Category: Daily News

An Orange County Superior Court Judge ruled late Monday that four drug companies can’t be held liable for that state’s opioid epidemic. Communities had hoped for tens of billions of dollars in compensation to help ease the addiction crisis.

It marked the first trial win for any drug companies in the more than 3,300 lawsuits filed by states and local governments over a drug abuse crisis that the U.S. government says led to nearly 500,000 opioid overdose deaths over two decades.

Attorneys representing four California counties argued the drug companies used false and misleading marketing to push up the sale of prescription opioids. The Sixth Amended Complaint asserted causes of action for False Advertising , Unfair Competition and Public Nuisance against the companies. The companies denied any wrongdoing.

Phase I of this case regarding liability was tried to the Court between April 19, 2021 and July 27, 2021 . No party requested trial by jury on any claim or issue. The entire trial was conducted remotely, via the Zoom platform. All parties rested on July 27, 2021. The Court set a briefing schedule for closing briefs, and closing arguments were heard on September 30, 2021 and October 1, 2021.

In his 41-page ruling, Superior Court Judge Peter J. Wilson said it was unclear the drug industry’s marketing efforts led to directly to a rise in illegal use of prescription opioid painkillers.

He also acknowledged that his Court is aware of the toll being taken on society by what has been variously referred to as the “opioid crisis” or the “opioid epidemic” and that the defendants do not dispute that there is an opioid crisis.

However he noted that “the California Legislature has approved, and continues to approve, the availability of opioid medications, through prescriptions, by passing the laws described” in the opinion.

The ruling went on to say “As the Historical and Statutory Notes to Business & Professions Code section 2241.5 state, “it is the intent of the Legislature to encourage physicians to provide adequate pain management to patients in California consistent with Section 2241.5.” And the California Legislature made clear its intention to expand, rather than restrict, the appropriate prescribing of opioid medications.“

“In addition to its relevance to proof of the “unreasonableness” element of a public nuisance claim as discussed above, the absence of evidence concerning medically inappropriate prescriptions also breaks the chain of causation between Defendants’ alleged wrongful conduct and the harms complained of.“

The ruling reviewed documents presented during the trial against each defendant in great detail, and concluded that none of the identified statements, within the applicable statute of limitations periods, to be false or misleading. An allegedly false or misleading statement in an internal company document, that was in no way published or disseminated before the public, would not qualify as “false advertising” under the statute or applicable cases.

The ruling concludes that “There will accordingly be judgment for Defendants on all claims.”

The ruling came as J&J and the three largest U.S. drug distributors – McKesson Corp, Cardinal Health Inc and AmersourceBergen — work to finalize a proposed deal to pay up to $26 billion to settle the thousands of cases against them. And a bankruptcy judge in August approved a settlement by OxyContin maker Purdue Pharma and its wealthy Sackler family owners of the claims against them that the company values at more than $10 billion.

In a statement, the lead lawyers overseeing related federal lawsuits against the companies — Jayne Conroy, Paul Farrell and Joe Rice — said they strongly disagreed with the ruling and stressed that it did not impact related cases nationally.

The only other opioid trial to reach a verdict resulted in an Oklahoma judge in 2019 ordering J&J to pay $465 million to the state. J&J is appealing that decision.

Trials are currently underway a New York case against Teva and AbbVie and in Ohio against three pharmacy chain operators. A West Virginia federal judge recently finished hearing evidence in a trial involving the distributors.

A former Costa Mesa resident, who was arrested in October on suspicion of collecting over $1.4 million from companies paying for bogus workers’ compensation insurance coverage, made her first court appearance in Orange County last week to face multiple felonies.

Unlicensed insurance agent Karyl Lynn Reed, 57, was arraigned on multiple felony counts of grand theft, forgery, embezzlement, and aggravated white-collar crime after allegedly defrauding three victims. Earlier this month, Reed was arrested in Seabrook, Texas, and extradited to Orange County.

An investigation by the Department of Insurance found that between 2012 and 2019, Reed acted as an insurance agent without a license and collected premiums for workers’ compensation insurance through her businesses, Envoy Business Partners and Allenn Specialty Group. Both companies operated out of facilities located at 16787 Beach Blvd,. Suite 730, Huntington Beach, CA 92647-4848

She would provide her victims with fraudulent Certificates of Insurance, causing her victims to believe they had valid coverage when there was actually none.

The investigation discovered Reed also operated a staffing company without valid workers’ compensation coverage and personally adjusted and administered employee injury claims. She collected workers’ compensation premiums and payroll, employer and employee taxes from victims, and provided them with falsified Certificates of Insurance as well leading them to believe they were covered when they were not.

The Department’s investigation revealed that one victim did not have workers’ compensation coverage for an employee who became injured. Another victim had requested an updated Certificate of Insurance from their insurance company and were told no policy or coverage was in place and found out the policy number Reed had provided them belonged to a policy for another business.

The investigation further revealed another victim who discovered the money they were paying Reed to her staffing service was not being remitted to the insurance company.

The public defender representing Reed could not immediately be reached for comment. Reed is due back in court in December. The case is being prosecuted by the Major Fraud Unit of the Orange County District Attorney’s Office.

Consumers can check the license status of their agent or contact the Department of Insurance at 800-927-4357 if they suspect they are victims of insurance fraud.

The framework of a deal on President Biden’s social spending package unveiled on Thursday does not include allowing Medicare to negotiate lower prescription drug prices, leaving out a major Democratic priority.

A senior administration official told reporters there were not enough votes among Democrats to pass the policy.

“[President Biden] has spent countless hours over the last several weeks discussing this topic with members of Congress and trying to secure a deal,” the official said. “But at the end of the day, there are not yet enough votes to get something across the line that will deliver what the American people need and expect on prescription drugs.”

The absence of drug pricing in the package is a major failure for the party on one of its key campaign pledges, and an area where leaders like Biden and Speaker Nancy Pelosi (D-Calif.) had repeatedly vowed to take action.

Sen. Kyrsten Sinema (D-Ariz.), as well as a small handful of House Democrats, were seen as obstacles to passing the policy.

As rumors circulated about drug pricing provisions being dropped or watered down on Wednesday, vulnerable House Democrats urged their party to keep a strong provision in, noting they campaigned on it.

“All of us would love to be able to go back to our districts and say, ‘Hey this is something we campaigned on that we delivered,'” said Rep. Susan Wild (D-Pa.), speaking of other front-line members in competitive districts.

Now, because of objections from a small minority of Democratic lawmakers, the drug pricing provision is being left out.

The proposal is extremely popular with voters. A Kaiser Family Foundation poll this month found that 83 percent of the public support allowing the government to negotiate drug prices.

Lawmakers had expressed hope in recent days that they would be able to find a compromise on a narrowed version of the drug pricing measure. Senate Finance Committee Chairman Ron Wyden (D-Ore.) said in recent days he would not accept a “fig leaf” on drug pricing and would insist on a strong measure.

Sen. Bernie Sanders (I-Vt.) has also made lowering drug prices a top priority for the package.

Reps. Scott Peters (D-Calif.), Kathleen Rice (D-N.Y.) and Kurt Schrader (D-Ore.) voted against a drug pricing proposal in committee last month, warning it would harm innovation from drug companies to develop new treatments. They pushed an alternative, much scaled-down measure.

The absence of drug pricing measures in Biden’s new spending framework is a major victory for the pharmaceutical industry, which fought hard against the proposal with lobbying and a seven-figure ad buy, and has long been a powerful force in Washington.

Drug companies warned that regulation of their prices would harm their ability to do research and bring new treatments to market.

Since the COVID-19 pandemic began, over 50,000 incarcerated persons in California’s state prisons have been infected by the SARS-CoV-2 virus. At least 240 have died from the disease, many more have been hospitalized.

Finding California’s plan for curbing the spread of Covid-19 in state prisons woefully inadequate, a federal judge ordered the state to carry out a court-appointed receiver’s recommendation that all prison staff be vaccinated by January 12, 2022

At a July 29 case management conference, court-appointed receiver J. Clark Kelso stated that “all of our efforts to date have been insufficient to achieve the very high rate of staff vaccination that is necessary to further significantly reduce the risk that Covid will be introduced into our prisons,” in part due to the threat posed by the more infectious delta variant.

The state had argued that its current policy of requiring vaccines at two health care-focused institutions – the California Health Care Facility in Stockton and California Medical Facility in Vacaville – and for employees working in designated health care settings at 33 other prisons was a reasonable approach. Under that policy, unvaccinated employees are also required to undergo Covid testing twice per week.

Judge Tigar disagreed with the state’s assessment, concluding that its failure to implement a vaccine mandate for staff constitutes deliberate indifference in violation of the Eighth Amendment.

“A finding that defendants were not deliberately indifferent based on a toolbox without a vaccine has little relevance when the same toolbox now includes a vaccine that everyone agrees is one of the most important tools, if not the most important one, in the fight against Covid-19,” Tigar wrote.

The judge ordered Kelso to draft an implementation plan, including a deadline for all covered persons to be vaccinated, by Oct. 12. The mandate would allow for certain religious and medical exemptions.

Under current rules, prison employees must get vaccinated or submit to regular COVID-19 testing. Tigar’s order would eliminate the testing alternative for everyone except those with religious or medical exemptions.

Defendants and the Receiver jointly filed the required plan with a deadline for covered persons to be fully vaccinated by November 29, 2021.

Defendants subsequently indicated some confusion over whether the deadline was as stated in the filed plan, explaining that they had requested a December 20, 2021 deadline to which the Receiver did not agree. The Court ordered Defendants to meet and confer to attempt to resolve any dispute that might exist over the implementation deadline.

The Receiver requested an order setting a specific implementation deadline. The Court reviewed the Receiver’s and Plaintiffs’ filings in support of such an order, and Defendants’ and Intervenor California Correctional Peace Officers’ Association’s filings in opposition.

In light of the compelling public health considerations underlying the vaccination order, as well as the significant passage of time – thirty days since the Court issued its order – without any apparent action aside from the October 12 joint filing of an implementation plan, the Court agreed with the Receiver that it is appropriate to set a specific vaccination deadline at this time.

The Court ordered that full vaccination of the persons covered by the September 27, 2021 order occur no later than January 12, 2022.

In the process, the politically powerful prison guards’ union and Gov. Gavin Newsom have resisted a COVID vaccine mandate, despite growing outbreaks. On October 12, 2021, the State of California appealed the Order to the 9th Circuit Court of Appeal. Newsom’s administration on Monday asked Tigar to pause his order while the appeal makes its way through court.

Connie Gipson, director of the correction’s department’s Division of Adult Institutions, said in the filing that she’s concerned a significant number of employees would quit or face firing rather than accept the vaccine.

The state’s much-maligned Employment Development Department acknowledged Monday, that organized crime rings and inmates snatched $20 billion intended for jobless Californians during the height of the pandemic. The loss is higher than the $11 billion estimate given earlier in the year.

Courthouse News reports that the alarming admission came during an oversight session in which the department’s brass updated lawmakers on progress being made to fraudproof and revamp an agency that failed millions of Californians last year. The updated total of confirmed unemployment benefits issued to scammers nearly doubles the estimate given by the department this past January, thought it warned at the time the figure could be as high as $30 billion.  

“Of the $177 billion that was paid out, $20 billion is estimated to be fraudulent,” EDD Director Rita Saenz told lawmakers.

The swift takeover of California’s unemployment system last year roiled taxpayers and was a political nightmare for Governor Gavin Newsom and the state’s Democratic leaders. The embarrassing revelation that inmates on death row were able to apply for and receive benefits while hundreds of thousands of legitimate claims went unfilled spurred the overhaul of the department’s leadership and its outdated customer service systems.  

The fraud not only sparked criminal investigations but caught the attention of lawmakers who turned to the state’s venerable auditor for help.

State Auditor Elaine Howle found the department was ill-prepared for a major economic downturn and essentially ignored recommendations her office issued 10 years ago in wake of the Great Recession.  

“EDD’s performance was poor before the pandemic, it just got miserable,” Howle told a joint budget committee Monday.

Howle’s reports spurred a flood of reforms and the auditor joined Saenz to give lawmakers a progress report on the department’s ongoing changes.

The auditor, who is scheduled to retire this year after 21 years on the job, said the department has implemented around 60% of the recommendations issued in her January report. The department has begun clearing its deferred claims backlog, updated its website to be more transparent for the public and renovated its call center.

While Howle called the changes “notable progress,” she urged the committee to keep up with persistent oversight and make sure the department carries out the changes.

The committee’s chair state Sen. Wendy Carrillo lamented the slow pace of progress, noting the department is still struggling with a massive claims backlog despite an influx of recent budget funding to help boost staffing levels. The Los Angeles Democrat asked Howle how the state can “turn this Titanic around” and be sure the embattled department is spending the $276 million in new funding and making changes wisely.  

“What’s the use if the system is so slow that it can’t take into account a new workforce or the need of people requiring assistance from the EDD?” asked the former broadcast journalist.

Monday’s hearing, which had been postponed multiple times over the last several months, comes as the state continues to struggle with high levels of unemployment.