Massive claims are endangering fen-phen fund
Philadelphia Inquirer
October 4, 2002

A carefully crafted plan to resolve the injury claims of thousands of people who once used the popular diet drugs Pondimin and Redux has, at least temporarily, gone into a tailspin.
That's because, according to papers filed in federal court, a small group of lawyers has filed massive numbers of questionable claims, threatening to drain the bulk of a $3.75 billion settlement fund.

Lawyers who negotiated the settlement in 1999 have asked U.S. District Judge Harvey Bartle 3d to suspend the processing of all claims filed by people who purport to have serious heart injuries.
The numbers of those claims, for which compensation can range from $7,000 to $1,400,000, are projected to be seven times higher than had been expected.

According to documents submitted to Bartle last week, about 5,000 such claims had been anticipated by a Philadelphia-based trust that administers the diet-drug settlement. The average payment for a person who suffered serious heart damage is about $400,000.

But 17,000 claims were filed between February and August, and the number is expected to soar to about 35,000 by the end of the year. At $400,000 each, it would cost $14 billion to cover the claims.

Thousands of people have responded to TV and newspaper ads placed by lawyers seeking clients who took Pondimin (one of the pills in the fen-phen combination) and Redux.

Bartle, who presides over all federal litigation involving the diet drugs, has scheduled a conference on Wednesday to explore whether the claims-evaluation process must be tightened.

The request to suspend the process was made by an unusual alliance. The petitioners included lawyers for Wyeth, which produced the diet drugs; plaintiffs' lawyers who sued the Madison, N.J., company and then negotiated the federal settlement; and lawyers for the trust that administers the settlement.

In unison, the lawyers expressed concern in detailed legal pleadings that the claims process had been corrupted.

Wyeth hired a cardiac ultrasound expert, Arthur E. Weyman, to study a sampling of 300 claims. Weyman concluded that two-thirds of the heart-damage claims did not qualify for compensation benefits under the settlement.

Thirty lawyers and groups of lawyers were cited in the legal filings as having submitted 64 percent of the heart-damage claims.

Two New York law firms - Napoli, Kaiser, Bern & Associates and Hariton & D'Angelo - were accused of setting up a "production line" from which "hundreds of medically unreasonable claims" were submitted.

A Kansas City, Mo., cardiologist named Linda Crouse, who performed more than 700 echocardiograms on clients of the two law firms, was accused of exaggerating many of her findings.

Crouse testified at a hearing before Bartle last month that she was paid $725,000 by the New York firms. She did not respond yesterday to a request for comment.
But Marc Bern, a partner in the Napoli law firm, said the claims filed by his firm and the echocardiograms by Crouse were "absolutely, totally honest."
"These were done according to Hoyle," Bern said, meaning "by the book." "The problem is [the trust doesn't] have enough money. The problem is that they're going to go bankrupt. Wyeth didn't put in enough money."
That's a point on which Wyeth emphatically disagrees.
Last week, the company set aside an additional $1.4 billion to cover a possible wave of new lawsuits if the federal settlement fund ran out.
That makes for a total of $14.6 billion that Wyeth, formerly American Home Products, has earmarked to pay diet-drug claims.
Pondimin and Redux were pulled from the market in 1997 after the U.S. Food and Drug Administration received reports that some users had developed heart-valve problems.
Though 5.8 million people used the drugs, research studies gradually showed that only a tiny fraction suffered serious heart problems. An even smaller number suffered a disabling and often fatal heart-lung disease called primary pulmonary hypertension.
Officials at Wyeth estimated the number of severely injured people in the range of 1,000.
Plaintiffs lawyers filed thousands of lawsuits and claimed the number of injuries was much greater.

After reaching the $3.75 billion federal settlement, which was touted as one of the most comprehensive class-action settlements in history, Wyeth was hit with 50,000 new claims in state courts. The company ended up paying billions more to settle those.

In many cases, those who "opted out" of the federal settlement were solicited through newspaper and TV ads by lawyers who convinced them that the financial rewards would be greater by suing in state court.

In one extreme example, five people with minor heart malfunctions won $30 million each in a Mississippi jury trial. Under the federal settlement, those diet-drug users would each have received $6,000.

Wyeth negotiated an out-of-court settlement in that and many other state cases, paying huge sums.

The company's general counsel, Louis L. Hoynes Jr., said earlier this year that he believed most of the money paid in those settlements went to people who were not seriously injured - or not injured at all.

Contact L. Stuart Ditzen at 215-854-2431 or sditzen@phillynews.com.