Activity In The Firm's Consumer Fraud Section - Thursday, January 31, 2013 12:54 - 0 Comments

A Report On Our Consumer Fraud Section

Our readers seem to like it when we feature particular Sections of our firm in the Report. We try to highlight the latest litigation trends occurring in a particular area of the law. We have received a great number of comments thanking us for doing this. This month, we feature the Consumer Fraud/Commercial Litigation Section of the firm which is managed by Dee Miles, who is Section Head and a member of the firm’s Board of Directors. The Fraud Section has been very busy during 2012 and that has continued into the New Year. The section is currently investigating and/or litigating the following cases:

AWP
Our firm represents the States of Alabama, Alaska, Hawaii, Kansas, Louisiana, Mississippi, South Carolina and Utah in a series of cases against pharmaceutical companies, known as the Average Wholesale Price (AWP) litigation. These States allege that pharmaceutical companies’ falsified pricing information, causing state Medicaid agencies to grossly overpay for prescription drugs. The Manufacturers’ false and inflated AWPs (average wholesale prices) caused pharmacies to shop for drugs that offered the highest reimbursement from the State. The inflated AWPs in turn provided higher sales revenue, volume and market share for the drug companies, and created dramatically steeper costs for the States. Juries have returned over $600 million in verdicts for the States of Alabama, Mississippi, Kentucky, Wisconsin, Missouri and Massachusetts. Meanwhile, our firm has settled with many companies in all eight states for over $700 million. The Beasley Allen attorneys litigating these cases are: Dee Miles, Roman Shaul, Clay Barnett, Chad Stewart, Bill Hopkins and Alison Hawthorne.

Lawyers: Dee Miles, Roman Shaul, Clay Barnett, Chad Stewart and Alison Hawthorne
Primary Staff Contacts: Beth Warren and Jessica Sutherland

AWP McKesson/First Databank
In addition to pursuing drug manufacturers for the fraudulent pricing of prescription drugs, the States of Alaska, Hawaii, Kansas and Louisiana have filed lawsuits against the major drug wholesaler, McKesson Corporation, for its role in the AWP scheme. These actions assert that from 2001 to 2009, McKesson associated itself with First Data Bank, Inc. to unlawfully and artificially increase the Wholesale Acquisition Cost (WAC) to Average Wholesale Price (AWP) markup factor for a multitude of brand name prescription drugs. McKesson and First DataBank’s deceptive practices resulted in the publication of false and misleading AWP prices, which the four states relied upon in making payments for brand name prescription drugs. McKesson and First DataBank’s scheme created overpayments for most brand name prescription drugs, in addition to the overpayments induced by the manufacturers’ fraudulent prices (the subject of separate but related AWP litigation filed by numerous states). Settlements have been reached in several of these cases already. The Beasley Allen attorneys litigating these cases are: Dee Miles, Roman Shaul, Clay Barnett, Chad Stewart, and Alison Hawthorne.

Lawyers: Dee Miles, Roman Shaul, Clay Barnett, Chad Stewart and Alison Hawthorne
Primary Staff Contacts: Beth Warren and Jessica Sutherland

Class Actions
Our firm’s class action practice is rapidly growing. We have cases filed all over the country ranging from consumer fraud, Antitrust, employment abuses, ERISA (Employment Retirement and Income Security Act) to product liability and nuisance cases. This area of the law continues to grow due to the corporate abuses occurring in the business world. Often times the class action is the most efficient legal vehicle to rectify a large scale “wrong” because while corporate abuse may have caused someone or a business harm, the harm is small, yet widespread. Some say a class is appropriate when “nobody gets ‘hit’ for much, but everybody does get ‘hit’.” Well, the “hits” keep coming and the class action cases continue to be filed.

While arbitration clauses have had some limited impact on class action filing, it has not proved to be the effective deterrent corporate America had hoped for. This is mainly due to the courts finally recognizing that arbitration was never intended to be utilized in consumer contracts. It was designed for complex business transactions involving sophisticated parties in specialized areas of business. However, corporations have abused the use of arbitration clauses to frustrate consumer resistance to their fraudulent practices; thus, it has resulted in a profit-making measure for corporate America.

Just because a consumer contract has an arbitration clause, that doesn’t mean a class action on the abusive corporate conduct is barred. There may be ways around the arbitration clause and a lawyer familiar with the ever-changing law on this issue can make that determination. Bill Hopkins, Archie Grubb, Chad Stewart and Andrew Brashier, lawyers in the section, are well versed in this area of the law.
We review many potential class actions daily and welcome the opportunity to review more.

Lawyers: Bill Hopkins, Archie Grubb, Chad Steward and Andrew Brashier
Primary Staff Contact: Bill Hopkins

Mortgage Fraud Cases
There are a large number of cases we are handling involving fraud in the mortgage loan area of lending, and misrepresentations involved with origination fees, servicing fees, unnecessary “add ons” and more. We have handled thousands of these cases and they continue to exist due to banks and other mortgage lenders relying of “fee revenue” as opposed to simply relying on the interest generated by the loan as income to the lender. This “fee generating” approach has landed many lenders in court and will continue to be a problem until the lenders clean up their practices.
Lawyers: Lance Gould, Scarlette Tuley and Bill Robertson
Primary Staff Contact: Paula Shaner

Antitrust Cases
Lawyers in the Section continue to investigate and litigate antitrust cases. Antitrust law is the law of competition. Society is better off if buyers and sellers act independently, not in concert. Antitrust law focuses on the promotion of competition through restraints on monopoly and cartel behavior. Typical cases involve attempts to monopolize, price fixing, exclusive distributorships, refusals to deal, tying arrangements, and mergers and acquisitions. We believe that antitrust is a growing area, as corporations increasingly tend to “cross the line” as they seek to gain advantage in this tough economy.

Beasley Allen is currently involved in antitrust litigation involving an illegal tying arrangement whereby a major pharmaceutical company requires users of its patented method of administering a cardiac drug to also purchase the pharmaceutical company’s unpatented cardiac drug (as opposed to cheaper generic drugs offered by competitors). The result is that our client, a hospital, is forced to pay four times as much for the branded (but unpatented) drug as it could for identical generic drugs. The case is filed as a class action on behalf of all healthcare providers affected by this conduct.

We are also involved in price-fixing litigation where we represent a state’s Attorney General, on behalf of the state and its consumers, against manufacturers of LCD screens used in televisions, computer monitors, and cellular phones. The Federal Trade Commission and Department of Justice have already investigated and sanctioned a number of LCD manufacturers for blatant collusion in setting prices for LCD products. Other states are involved in separate litigation against these manufacturers, and we envision that all state Attorneys General will file similar claims to recoup excess prices paid by state agencies and consumers for LCD products.

Lawyers: Archie Grubb, Scarlette Tuley and Andrew Brashier
Primary Staff Contact: Mandy Cook

Qui Tam Cases

A qui tam action involves a private party, called a relator, who asserts claims on behalf of the government. Although the government is considered the real (named) Plaintiff, if the action is successful, the relator receives a share of the award. Most qui tam actions are brought under the federal False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., although many States have adopted their own false claims acts. The successful results speak for themselves – over $34 billion in recoveries since 1986 – and that tells us a powerful story. Our firm is currently involved in a number of these qui tam cases throughout the country.

Qui tam actions typically begin with an employee witnessing his/her employer defrauding the government. The employee may later consult with an attorney on another matter, but convey their knowledge of false information being given to the government. Attorneys need to be on the lookout for such information and recognize potential claims.

It takes vigilance and courage for these private individuals, commonly referred to as “whistleblowers,” to report fraudulent activity; but without them, the vast majority of fraud against our government would go undetected. Recognizing the perils faced by whistleblowers, legislators have passed laws protecting individuals who take a stand against fraud. 31 U.S.C. § 3730 prohibits discrimination and retaliation against whistleblowers and imposes strict penalties, including double back pay with interest, on violators.

Additionally, if a qui tam action is successful, the whistleblower receives between 10- 30% of the Government’s recovery. Damages under the FCA include penalties and “3 times the amount of damages which the Government sustains” due to the fraud. 31 U.S.C. § 3729(a)(1)(G). In short, the law protects and rewards whistleblowers for their instrumental role in exposing and prosecuting fraud. Lawyers in our firm have waged war against corporate fraud for over 30 years and would welcome the opportunity to assist with any qui tam actions that any of our readers may have.

Lawyers: Larry Golston, Archie Grubb, Chad Stewart and Andrew Brashier
Primary Staff Contact: Mandy Cook

Bank of America/Merrill Lynch

Financial Advisors who worked for Merrill Lynch participated in several deferred compensation plans, including plans with names like FACAAP, Growth Award, WealthBuilder, and other Long Term Compensation Incentive Programs (LTCIP’s). The Advisors worked hard to accumulate benefits in the LTCIP’s with the expectation that Merrill Lynch and its successors would honor their obligations under the plans. Unfortunately, those obligations have not been honored.

Bank of America’s acquisition of Merrill Lynch triggered what was defined as a “Change in Control” within the LTCIP’s. According to plain language in the plans, that event affected the vesting of deferred compensation so that any participating broker who resigned for “Good Reason” following the buyout was due to be paid the deferred compensation they worked so hard to build up. This, however, did not happen and resulted in thousands of former Merrill Lynch Financial Advisors being owed millions of dollars in unpaid benefits.

Lawyers in the section are investigating and have filed claims on behalf of former Merrill Lynch brokers against Bank of America. These former employees often left either because of the changes that occurred or in some cases were pressured or pushed out by the incoming management. In any case, they were wrongfully denied deferred compensation to which they were and may still be entitled. During these tough economic times, it is a sad commentary that any hard working person must fight for what is rightfully due to them. Beasley Allen is here to help those former Merrill Lynch employees win that fight against Bank of America.

Lawyers: Chad Stewart, Scarlette Tuley and Larry Golston
Primary Staff Contact: Jodi Turner

FLSA Litigation

We have been handling FLSA (Fair Labor Standards Act) cases for many years. FLSA cases range from mischaracterizing an employee as a “manager” to avoid having to pay overtime wages, to employers having employees “work off the clock” to save on labor cost, but both are violations of the law under the FLSA.

We recently filed a case against a company in Alabama alleging that the employees are not being compensated for all hours worked. The company has a policy of adjusting the work times of employees to reflect when the employees’ shifts start, rather than when the employees clock in. Most employees have to clock in and perform work 15 minutes prior to their shift starting but do not get paid for this time. This is commonly referred to as an off-the-clock violation. Over the course of weeks, months, and years, this 15 minutes of work without pay can add up.

We have handled similar cases in the past. Whether caused by interrupted meal periods or duties performed off-the-clock perhaps before or after a shift, we are always investigating cases where an employee has not received pay for all of their work.

Lawyers: Lance Gould, Roman Shaul and Brad Smelser
Primary Staff Contact: Holly Busler

Equal Pay/Race Discrimination/Age Discrimination

Several Lawyers in the Section also handle other employment cases involving discrimination due to gender, race, age, culture and other factors. We recently settled several cases involving these issues and hopefully bettered the work environment for many others.

Lawyers: Larry Golston, Lance Gould, Scarlette Tuley and Brad Smelser
Primary Staff Contact: Holly Busler

If you need to talk with any of the lawyers listed above about any of the areas discussed, contact Michelle Fulmer at 800-898-2034 or by email at Michelle.Fulmer@beasleyallen.com. She will have the appropriate lawyer contact you.