AstraZeneca Sues South Carolina to Block Use of Private Lawyers in State's Seroquel Case

When AstraZeneca reached a $68.5 million settlement with 37 states last week for alleged off-label marketing of its Seroquel antipsychotic, seven states with pending Seroquel false marketing cases against AZ stayed on the sidelines. One of them was South Carolina, which sued AstraZeneca for off-label Seroquel marketing in 2009. On Monday, AstraZeneca went on the attack, filing a 22-page declaratory judgment suit against S.C. Attorney General Alan Wilson in state court in Spartanburg.

AstraZeneca's lawyers at Morgan, Lewis & Bockius allege that Wilson is violating the company's constitutional due process rights by prosecuting a "law enforcement action akin to a criminal proceeding" under the guise of a civil suit. AZ also accuses Wilson of reaching an "unlawful" agreement to split a potentially "staggering"contingency fee among three private plaintiffs lawyers and his own office.

"The underlying litigation, as it now stands, is an orchestrated plan by Attorney General Wilson and private counsel to seek the maximum penalty--in the absence of any actual deception, actual reliance on any actual deception, or actual harm from AstraZeneca's actions," AZ's complaint asserts. "Moreover, the Attorney General and private counsel now have created an enterprise whereby they will jointly attempt to exploit the Attorney General's law enforcement authority, so they can both profit on a massive contingency fee."

The company cites a December 2009 amendment to a fee agreement that grants plaintiffs lawyers F. Kenneth Bailey of Bailey Perrin Bailey, John Simmons of the Simmons Law Firm, and John Belton White Jr. of Harrison, White, Smith& Goggins up to 23 percent of any penalties awarded to the state under the South Carolina Unfair Trade Practices Act.

The AG's office would retain ten percent of the contingency fee under the agreement. "Both the Attorney General's and private counsel's financial interest in the 'successful' prosecution of claims against AstraZeneca could be staggeringly high," AZ alleges.

South Carolina first filed suit against AstraZeneca in 2009, seeking damages to recover funds the state spent to treat Seroquel side-effects and for reimbursements for alleged off-label Seroquel uses. Wilson's predecessor amended the state's complaint in March 2010, dismissing all claims except for statutory penalties for alleged false statements in Seroquel package inserts. In addition, AZ claims, the state amended its fee agreement to delete a previous provision strictly limiting the private lawyers' recovery to actual damages. (The state's original and amended fee agreements and complaints against AZ are here.)

According to AstraZeneca, Wilson and the state's outside counsel claim AZ must be penalized $5,000 for every Seroquel prescription ever written in South Carolina. That could translate into "at least millions" for the plaintiffs firms, and contingency fees for Attorney General Wilson that "could approximate or exceed the annual budget for his office."

We left messages with Ken Bailey of Bailey Perrin Bailey and with aspokesperson for AG Wilson, but we didn't hear back. AZ lawyers J. Gordon Cooney Jr., Brian Shaffer, and Thomas Sullivan of Morgan Lewis declined to comment.

via law.com

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