South Carolina Personal Injury Law Blog

Teachers File Lawsuit over Investment Recommendations

Two members of the National Education Association claim, in a lawsuit filed last week, that the organization accepted millions of dollars in payments from Nationwide Life Insurance Company and the Security Benefit Group to endorse high-cost investments to its members. The lawsuit contends that by recommending the investments, the NEA violated its duty to its members. With an estimated 3.2 million members, the NEA is the nation’s largest professional organization. 

Source:  "Lawsuit Says Teachers Are Overcharged on Annuities" by Gretchen Morgenson, published in The New York Times.

Drug Companies to Pay for Overcharging

A federal district court judge in Boston, MA found three drug makers liable last week for overcharging Medicare, pension funds, insurers, and patients for certain drugs.  In a nationwide class action lawsuit, plaintiffs alleged that AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, and Schering-Plough sold drugs to doctors at discounted prices while encouraging them to claim full reimbursement from insurers.  The judge dismissed claims against Johnson & Johnson.  A calculation of damages to be paid by the defendants is expected by August. 

Source:  "AstraZeneca, Bristol Overcharged on Drugs, Judge Says" by Cary O’Reilly, published at Bloomberg.com.

Supreme Court Delivers Another Strike to Shareholders

Last week, the U.S. Supreme Court set a higher legal standard for investors to overcome when claiming fraud against companies.  In an 8-1 decision, the Court embraced strict interpretation of a provision of the Private Securities Litigation Reform Act of 1995 that requires plaintiffs to show that the defendant intended to deceive, manipulate, or defraud.  The Court’s ruling will give judges more latitude to dismiss cases that cannot meet the burden set by the court.  You can read the Court's decision in Tellabs v. Makor Issues and Rights, Ltd. by clicking HERE.

Source:  "Justices Tighten Rules on Shareholder Suits" by Stephen Labaton, published in The New York Times.

State Farm Accused of Racketeering

In a lawsuit filed last week, a group of Mississippi homeowners accused State Farm Fire & Casualty Co. of a “pattern of racketeering” in the handling of claims related to Hurricane Katrina.  Attorneys for the homeowners claim that the insurer manipulated engineering reports in order to deny policyholder claims.  The use of the racketeering statute is a new tactic for attorneys pursuing Katrina-related claims against insurance companies. 

Source:  "Racketeering Alleged in Katrina Suit" by Michael Kunzelman, published in the Houston Chronicle.

Judge Orders Pet Food Maker to Stop Contact with Plaintiffs

A federal judge has ordered a pet food manufacturer to cease contact with plaintiffs who have filed lawsuits against the company over alleged contamination of its products. Judge Noel Hillman has told Menu Foods, Inc. to turn over the names and bar admissions of the attorneys who advised the company that such communications were proper. The calls were made only one day after the judge instructed the company to stop communication with plaintiffs represented by counsel. 

Source:  "Judge Seethes Over Direct Contact of Represented Parties in Pet Food Case" by Lisa Brennan,  published at Law.com.

SEC to Back Plaintiffs in Enron Case

The Securities Exchange Commission will support investors who hope to hold banks liable for allegedly facilitating fraud by Enron against its shareholders. The SEC support is expected to bolster the shareholders’ upcoming Supreme Court case. The decision marks a victory for plaintiff attorneys after intense lobbying over the issue. 

Source:  "SEC to Side With Enron Plaintiffs" by Carrie Johnson, published in The Washington Post.

OxyContin Manufacturer and Executives Plead Guilty to Criminal Charges

The company that makes the painkiller OxyContin and three of its current and former executives recently plead guilty in federal court to criminal charges that it misled doctors and patients when it claimed that the drug was less likely to be abused than traditional narcotics.

The company, Purdue Pharma, agreed to pay $600 million in fines and other payments to resolve the criminal charge of ‘misbranding’ the product.  This is one of the largest amounts ever paid by a drug company in such a case. The three executives, including its president and its top lawyer, also plead guilty to misdemeanor charges of misbranding the drug. Together, they agreed to pay $34.5 million in fines.

Source:  "Narcotic Maker Guilty of Deceit Over Marketing" by Barry Meier, published in The New York Times.

Doctors Face 50 Years in Prison for Surgery Scam

Three California doctors were arrested for recruiting patients to undergo needless surgeries in order to defraud insurance companies. Prosecutors claim the doctors performed over 1,000 procedures on 940 patients in exchange for cash or cosmetic surgery while billing insurance companies an estimated $30 million. The doctors face 47 felony counts for conspiracy, insurance fraud and other charges and could face 50 year in prison if convicted. 

Source:  "3 Doctors Held in Health Insurance Scam" by Christine Hanley, published in the LA Times.

AOL Publishes Propaganda About Our Legal System

Please read the following letter and information from Jon Haber, the CEO of the American Association for Justice regarding America Online's decision to puslish propaganda regarding our legal and civil justic system:

I am writing about something which is currently on the America Online (AOL) website titled "Most Outrageous Lawsuits." It appeared in the money and finance section of AOL and is also prominently displayed on the AOL home page.

We have seen this propaganda before.  The "crazy lawsuits" they describe come directly from groups like Citizens Against Lawsuit Abuse (CALA) and the American Tort Reform Association (ATRA), groups whose sole mission is to dismantle the civil justice system and eliminate accountability for corporate negligence.  In the past, when such front groups have provided examples of "cases," they haven't even been real.

AOL is preying on an unsuspecting public that assumes what is posted on its site is news, all to make the case that they, and other negligent corporations, should not be held accountable for wrongdoing in our courts.

There is good reason for AOL to invest its resources in the misinformation campaign to eliminate the right of Americans to seek justice.  In the past few years, it is the civil justice system that has been the last resort for shareholders and investors to hold AOL accountable for their negligence. The following are just a few examples of the trouble AOL has gotten in:

• Just this week AOL agreed to pay $246 million to compensate the University of California for losses to their pension and endowment funds after the company's stock prices plunged in 2001-2002. The University alleged that AOL inflated it stock price prior to its merger with Time-Warner by misrepresenting its sales, revenues and subscriber numbers.
• On February 26, 2007, Time Warner reached agreements to pay $405 million to settle lawsuits related to past accounting problems at AOL.
• On February 7, 2007, AOL reached a $105 million settlement with the California State Teachers' Retirement System that claimed that AOL executives and bankers had artificially boosted the value of its stocks prior to buying Time Warner.
• In December, 2006, AOL settled a securities fraud case for $50 million with the state of Alaska.
• In September, 2006, AOL members joined together in a class action suing AOL for violating their privacy by posting their search queries online. AOL made public the search queries of over 600,000 members.
• In January, 2006, AOL settled a class action for $25 million after the company was accused of wrongfully billing its customers.
• In 2005, Time Warner settled a $2.4 billion securities fraud lawsuit stemming from their misstatement of advertising revenue on the eve of its merger with AOL.
• In 2004, AOL settled two class actions that claimed it had continued to bill plaintiffs after their subscriptions were cancelled.

The American Association for Justice has made several attempts to get this propaganda pulled from the website but AOL has refused.  We will continue to press but I encourage you to take the following steps:

• If you are a member of AOL tell them to stop running this feature on their website by posting a comment;
• Call the Chairman and CEO of AOL, Randy Falco, at (703) 265-1000 and ask him to take down the information;
• Circulate this information to others who will take action; and
• Send to any legal and political blogs you know of.
• If you have any questions or need information, please do not hesitate to contact the AAJ Communications Department at 202-965-3500 x369.

Thank you.

Jon Haber
CEO
American Association for Justice

FTC Reports ID Theft Is Once Against Most Common Complaint

According to the Federal Trade Commission, more than 670,000 cases of fraud and identity theft were reported in 2006. In seven consecutive years, identity theft continues to be the most common complaint. Last year, the problem cost consumers nearly $1.2 billion. 

Source:  "670,000 Identity Theft, Fraud Cases in 2006" published in the Los Angeles Times.