Legal Roundup: Florida Accused of Illegally Kicking People Off Medicaid, Johnson & Johnson to Pay $572 Million in Opioid Case

A look at recent court decisions and how their rulings have an impact on risk management and the insurance industry.
By: | September 4, 2019

Johnson & Johnson to Pay $572 Million in ‘Landmark’ Opioid Case

The Case: Drug maker Johnson & Johnson faced off against an Oklahoma judge over the company’s alleged role in the opioid crisis that’s left more than 400,000 dead since 1999.

CNBC reports that court documents say J&J and subsidiary Janssen “repeatedly downplayed the risks of addiction to opioids, training sales representatives to tell doctors the risk was 2.6% or less if the drugs were prescribed by a doctor. Physicians who prescribed a high amount of opioids were targeted as ‘key customers.’ ”

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Scorecard: Johnson & Johnson has been ordered to pay $572 million for its allegedly deceptive marketing practices that helped fuel the epidemic. J&J intends to appeal the decision.

The company’s stock rose 2% on the news because investors thought the company could be on the hook for as much as $5 billion.

CNBC reports: “Calling the opioid crisis an ‘imminent danger and menace,’ District Judge Thad Balkman said, ‘the state met its burden that the defendants Janssen and Johnson & Johnson’s misleading marketing and promotion of opioids created a nuisance as defined by [the law],’ including a finding that those actions compromised the health and safety of thousands of Oklahomans.”

Takeaway: Expect far more litigation around the opioid epidemic. Just last week, Endo International and Allergan settled lawsuits with two Ohio counties for a total of $15 million.

More than 2,300 lawsuits are still coming from state and local governments who claim that the drug companies used deceptive marketing tactics in the promotion of opioids.

Knights of Columbus Sued After Discovery of Alleged Insurance Fraud 

The Case: The Knights of Columbus is being accused of a wide-ranging insurance scheme.

In U.S. District Court in Colorado, an IT firm called UKnight claims it was hired to work for the Knights of Columbus but found that the group was artificially inflating its membership numbers to get better insurance ratings and, in turn, better deals of the life insurance.

BuzzFeed reports that “the lawsuit claims that the Knights’ membership is not in fact growing, but shrinking and getting older. To hide this, the lawsuit claims, it has made it extremely difficult to remove members from its rosters, even if they haven’t paid dues in years. So, as some more members join, and none of the members who leave are recorded, it appears to insurance rating companies that its pool of potential customers is growing.”

UKnight claims “the Knights unlawfully terminated its contract after UKnight discovered the alleged conspiracy,” according to BuzzFeed.

Scorecard: The lawsuit was filed in 2017 but after failed negotiations, it went to trial on August 26.

The Knights of Columbus told BuzzFeed they have “a long-standing, thoughtful, and well-conceived membership retention process in place that reflects sound practices and the values of the Order.”

They also said the organization “believes strongly in the judicial process and looks forward to responding before a jury to the claims made by the plaintiff in this contract dispute.”

Takeaway: The Knights of Columbus is a heavy hitter in the political world and counts icons Babe Ruth and John F. Kennedy as past members.

It’ll be interesting to see how the case plays out.

UnitedHealthcare Seeking to Dismiss Woman’s Lawsuit Over Denial of Cancer Treatment

The Case: Earlier this year, Kate Weissman sued UnitedHealthcare over the insurer’s refusal to pay $95,000 for proton beam radiation therapy, which is meant to precisely target tumors in the body.

The Boston Globe explains: “Weissman, 34, believed it would save her life — but UnitedHealthcare disagreed, saying proton therapy is experimental and is not proven to be more effective than conventional radiation for her cancer.”

The newspaper goes on to say the case could seek class-action status and that UnitedHealthcare is now asking for the case to be dismissed, “arguing that she has failed to make a claim under specific provisions of a federal law that governs employer-sponsored health plans.”

Scorecard: Weissman is cancer free for three years and vows to keep on fighting the insurer, according to the Boston Globe. UnitedHealthcare told the paper its coverage decisions are based on scientific research.

Takeaway: As new cancer treatments become available, insurers will find themselves deciding whether to cover them or not. Proton treatment is an interesting case.

The Boston Globe explains: “It typically costs at least twice as much as standard radiation — but studies have failed to show that it is superior to standard radiation for most patients. Insurers routinely refuse to pay for the treatment, though some patients get covered after appealing. Still, health policy experts who have studied proton therapy say it is used more often than it should be, representing waste in the health care system.”

Florida Accused of Illegally Kicking People Off Medicaid

The Case: Dozens of people have sued the Department of Children and Families and the Agency for Health Care Administration in Florida, claiming that they were illegally kicked off of Medicaid.

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They say they were removed from coverage “without the state department first determining if the residents were still eligible, without giving residents’ notice or without giving them an opportunity to appeal the decision,” according to The Florida Times-Union

Scorecard: The case is still ongoing. It hinges on whether the state kicked the people off Medicaid after they were ineligible in just some categories of coverage but not all, according to the newspaper.

The lawyers who filed the suit are trying to increase the size of the class-action.

Takeaway: Removing someone’s health insurance is a sure-fire way to get them up in arms. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]