Lawsuits & Judgments

On Sept. 6, the Supreme Court of New Jersey reversed the rulings of two lower courts and withdrew the class action status of HMOs and Insurance Companies who had been suing Merck over VIOXX. The case, the International Union of Operating Engineers Local 68 Welfare Fund v. Merck was filed by the union health plan against Merck and they sought to expand the suit to represent all health plans.

The insurers were suing the New Jersey based pharmaceutical company to recoup their VIOXX related expenditures. Merck, who was represented by the firm of O’Melveny & Myers and their outside counsel Hughes Hubbard & Reed, had always opposed the class certification in the case. The courts ruling was based on the fact that the claims of the plaintiff’s were not narrow enough to warrant class status. For a class to be certified, each of the claimants must be making similar allegation and this was not the case with the insurance companies. Ted Meyer of Hughes Hubbard & Reed explains:

The Supreme Court recognized that a class action was improper because each insurance company and HMO considered different types of information in deciding whether to reimburse patients for VIOXX, and they all went through varied processes with different experts in making those decisions.

This was a big win for Merck as the damages in the case could have reached $18 billion had it been allowed to proceed. However, it does not preclude the insurance companies from initiating lawsuits individually. There are already more than 27,000 VIOXX related lawsuits against Merck and the company’s strategy is to fight them individually. Merck has had some success in this area. According to an announcement on the companies website, more than 4,600 have already been dismissed, 1,170 “with prejudice” , meaning that they cannot be filed again.

The VIOXX issue will be a thorn in the side of Merck for some time and only with hindsight will we be able to tell if their strategy in these cases was successful.