Courtney settlement totals $71 million, paper reports

KANSAS CITY, Mo. -- Two pharmaceutical companies will pay a total of $71 million to victims of former pharmacist Robert Courtney's drug dilution schemes, a newspaper reported.

In its story for Sunday editions, The Kansas City Star did not cite a source for that figure.

Attorneys for the plaintiffs declined to confirm the amount, as did officials of drugmakers Eli Lilly and Co. and Bristol-Myers Squibb Co.

The settlement, reached in October, was confidential. But The Star said it had learned that last month, arbitrators assessed $48.55 million against Eli Lilly and $23.55 million against Bristol-Myers Squibb.

That brings the total amount of the settlement to $72.1 million, the newspaper reported, with litigation and administrative expenses totaling roughly $1 million.

Bristol-Myers Squibb is paying less than half as much as Eli Lilly, The Star also reported, because the plaintiffs alleged that Bristol-Myers learned of Courtney's scheme only a few months before Courtney's arrest. The plaintiffs alleged that Eli Lilly knew of the dilution scheme as early as three or more years before his arrest.

"When we announced the settlement, we said the terms would remain confidential, and we're abiding by that," said Judy Kay Moore, a spokeswoman for Eli Lilly.

The settlement resolved hundreds of civil lawsuits against the drug companies just before the first case, brought by ovarian cancer patient Georgia Hayes, was scheduled to go to trial.

The Star also reported that the drug companies transferred the settlement money earlier this month into a bank account in Kansas City. The amounts paid to each claimant will be based on a formula that will result in some claimants receiving more than others, according to the strengths of their cases.

Retired Jackson County Circuit Judge Forest Hanna III was appointed to devise the formula and was expected to come up with a final version soon. Once that happens, living claimants are expected to be paid first, followed by heirs of deceased patients.

"We've got two four-drawer filing cabinets full of claims," Hanna said. "I have three administrative assistants who are loading the claims onto a computer program. That's just started."

The money will be divided among the more than 350 claimants who sued the drug companies in Jackson County Circuit Court.

The Star also said it had obtained documents showing that claimants who are determined to have received diluted cancer drugs made by Eli Lilly or Bristol-Myers Squibb on or after Jan. 1, 1998, will receive minimum payments of $100,000. That date was when plaintiffs in the civil lawsuits alleged Eli Lilly learned that Courtney was selling more cancer drugs than he was buying.

"I think this is a settlement that makes a lot of sense, both for the plaintiffs and the defendants," said David Achtenberg, a law professor at the University of Missouri-Kansas City School of Law. "It ensures a substantial recovery for victims who otherwise would have faced extremely difficult and chancy litigation.

"And for the defendants, it lets them put behind them a very troublesome and tragic chapter in their corporate lives.

"The lawyers for both sides have obviously done very good work for their clients."

Attorneys for the plaintiffs will be paid a percentage of their clients' awards.

The payments mark the final phase of a contentious and drawn-out process started when the drug companies were sued by victims, and families of victims, of Courtney's dilution scheme.

Courtney was sentenced to 30 years in prison in December after pleading guilty in February 2002 to diluting cancer medications to a fraction of their potency.

His criminal conduct triggered hundreds of civil lawsuits by cancer patients and their families against Eli Lilly and Bristol-Myers Squibb, as well as against Courtney.

Both companies made chemotherapy drugs that were adulterated by Courtney. The lawsuits claimed that they knew or should have known of Courtney's scheme and did nothing to stop it.

But the drugmakers insisted they learned of Courtney's scheme only after he was arrested in August 2001.

Just days after the settlement, a jury assessed more than $2 billion in damages against Courtney in the Hayes case. It was the only one of the cases to go to trial, and it resulted in the second-largest jury verdict in the United States last year.

The verdict was largely symbolic, because Courtney's assets and insurance coverage were nowhere near that amount.

The settlement is in addition to a restitution plan that was part of Courtney's federal criminal case. In conjunction with his guilty plea, Courtney forfeited at least $10.5 million in personal assets for restitution to cancer victims and their families.

The restitution arrangement includes patients who received diluted drugs as far back as 1991.