A TIME-LINE OF EVENTS
settlement payments mark the final phase of a contentious, drawn-out process
which began when the drug companies were sued by victims, and families of
victims, of Courtney's dilution scheme.
Courtney, who pleaded guilty
in February 2002, was sentenced to 30 years in prison in December 2002 for
diluting cancer medications to a fraction of their potency.
His criminal conduct
triggered hundreds of civil lawsuits by cancer patients and their families
against Eli Lilly, Bristol-Myers Squibb and Courtney.
The lawsuits alleged that
Eli Lilly and Bristol-Myers Squibb knew or had reason to know of Courtney's
dilution scheme but did nothing to stop him.
Both companies made
chemotherapy drugs that were adulterated by Courtney.
The plaintiffs contended
Eli Lilly and Bristol-Myers Squibb had access to sales data revealing
Courtney's sales numbers exceeded the drug quantities he purchased.
Both companies vehemently
denied liability, citing incomplete sales data that were used to determine
sales representatives' compensation and quotas, not to uncover criminal
conduct. The drugmakers insisted they learned of Courtney's scheme only after
his arrest in August 2001.
On October 7, 2002, just as
the Hayes case was set to go to trial, Eli Lilly and Bristol-Myers Squibb
agreed to settle the lawsuits on a confidential basis.
The settlement was reached
after Senior Jackson County Circuit Judge Lee Wells prodded the parties to meet
with an outside mediator.
Reasons to settle
In a joint statement
explaining their decision to settle, the companies said the mediation
"forced all the parties to take an additional hard look at this case and
to carefully consider the emotional impact of protracted litigation on the
A key factor leading to the
settlement was a peculiarity of Missouri law. Under the law, even if a jury had
found the drug companies only one percent at fault, they could have been forced
to pay 100 percent of any damages awarded by the jury.
The companies' possible
exposure was made clear just days after the settlement, when a jury assessed
more than $2-billion in damages against Courtney in the Hayes case. It was the
only one of the cases to go to trial, and it resulted in the second-largest
jury verdict in the United States last year.
The verdict was largely
symbolic, because Courtney's assets and insurance coverage were nowhere near
that amount. But the verdict underscored the emotional effect of Courtney's
misdeeds and showed what the drug companies would have been up against.
While the companies faced
risks in proceeding to trial, the plaintiffs also faced uncertainties. In
seeking to hold Eli Lilly and Bristol-Myers Squibb liable, they sought to break
new legal ground by asserting the companies had an obligation to go to the aid
of a person in harm's way.
A legal principle holds
that there is no legal duty to rescue someone from the wrongful conduct of
"In view of the
companies' possible exposure and in view of the possibility that the plaintiffs
might not have received $71-million, the settlement probably makes perfect
sense," said Jeffrey Berman, a law professor at the University of
Missouri-Kansas City School of Law.
Bristol-Myers Squibb is
paying less than half as much as Eli Lilly because the plaintiffs alleged that
Bristol-Myers learned of Courtney's scheme only a few months before Courtney's
arrest. The plaintiffs alleged that Eli Lilly knew of the dilution scheme as
early as three or more years before his arrest.
The overall settlement
amount comports with what the mediator, former Houston Judge Susan Soussan,
recommended during the mediation talks in October.
A three-member arbitration
panel, including Soussan, determined the amount. When the settlement was
announced in October, the two sides had agreed only to a settlement range of
between $21-million and $85-million.
The plaintiffs' legal fees
will come out of their payouts, based on the contractual arrangements each has
with attorneys. Typically, plaintiffs' attorneys charge a contingency fee of
between 30 percent and 40 percent in cases that are settled.
The settlement is in
addition to a restitution plan that was part of Courtney's federal criminal
case. In conjunction with his guilty plea, Courtney forfeited at least
$10.5-million in personal assets for restitution to cancer victims and their
arrangement, which is subject to court approval, involves less money but
embraces more victims than the settlement with the drug companies. It includes
patients who received diluted drugs as far back as 1991.