A Florida cardiologist has been sentenced to six years in federal prison and ordered to pay $4.5 million in restitution after serving to review the echocardiograms of more than 1,100 prospective claimants on a fen-phen settlement trust fund; many of the claimants he diagnosed were not in fact ill. “The physician was also to be compensated $1,500 for each claimant who qualified for benefits when that person’s claim was paid, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania, which prosecuted the case.” At trial, he testified “that his medical reports had been forged by the mass tort lawyer who had hired him on a contingency fee basis, the record states.” As I observed in The Litigation Explosion, medicine, like law, is a profession in which the prohibition of contingency or success fees developed early, in large part because it was expected that such fees would work to the benefit of dishonest practice. [Penn Record]
We’ve recently discussed the Kentucky fen-phen scandal, in which the plaintiffs’ lawyers are accused of stealing tens of millions of dollars from their clients; there’s another brewing scandal involving fen-phen lawyers in New York.
Napoli Kaiser Bern (now known as Napoli Bern) represented more than 5,000 plaintiffs who had opted out of the larger class action suit against manufacturer AHP; a whistleblower, or disgruntled ex-employee (take your pick) alleged that Napoli Bern manipulated the amounts of the settlement to be paid to each plaintiff — giving more to its own direct clients — so that Napoli could maximize its own profits at the expense of other law firms.
More important is the allegation that Napoli Bern lied to its clients (and to its own expert witness on ethics) in making them think that the amounts allocated to each plaintiff had been determined by AHP and reviewed by a special master appointed by the court; in fact, it appears that Napoli Bern may have decided unilaterally how much to offer each plaintiff. Yesterday, a New York state judge ruled that the allegations had sufficient merit to reopen the settlement and send the allegations against Napoli Bern to trial.
The stakes are high here; the total amount of this settlement — confidential, but reportedly at least a billion dollars — is not at issue, but the distribution of that money among the lawyers and plaintiffs is. As the judge noted, in theory the penalty could be as severe as requiring Napoli Bern to forfeit all fees earned in the case. (Isn’t mass tort litigation fun? Billions of dollars of Other People’s Money floating around, waiting for lawyers to figure out how to distribute it.)