A state court in Tennessee has punished Endo Pharmaceuticals for improperly withholding a vast trove of documents relating to the sale and marketing of its opioid medication Opana ER.
The judge presiding over the civil trial also concluded the drugmaker and its attorneys made at least a dozen false statements during the pretrial fact-finding process.
"It appears to the court that Endo and its attorneys, after delaying trial, have resorted to trying to improperly corrupt the record," wrote Chancellor E.G. Moody in a judgment issued on April 6.
Endo denies wrongdoing. In a statement emailed to NPR the company said it will appeal the judgement.
But Gerard Stranch, one of the attorneys suing the drugmaker on behalf of local governments in Tennessee, said Endo and its lawyers "conspired to hide the truth" over a period of years as the fact-finding phase of the trial proceeded.
"[Endo's] lawyers crossed the line and worked with the company to subvert the court's orders and then made false statements to the court about it," he said.
Stranch's legal team filed a series of complaints with the court about Endo's conduct in the case, which led to the judge's order.
A controversial opioid, a devastating epidemic
At issue is a lawsuit filed in 2017 by county prosecutors and other local government officials in eastern Tennessee. They claim Endo's opioid medication Opana ER was marketed aggressively in the state without proper safeguards, contributing to high rates of addiction and death.
"The damage is devastating. It has really ripped at the fabric of our community," said Barry Staubus, district attorney in Sullivan County Tennessee.
"It's overdose deaths, it's people losing their jobs, losing their dignity. Almost all our crime is driven by drugs," he told NPR.
Local governments suing the company have demanded roughly $2.4 billion in damages.
Endo ended sales of Opana ER in 2017 after the Food & Drug Administration found it was often abused by people who crushed, dissolved and injected the medication. That misuse also contributed to outbreaks of infectious diseases including HIV and Hepatitis C.
As commonly occurs in litigation, Endo fought in Tennessee to avoid sharing internal documents, communications and memos that describe its business dealings.
But in September 2018, Moody issued an order requiring Endo to divulge detailed information about prescribers it worked with, company efforts to stop abuse of Opana ER, and other opioid-related matters.
A "coordinated strategy" by Endo
In his judgment, Moody found the company violated that order deliberately as "part of a coordinated strategy between Endo and its counsel ... to interfere with the administration of justice."
According to Moody's order, Endo's team made at least a dozen false statements during court proceedings and withheld hundreds of thousands of documents, many of them directly relevant to the case.
The court also found some of the documents contradicted sworn testimony provided by Endo witnesses.
One Endo executive testified that the company stopped marketing its opioids to health care providers if their prescribing practices raised safety concerns. According to the company, once a prescriber was placed on the so-called "global exclude" list, they stayed on.
"This was the testimony under penalty of perjury by Endo," Stranch told NPR. "When we got this new tranche of documents we discovered that people went on and off [the list] all the time."
In his order, Moody concluded Endo's behavior was so egregious he was justified in issuing a "default judgment" against the company — effectively skipping the civil trial and finding the company liable for harm caused by the opioid crisis. He noted that plaintiffs have sued for $2.4 billion and "have expert testimony which supports that amount."
"Although this is a harsh sanction, justice demands it under the circumstances. Anything less would make a mockery of the attorneys who play by the rules and the legal system," Moody wrote.
Moody also began a separate legal process in his court designed to identify attorneys who allegedly made false statements and determine what sanctions they might face.
Endo plans to appeal
A spokesperson for Endo Pharmaceuticals declined to be interviewed by NPR.
In a statement, the company said it made a good-faith effort to provide relevant documents and would appeal the judgment. "Endo strongly disagrees with the...court's orders, which it believes are procedurally, factually, and legally deficient," the statement read.
Arnold & Porter, the lead law firm representing Endo in the case, also sent NPR a statement saying it was disappointed by Moody's order. "As a firm, we are deeply committed to the integrity of the legal process," the statement said.
But A. Benjamin Spencer, dean of William & Mary Law School and an expert on civil procedure, said the judge in this case documented in detail how Endo and the company's lawyers crossed into dangerous legal territory.
"To the extent that it involves misrepresentation, falsehoods and continuing ongoing obfuscation and obstruction, I think it is extraordinary," Spencer said. "Lawyers are supposed to know better."
Drug companies face an avalanche of lawsuits over their role in the nation's deadly opioid epidemic. One question in those legal fights involves how much firms have to divulge about how they handled opioids.
This isn't the first time companies entangled in opioid litigation have faced accusations of improperly withholding documents and other key information.
But Spencer said the punishment handed down by the Tennessee court is rare and "really extreme," reflecting the gravity of misconduct identified by the judge.
While this judgment is under appeal, Moody scheduled a jury trial for July to determine the amount of damages Endo must pay for its role in Tennessee's opioid crisis.
In his order, Moody pointed to the devastation already caused by the epidemic, noting "at least three people die every day of an opioid overdose in Tennessee."
NOEL KING, HOST:
Drug companies are being sued over their role in the opioid epidemic. And a big legal question is how much those companies have to reveal. A state judge in Tennessee is weighing that question now. The case involves the maker of an opioid called Opana ER. Here's NPR addiction correspondent Brian Mann.
BRIAN MANN, BYLINE: Four years ago, prosecutors in eastern Tennessee sued Endo Pharmaceuticals. They argued the company marketed Opana ER aggressively without the safeguards needed to keep it from being sold illegally on the streets. That same year, Endo pulled the opioid from shelves because of safety concerns. But Sullivan County District Attorney Barry Staubus says it was too late.
BARRY STAUBUS: The damage is devastating. It has really ripped at the fabric of our community.
MANN: Staubus' lawsuit called for Endo to pay up to $2.4 billion in damages to help local governments in Tennessee respond to the opioid epidemic.
STAUBUS: It's overdose deaths. It's people losing their jobs, losing their dignity. Almost all our crime is driven by drugs.
MANN: Normally, the question of Endo's liability in this case would be hashed out in a civil trial. That's what everyone expected. Instead, a state judge did something extraordinary. Earlier this month, Chancellor E.G. Moody handed down what's known as a default judgment declaring Endo is liable. In legal terms, it was sort of a game-over moment. According to Moody, his judgment was meant as punishment after the corporation and its attorneys repeatedly withheld key documents and made at least a dozen false statements to the court and plaintiffs. Moody writes that he found - and these are his words - a coordinated strategy between Endo and its counsel to interfere with the administration of justice. Gerard Stranch is one of the attorneys suing Endo. And it was his legal team that first complained to the court about Endo's behavior
GERARD STRANCH: Endo and its lawyers conspired to hide the truth from the plaintiffs and the court. And you're not allowed to do that in discovery.
MANN: Stranch says he fights with corporations all the time to gain access to documents they don't want to share. But he claims this behavior by Endo and the company's attorneys was different.
STRANCH: What is so extraordinary here is the lawyers crossed the line and worked with the company to subvert the court's orders and then made false statements to the court about it. That is just breathtaking and not something that you see ever, really.
MANN: This wasn't just procedural stuff, Staubus says. During the fact-finding process, Endo testified it stopped marketing opioids to health care providers if their prescribing practices raise safety concerns. According to the company, once a prescriber was placed on that red flag list, they stayed on.
STRANCH: This was the testimony under penalty of perjury by Endo. When we got this new tranche of documents, we discovered that people went on and off it all the time.
MANN: NPR tried repeatedly to speak with Endo and the company's attorneys at a firm called Arnold & Porter about the court's judgment. Both declined comment, citing the ongoing litigation. But they did issue statements. Endo said it plans to appeal the Tennessee court's order, describing it as procedurally, factually and legally deficient. Arnold & Porter said the law firm is disappointed by the judgment. Quote, "as a firm, we are deeply committed to the integrity of the legal process." But A. Benjamin Spencer, the dean of William & Mary Law School and an expert on civil procedure, says the judge in this case found Endo and the company's lawyers crossed into dangerous legal territory.
A BENJAMIN SPENCER: To the extent that it involves misrepresentation and falsehoods - continued, ongoing obfuscation and obstruction. I think that is extraordinary. Lawyers are supposed to know better.
MANN: This isn't the first time people suing Big Pharma over opioids have accused companies of improperly withholding documents and other information. But Spencer says the punishment handed down by the court in this case is extremely rare and reflects the gravity of misconduct identified by the judge.
SPENCER: Default judgment as a sanction for contempt is really extreme. We call it the death penalty of the discovery sanctions.
MANN: While this decision is appealed, the court has already scheduled a damages trial for this summer to establish how much money Endo will have to pay for its role in Tennessee's opioid crisis.
Brian Mann, NPR News. Transcript provided by NPR, Copyright NPR.