Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc.
2013 U.S. App. LEXIS 6793
| 1st Cir. | 2013Background
- Kaiser Foundation Health Plan and Kaiser Foundation Hospitals, along with Aetna and Guardian, sued Pfizer Inc. and Warner-Lambert for fraudulent off-label Neurontin marketing under RICO and UCL in the District of Massachusetts.
- A Kaiser jury awarded about $47.36 million in compensatory damages, which the district court trebled to approximately $142.09 million under RICO.
- Pfizer and Warner-Lambert had previously pled guilty in a related criminal action and paid criminal and civil fines totaling the hundreds of millions, linked to the same off-label marketing conduct.
- The Neurontin MDL was consolidated in Massachusetts; the district court later resolved the Kaiser's claims while dismissing others in related actions.
- Kaiser presented evidence that Pfizer’s off-label promotion influenced formulary decisions and prescribing behavior, contributing to injury and damages through payment for fraudulent prescriptions.
- Pfizer challenged the causation, liability, and damages theories on appeal; the court ultimately affirmed liability and the damages award, and addressed proximate and but-for causation, admissibility of expert evidence, and damages methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kaiser proved proximate causation under RICO | Kaiser argues Pfizer's misrepresentations foreseeably caused injury to Kaiser as the primary victim. | Pfizer contends the causal chain is too attenuated due to independent physician decisions and multiple intermediaries. | Yes; Kaiser satisfied proximate causation under Holmes framework; chain not too attenuated. |
| Whether Kaiser proved but-for causation | Kaiser showed that Pfizer's fraud reduced Neurontin prescriptions it paid for through aggregate evidence and doctor- and formulary-level actions. | Pfizer urged that aggregate evidence cannot establish but-for causation given physician independent judgment. | Yes; aggregate evidence, with accompanying direct reliance evidence, suffices to show but-for causation. |
| Admissibility and sufficiency of Dr. Meredith Rosenthal's aggregate evidence | Rosenthal's econometric model linking promotional spending to prescribing is scientifically valid and fit for causation. | Keeley critiques methodological choices; aggregate model should be excluded or deemed insufficient. | Admissible and sufficient; methods were proper under Daubert/Rule 702 and supported causation. |
| Reasonableness and sufficiency of damages methodology | Hartman’s damages model using alternative drugs and reduced costs yields a rational basis for damages. | Pfizer argues the substitute-drug list lacks proof of equal efficacy and that estimates are speculative. | District court's damages methodology proper; provided a rational basis; no reversible error. |
Key Cases Cited
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (Supreme Court 1992) (establishes but-for and proximate causation framework for RICO 'by reason of')
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (Supreme Court 2006) (proximate cause, focusing on directness and injury scope)
- Bridge v. Phoenix Bond & Indemnity Co., 128 S. Ct. 2131 (Supreme Court 2008) (no first-party reliance requirement; proximate causation factors and injures)
- Hemi Grp., LLC v. City of New York, 130 S. Ct. 983 (Supreme Court 2010) (proximate causation considerations in a RICO context)
- Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (Supreme Court 1983) (proximate cause framework and policy considerations in antitrust/related claims)
- BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750 (7th Cir. 2011) (proximate cause and damages considerations in wrongdoing contexts)
- In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012) (aggregate evidence and causation in pharmaceutical marketing cases)
- UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010) (aggregate evidence and causation in drug marketing context)
- Ironworkers Local Union 68 v. Bayer Corp., 634 F.3d 1352 (11th Cir. 2011) (economic injury focus in pharmaceutical marketing disputes)
- Kaiser Findings, 2011 WL 3852254 (D. Mass. 2011) (district court’s Kaiser's RICO/UCL findings and damages framework (not a reporter case, listed for context))