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PA Federal Court Upholds Consumer Class Action Lawsuit Filed by Philadelphia Union Funds

On Friday, March 12, 2010, Pennsylvania Federal Court upheld a consumer class action brought by two Philadelphia Municipal union health and welfare benefit plans, to recover the money they and other health benefit and prescription plans paid for useless fentanyl pain patches that were recalled due to a manufacturing defect, under a ruling handed down by US District Court Judge Cynthia M. Rufe.

The ruling came in the case of AFSCME District Council 47 v. Ortho-McNeil-Janssen, et al, (E.D. Pa., No. 2:08, cv, 5904), in response to a motion to dismiss the case, filed by the three manufacturer defendants,Ortho-McNeil-Janssen, which sold Duragesic brand patches, Sandoz, which marketed a generic version, and Alza Corporation, the actual manufacturer of the defective patches.

The lawsuit arose out of an announcement that was made on February 12, 2008, to recall Duragesic pain patches. The patches contain fentanyl, a potent narcotic painkiller, and are designed to provide controlled, gradual release of the drug over three days.The patches were recalled after it was found that some patches could have a manufacturing defect in which the inner reservoir of the fentanyl might have a cut, which could cause a sudden and potentially fatal release of the drug.

The recall notice instructed patients not to handle or use the pain patches subject to the recall. Health benefit plans throughout the country such as District Council 47 and the Fire Fighters benefit plans had expended money for the worthless patches.

The class action complaint filed on behalf of the American Federation of State, County and Municipal Employees, District Council 47 Health and Welfare Fund, and the Philadelphia Firefighters Union Local No. 22 Health and Welfare Fund, stated four legal grounds or bases for recovering the money spent for the patches: the Pennsylvania Unfair Trade Practices and Consumer Protection Law, express warranty, implied warranty, and unjust enrichment. The manufacturers, who to date have refused to reimburse health benefit plans, asked the Court to dismiss the case.

The Court rejected numerous arguments raised by the manufacturers to avoid being held responsible. It found that the two union funds had legal standing to assert reimbursement claims against the manufacturers for the cost of the useless, recalled drug patches because the Complaint sufficiently alleged they had in fact been injured by the recall by paying the money.Furthermore, the funds were entitled to sue the manufacturer as a consumer under Pennsylvanias consumer protection law. The Court also ruled the two union funds were qualified to sue under warranty law.However, the Court went on to dismiss the warranty claims because the plaintiffs had not notified the manufacturer of the warranty claim before filing suit.

According to Philadelphia attorney William D. Marvin, one of the attorneys representing plaintiffs in the class action, Judge Rufe’s opinion brings some much-needed clarity to some fundamental issues on the liability of drug manufacturers when their products are recalled or turn out to be something less than advertised.What is important here is the courts clear determination that by paying for the prescriptions, health benefit providers have standing to sue manufacturers and distributors of defective or misrepresented products to recover the money paid for the products.We look forward to proceeding with discovery and on to trial now that our clients claims have been upheld.

Mr. Marvin is with the law firm of Cohen, Placitella & Roth, P.C., of Philadelphia and Red Bank, New Jersey. The firm of Bailey, Perrin Bailey of Houston, Texas also represents the union funds in the class action.

To find out more about the class action lawsuit, contact William D. Marvin at [email protected], or click here, to submit an inquiry.

To read US District Court Judge Cynthia M. Rufe’s opinion on the motion to dismiss, please click here.

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