Antitrust Law Daily Wrap Up, RICO—D. Mass.: Third-party payor states valid claims against Celexa, Lexapro maker, (Dec 15, 2014)

By Greg Hammond, J.D.

A third-party payor of medical expenses has adequately alleged Racketeer Influenced and Corrupt Organizations Act claims against the makers of the anti-depressant drugs Celexa and Lexapro. The federal district court in Boston determined that the third-party payor sufficiently alleged standing, a common purpose, and predicate acts constituting a pattern of racketeering (In re Celexa and Lexapro Marketing and Sale Practices Litigation, December 12, 2014, Gorton, N.).

Painters and Allied Trades District Council 82 Health Care Fund (Painters), Allied Services Division Welfare Fund, and New Mexico UFCW Union’s and Employer’s Health and Welfare Trust Fund (NM UFCW) are all third-party payors that reimburse medical expenses of plan members. Painters alleged that Forest Laboratories, Inc. and a related entity violated RICO, the Minnesota Consumer Fraud Act, Minnesota Unfair Trade Practices Act, and Minnesota Deceptive Trade Practices Act by misrepresenting and concealing material information about the efficacy of Celexa and Lexapro in treating major depressive disorder in pediatric patients. Similarly, Allied Services/NM UFCW alleged that Forest violated RICO, Illinois and New Mexico consumer protection statutes, and the consumer fraud laws of 46 other states. Forest moved to dismiss.

Painters. In support of their motion to dismiss, Forest argued that Painters’ claims were barred by the statute of limitations, and for failure to plead the requisite elements of the RICO and Minnesota state law claims. The court first determined that the RICO and Minnesota consumer fraud claims were timely filed.

Second, the court determined that Painters’ RICO claims were sufficiently pleaded, despite Forest’s arguments that Painters failed to adequately plead standing, a common purpose of a RICO enterprise, and predicate acts. Specifically, the court found that Painters sufficiently pleaded: (1) injury to have RICO standing; (2) that at least some of the enterprises shared the common purpose of promoting off-label pediatric uses of Celexa and Lexapro while concealing their true efficacy; and (3) predicate acts of mail and wire fraud.

Lastly, the court found that Painters sufficiently pleaded its Minnesota consumer protection claims, because it was not required to plead a causal nexus, as Forest argued.

Allied Services/NM UFCW. All of Allied Services’ and NM UFCW’s claims were dismissed. The court found that their RICO, Illinois, and New Mexico claims were time barred under their respective statutes of limitation. In addition, the 46 consumer fraud claims were found to be governed by the laws of Illinois and Mexico, which were time barred.

The case number is 09-2067.

Attorneys: David R. Buchanan (Seeger Weiss LLP) for New Mexico UFCW Union’s and Employer’s Health and Welfare Trust Fund and Allied Services Division Welfare Fund. Cicely I. Lubben (Stinson Leonard Street LLP) for Forest Laboratories, Inc.

Companies: New Mexico UFCW Union’s and Employer’s Health and Welfare Trust Fund; Allied Services Division Welfare Fund; Painters and Allied Trades District Council 82 Health Care Fund; Forest Laboratories, Inc.

Cases: RICO StateUnfairTradePractices MassachusettsNews