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Vioxx Settlement Recipients May Be On Their Own For ERISA Lien Resolution

By Director of Lien Resolution

Families and individuals injured by Vioxx may still have lien claims to resolve despite the Lien Resolution Administrator’s attempt to manage these claims.  In a December 4, 2012 ruling the United States District Court, E.D. Louisiana denied the motion of approximately forty six (46) insurance companies to have their lien claims resolved from the Vioxx settlement fund.  These companies sought to have their ERISA, Medicare Advantage, and FEHBA claims for reimbursement added to the multi-jurisdiction litigation taking place in the Eastern District of Louisiana. Though nearly twenty five thousand (25,000) liens were resolved under the Court’s management of the litigation, there are still several thousand outstanding reimbursement claims that must be satisfied before the Vioxx plaintiffs can realize their net settlements.

This case relates to the multidistrict products liability litigation for the prescription drug Vioxx.   On May 20, 1999, the Food and Drug Administration approved Vioxx for sale in the United States. It is estimated that 105 million prescriptions for Vioxx were written in the United States between May 20, 1999 and September 30, 2004. Based on this estimate, it is thought that approximately 20 million patients have taken Vioxx in the United States.  Vioxx remained publicly available until September 30, 2004, when Merck withdrew it from the market after data from a clinical trial indicated that the use of Vioxx increased the risk of cardiovascular thrombolytic events such as myocardial infarction (heart attack) and ischemic stroke.

Consequently, thousands of individual suits and numerous class actions were filed against Merck, the maker of Vioxx, in state and federal courts throughout the country alleging various products liability, tort, fraud, and warranty claims. On November 9, 2007, Merck formally announced that they had reached a Settlement Agreement for an overall amount of $4.85 billion. Pursuant to the requirements of federal and state laws creating statutory liens under the Medicare and Medicaid programs, the Settlement Agreement provided that a “Lien Resolution Administrator” establish “procedures and protocols . . . to identify and resolve Governmental Authority Third Party Payor/Provider Statutory Liens.”

On April 14, 2008, approximately forty-six (46) insurance companies (the “Plan Plaintiffs”) filed suit against settlement fund (among others) asserting claims for reimbursement under ERISA, and asking for an injunction to stop the disbursal of settlement funds.  The Court found that the prerequisites for an injunction were lacking in all respects. The Plan Plaintiffs sought review at the Fifth Circuit, which affirmed the lower court’s denial of an injunctionl. Avmed Inc. v. BrownGreer PLC, 300 Fed. App’x 261 (5th Cir. 2008) (“AvMed III“).  Despite this ruling, the court remained aware of the ERISA reimbursement issue and on January 22, 2009, the parties announced at the monthly status conference an agreement establishing a program to assist with resolving private Vioxx-related lien issues (“the Private Lien Resolution Program” or “PLRP”).  The Court authorized a nationally known private company to administer the program as Lien Resolution Administrator.

Despite their best efforts, the Lien Resolution Administrator did not address all the claims for reimbursement that could be brought against the class members.  Thus, Plan Plaintiffs sought leave to amend their complaint to add members of ERISA plans who did not participate in the Private Lien Resolution Program and to add claims for reimbursement under the Medicare Secondary Payer Act and the Federal Employee Health Benefits Act

The court denied the motion to add these claims since the Plan Plaintiffs’ brought different claims pursuant to different health benefit plan language in different factual circumstances. This diversity between the claims of the individual Plan Plaintiffs means that the rights to relief asserted did not arise out of the same transactions or occurrences and did not present common questions of law or fact. (AvMed II, 2008 WL 4681368, at *5-8).  The Court recognized the risk of “transform[ing] this litigation into an action against approximately 15,000 defendants, each of whom has entered into a separately negotiated health plan contract and each of whom has received medical benefits under highly individualized factual circumstances.” (Id. At 8).  The court concluded that “the proposed amendment is procedurally unworkable, for the same reasons set forth in AvMed II, and again poses the risk of expanding this litigation into a procedural morass.”

The court continued with the analysis of their denial of the motion by pointing out that pursuant to 29 U.S.C. § 1132(e)(2), ERISA claims may be brought “in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.” The proposed amendments would add a dozen defendants from different districts, none of them located in the Eastern District of Louisiana. It was also not clear from the record that any of Plaintiffs’ plans were administered in the Eastern District of Louisiana.  Finally, the alleged breaches, if any, were centered on the location of the defendants. Though the Court supervised the PLRP with respect to active cases, the personal injury actions underlying the proposed amendment had been resolved and stipulations of dismissal filed in the Court. Thus, the opportunities for economies of scale were no longer as apparent. In short, the Court found that considerations of “judicial economy and the most expeditious way to dispose of the merits of the litigation” counsel against hosting these disputes in the MDL.

According to this ruling, plaintiff’s who recover funds from the $4.85 billion dollar settlement may need to resolve outstanding reimbursement claims before for they can realize their individual settlement.  Thousands of plaintiffs must now confront plan administrators, third party administrators, and recovery agents in order to resolve outstanding ERISA, Medicare Advantage and FEHBA claims for reimbursement.  Though judicial economy weighs against handing these matters as part of the Vioxx multiple district litigation, it leaves many plaintiffs in a troubling, and possibly inequitable situation.  The result of failing to anticipate lien issues may leave some Vioxx plaintiffs in a far less advantageous position than others. If the Vioxx plaintiff lives in jurisdictions where defenses to these claims exist then the portion of the settlement apportioned to this claimant is greater than and equal apportionment to a plaintiff living in a jurisdiction where repayment to these plans will be mandatory.

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