How Legal Settlements Work: A Brief Introduction
Settlements can be offered, and accepted, at any time. At bottom, a settlement is simply an agreement. The defendant agrees to pay the plaintiff a negotiated sum of money and, in exchange, the plaintiff agrees to drop the case. Some companies will come to an out-of-court settlement agreement even before a lawsuit has been filed, hoping to head off protracted court proceedings.
Other claims reach settlement during pre-trial proceedings, when the plaintiff and defendant are busy sharing relevant evidence with each other. Faced by what’s shaping up to be an airtight case, defendants usually offer their accusers a sum to avoid losing more at trial. Of course, it’s always the plaintiff’s right to refuse a settlement offer, or negotiate for more, but it should be remembered that settling also takes the burden of trial from the plaintiff’s shoulders, too.
Janssen, J&J Have Settled Over 80 Risperdal Cases
Settlements can also take place during a trial, even days into court proceedings. That’s what happened when Janssen Pharmaceuticals was first hit by Risperdal lawsuits over gynecomastia around 2012. Most of these initial claims were filed in the Philadelphia County Court of Common Pleas, a state court in Pennsylvania. And, to encourage a speedy resolution, the judge presiding over the cases scheduled a series of six lawsuits for trial.
Janssen reached an undisclosed settlement agreement with the first plaintiff, a man, then 21-years-old, who had been prescribed Risperdal before it was approved for use in children, only one day into his trial, according to NJ.com. The company reached settlements with the next five plaintiffs shortly after. The next year, as Risperdal lawsuits continued to mount, Janssen settled a lawsuit in which 77 different men claimed they had experienced abnormal breast enlargement after taking the drug. A number of these plaintiffs had undergone such drastic body changes that they had required mastectomy procedures.
As in previous cases, the drug manufacturer included a nondisclosure clause in the settlement agreement, binding all 77 of the plaintiffs to silence. Several months later, the group of patients filed a motion in Pennsylvania state court attempting to force Janssen to honor its side of the agreement. In the motion, the plaintiffs told a judge that the defendant had refused to their settlements, despite agreeing to them months earlier.
When State Prosecutors Got Involved
The next few years saw a lull in settlement arrangements, at least where gynecomastia patients were concerned. But Johnson & Johnson was fielding another sort of litigation over Risperdal at the same time.
Beginning in 2004, state prosecutors from Louisiana to filed suit against Johnson & Johnson, arguing that the company had allowed its subsidiary, Janssen Pharmaceuticals, to market Risperdal off-label. The companies, State Attorneys General claimed, had promoted Risperdal for a host of unapproved uses, from symptoms of dementia in elderly patients to bipolar disorder in children. At the time, Risperdal was only approved to treat schizophrenia in adult patients.
When Janssen’s sales representatives approached physicians, the lawsuits said, they had been coached to minimize Risperdal’s risks, while over-stating its benefits. Some complaints even accused Janssen of orchestrating illegal kickback schemes to encourage higher rates of Risperdal prescription. By 2012, prosecutors from 36 states and the District of Columbia had filed similar off-label marketing suits against Janssen and Johnson & Johnson.
Janssen Settles State Cases For $181 Million
And while a number of state court judges, including ones in Arkansas and South Carolina, ordered the companies to pay millions of dollars in civil penalties, the lawsuits also led to a wave of settlements. As the New York Times then reported, Johnson & Johnson announced on August 30, 2012 that a $181 million settlement had been reached in the cases.
Federal Gov’t Takes Up Off-Label Marketing Claims
Little more than a year later, the company would end another lawsuit in a similar manner, except this time, the complaint was filed by the US Department of Justice, a wing of the federal government. Picking up on allegations first outlined in cases pursued by State Attorneys General, federal prosecutors accused Janssen Pharmaceuticals and its parent company of marketing Risperdal for off-label uses and paying illegal kickbacks to health care providers.
The company settled the Justice Department‘s claims for an astounding $2.2 billion, making it one of the biggest resolutions for a case of healthcare fraud in American history. But even more interesting was that, while Janssen Pharmaceuticals denied liability on the majority of charges, the company pleaded guilty to promoting Risperdal to doctors as a treatment for psychosis and associated symptoms in elderly dementia patients. That was illegal, since Risperdal hadn’t been approved for those people. In its plea agreement, Janssen accepted $400 million in criminal penalties.
Recent Settlements Avoid Risperdial Trials
Meanwhile, the number of product liability cases filed in state courts around the country was still growing. But it wouldn’t be three years until another settlement agreement with a gynecomastia patient was announced. That’s probably because Johnson & Johnson, along with its subsidiary, were awaiting the results of another round of bellwether trials heading forward in the Philadelphia County Court of Common Pleas.
The Role Of Bellwether Trials In Settlement Talks
What are bellwether trials meant to do? In one sense, these preliminary trials will decide the cases of select plaintiffs, and that’s a pretty big deal to the specific plaintiffs in question. But when hundreds or thousands of similar lawsuits are also awaiting judgment, bellwether trials take on a decidedly different cast.
When a bellwether jury finds in favor of the plaintiff, all of the other plaintiffs learn something about their own cases. And perhaps they gain a bit of leverage in settlement talks. Likewise, defendants who are victorious in early bellwether trials are probably a little less likely to settle the cases, because the prospect of going to trial now appears to suit their interests. This is the true purpose of holding bellwether trials, to provide plaintiffs and defendants with a better grasp on where they stand.
Defendants Lose Four Bellwethers
So how did those 2015 – 2016 bellwether trials go for Johnson & Johnson and Janssen Pharmaceuticals? Not very well. While the companies were absolved of responsibility in one trial, four other Philadelphia juries decided that the defendants should be held liable for concealing safety evidence from the public.
One man, now 21-years-old, was awarded $2.5 million in compensation. Another plaintiff, also 21 at the time of trial, was granted $1.75 million in damages. A third man, who had been prescribed Risperdal to treat the symptoms of Tourette’s syndrome, won $500,000.
But the largest jury verdict came in July of 2016, when a man who had been prescribed Risperdal at the age of five and soon developed gynecomastia, was awarded $70 million. Punitive damages, intended to punish Johnson & Johnson, accounted for a large proportion of the jury’s verdict. As the jury found, the defendant had attempted to destroy evidence relevant to the case.
That, perhaps, was a breaking point for the company, because two undisclosed settlements were to follow. In October 2016, only one day before the trial’s start date, Janssen Pharmaceuticals entered yet another settlement agreement in a Risperdal case, the Legal Intelligencer reports. A month later, the company settled another lawsuit four days before the case’s trial date had been scheduled. The most recent Risperdal settlement came on January 6, 2017. Again, the settlement was announced just days before trial was set to begin.