Fen-phen lawyers defrauded plaintiffs, court rules

Physicians, other health care professionals, hospitals, and other health-care entities take their lumps here with some regularity, so it is perhaps only fitting that I should note this story from yesterday's N.Y. Times:

W. L. Carter knew there was something fishy going on when he went to his lawyers’ office a few years ago to pick up his settlement check for the heart damage he had sustained from taking the diet drug combination fen-phen.

The check was, for starters, much smaller than he had expected. And his own lawyers threatened to retaliate against him if he ever told anyone, including his family, how much he had been paid. “You will be fined $100,000, you will go to jail and you will be sued,” Mr. Carter recalled them saying.

Mr. Carter was right to have been suspicious. The lawyers defrauded their clients, a state judge has ruled in a civil case, when they settled fen-phen lawsuits on behalf of 440 of them for $200 million but kept the bulk of the money for themselves. Legal experts said the fraud might be one of the biggest and most brazen in legal history.

This week, several clients testified before a federal grand jury that has begun to investigate potential criminal wrongdoing arising from the settlement.

“It enrages me,” said Sonja Pickett, a retail manager, who testified Thursday before the grand jury. “They robbed us.”. . .

The basic facts are not in dispute. When the clients sued the drug maker, they agreed to pay the lawyers 30 percent to 33 percent of any money that was recovered, plus expenses. In this case, that would have left the 440 clients to divide perhaps $135 million.

But the clients received only $74 million. An additional $20 million went to a questionable “charitable fund.” The rest — $106 million — went to lawyers. Though amounts of the individual settlements remain sealed, court papers suggest they were from $100,000 to $5 million. On average, plaintiffs received less than 40 percent of what the settlement agreement specified, instead of the roughly 70 percent to which they were entitled.

Had the lawyers merely taken what they were contractually entitled to, they would have become very rich men, said Tracy Curtis, a mortgage loan officer who is also suing her former lawyers. “They could have taken the high road,” Ms. Curtis said. “They would have made plenty of money.”

There's more, and it's all ugly. Shameful.