Decision brings LA reputation win, Caldwell electoral loss

When does the loss of a potential $330 million to the state of Louisiana equal a win? It does when it’s consequent to a defeat of jackpot justice, making the only real loser here Atty. Gen. Buddy Caldwell.

The Louisiana Supreme Court ruled that Caldwell, on behalf of the state, failed to show that the manufacturers/marketers of the antipsychotic drug Risperdal had attempted to place false claims with the state. And very properly so, for the case was riddled with weaknesses throughout. While it began about a decade ago, the award – with $70 million going to private lawyers – was made initially by a district court in notorious litigant-friendly St. Landry Parish.

The argument allowed to go forward by this court was that the state had been defrauded not because it actually had paid out taxpayer money on the basis of several thousand letters, eventually corrected, with a claim the Food and Drug Administration said was misleading and tens of thousands more visits made by pharmaceutical representatives in the interim, but because of the mere fact that the letters had gone out and the visits made. A court majority wisely rebuffed the minority’s, and Caldwell’s, view that a literal reading of the state law in question that actual payments by the state for a false claim billed by a party should be expanded in this instance to include entities not billing and rejected his definition of “misrepresentation” on which he built his case. In other words, in contrast to some other recent rulings, the Court rightfully refused to engage in judicial activism (even as one dissenter very erroneously substituted the idea that to not stretch statutes beyond their intent as he argued itself constituted a form of activism).

It’s a case that never should have been brought, given what was known about it and how similar claims elsewhere had been handled. For example, Caldwell and the district court relied heavily on logic expressed in a lower court case in West Virginia – even though a higher court in that state reversed it. Worse, Caldwell passed up an opportunity to join in a federal-government led suit with 45 other states that focused on this and other claims about marketing the drug and others for unapproved uses, to unapproved patient groups (some later authorized), and paid kickbacks in some cases. That recently brought a settlement of $2.2 billion. Caldwell has the option to try to sue on this basis as well, although it’s unclear how long and how many state resources would have to be committed to this.

One wonders why Caldwell did not join the national suit. It could be because the national suit only drew in $1.39 billion for false claims, but which included another drug. Louisiana’s share likely would have been in the neighborhood (based on population) of only $28 million. It also could be that there would have been little if any largesse to throw to state trial lawyers in prosecuting the case; it would be interesting to compare contracts with campaign finance donations to see which firms/lawyers that were in line to receive fees also have donated to Caldwell over the past few years.

By bringing and winning this case, not only could have Caldwell publicized to state voters he had stuffed into its coffers over a quarter-billion bucks, he also would have helped line the pockets of trial lawyers with a ridiculously high amount ($7,250 per letter or sales call) of cash. Best of all, to both he could prove he was a cash cow that donors should support in order to help tell voters this story justifying their keeping him in office.

Instead, now it appears he’s wasted an undetermined amount of taxpayer money and resources of private law firms hoping to share in the fatted calf he couldn’t rope in. Voters aren’t going to like the squandering of resources, and lawyers will lose confidence that he can steer money their way. None of this will help in a reelection campaign – especially if the contrast is made that for much less the state could have signed on to a campaign that could have paid off (population adjusted) at least $44 million.

Nonetheless, it’s a win for the state’s reputation in that its top judicial organ looks askance at attempts to allow litigants to bet on anything in the hopes that the Dr. Dealgood philosophy of justice produces a big payoff. It reassures of an impartial legal environment that doesn’t create different rules for different levels of income, and that should attract business, jobs, and money incomes.

But the definite loser here is Caldwell, who is made to look incompetent both as a lawyer and as a politician, interested more in grabbing headlines than getting a winning result. It only makes him seem more vulnerable in a 2015 reelection bid.