agreed to split their service awards, with 62 percent going to LaCorte and 38 percent going to his attorneys.  But the three firms that represented him are still fighting it out over how to split the 38 percent, with two of them — LaCorte's former lawyers at Vezina & Gattuso LLC and Boone & Stone — arguing that the fees should be split evenly, and a third, the Sakla group, saying that the other two firms didn’t do enough to justify an even split.

The most recent filings show that the firms are asking Judge Woodlock for summary judgment on that dispute.  The statutory fees from Pfizer, at issue in Tuesday's order, were for work that the Sakla firm had done. 

The case is U.S. ex rel. LaCorte et al. v. Wyeth Inc., case numbers 1:03-cv-12366 and 1:06-cv-11724, in the U.S. District Court for the District of Massachusetts.