New Details on the Kentucky Fen-Phen Settlement

Beth Musgrave of the Kentucky Herald-Leader has the latest report on Kentucky fen-phen attorneys William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr., who are accused of taking more than $65 million from their clients in the diet drug settlement.  Here's an excerpt:

Three lawyers for American Home Products had testified earlier in the trial that the $200 million settlement was for only 440 people and was not meant to settle future claims brought by people who had taken fen-phen but were not part of the 2001 Boone Circuit Court lawsuit. The three lawyers have argued that some money from the settlement had to be set aside in case other people who took fen-phen came forward with other lawsuits.

When no one came forward, the lawyers put some of the money in a non-profit and the rest went to legal fees and expenses. The lawyers on the case received approximately $105 million, their clients received $74 million and the remaining money went into a non-profit.

But Robbins, after reviewing transcripts, depositions and court documents related to the 2001 case, said he doesn't understand how American Home Products could say the $200 million settlement was strictly for the 440 clients. Documents indicate that American Home Products said the 440 people who took the drug were entitled to $30 million to $50 million.

Instead, the pharmaceutical company paid $200 million. Why would the company pay an additional $150 million, if it was not to pay for future claims?

"They were buying peace in Kentucky," Robbins said. Robbins will continue his testimony Tuesday. Gallion, who took the stand on Friday, is expected to return to the stand later this week.

The Wall Street Journal Law Blog also has an update:

Prosecutors allege that as part of the fraud, the three failed to tell clients how much the total settlement was for, threatened many with a fine if they told their family members about the settlement and also failed to tell many that some of the settlement money was going into a non-profit. The three Lexington-area lawyers deposited millions of the settlement money into their own accounts after the settlement was reached in 2001 and then later moved some of that money back into the settlement account after the Kentucky Bar Association issued a subpoena asking about the details of the settlement, the indictment alleges.

Robbins testified that the judge decides if and when clients are notified in a class action. “It is the judge’s responsibility to decide when notice should be given and what that notice should consist of.”

ECB