McGraw's attorneys lose appeal in Eli Lilly case

By John O'Brien | Apr 14, 2009


NEW YORK -- Attorneys for the State of West Virginia may not depose officials from Eli Lilly & Co. about a $1.4 billion federal plea agreement, a federal judge recently decided.

U.S. District Judge Jack Weinstein upheld an earlier ruling by Magistrate Judge Roanne Mann that said information concerning the plea agreement, which covered alleged actions from 1999-2001, was irrelevant to West Virginia's claims because they only cover alleged actions after 2002.

"Magistrate Judge Mann has carefully considered the matter and reached the appropriate conclusion in granting the protective order," Weinstein wrote April 6.

"Sufficient information about the 'factual basis' for the guilty plea is available to plaintiff, including the plea agreement, the U.S. Department of Justice's approval of the plea agreement, its Supplemental Motion in Anticipation of Sentencing and transcripts of all related proceedings in the Eastern District of Pennsylvania."

The State, through outside counsel hired by Attorney General Darrell McGraw, has already dropped its claims for damages done to its Medicaid program and for civil penalties for any actions occurring before 2002. Lilly pleaded guilty to federal charges of off-label marketing of its prescription antipsychotic Zyprexa, but only from Sept. 1999-March 31, 2001.

West Virginia's attorneys sought to depose those who are most knowledgeable about the terms of the guilty plea. U.S. Magistrate Judge Roanne Mann issued a protective order in February preventing any such discovery. The objection to it was filed March 2.

"Although Judge Mann found the information sought was relevant, she found that the guilty plea and related documents were themselves the best evidence of the nature of Lilly's conduct and any further discovery would be cumulative to discovery previously undertaken in the (mass district litigation)," wrote H. Blair Hahn, of Richardson, Patrick, Westbrook & Brickman in Mt. Pleasant, S.C.

"Further, she found the attorney-client privilege issues were unavoidable and thus rendered the deposition a burden to Lilly and the Court... Judge Mann's order denying the State's motion for protective order is clearly erroneous and contrary to law because the discovery sought by the State is not unreasonably cumulative or duplicative and because the burden of the proposed discovery does not outweigh its likely benefit..."

In January, Eli Lilly agreed to pay $1.4 billion to settle federal civil and criminal claims. The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

Consumer protection claims by 33 attorneys general were settled for $62 million last year, and 12 states still have claims pending against the company.

West Virginia is seeking only civil penalties for any unlawful activities occurring after 2002 because that's all the four-year statute of limitations allows. It filed suit in 2006.

It also dropped its Medicaid claims after Eli Lilly requested records associated with the program.

The State's appeal notes that the guilty plea says that "the conduct which forms the basis for this plea agreement... continued past March 31, 2001."

In October, Weinstein told the parties to take 30 days off from the case to try to work out a settlement. It did not work.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

Also representing West Virginia are Charleston's Jerri Janeen Legato and Charleston's Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw's campaign in 2004.

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