Sidney Hillman Health Center o v. Abbott Laboratories, Incorpora
2017 U.S. App. LEXIS 19925
| 7th Cir. | 2017Background
- Abbott promoted Depakote off-label (for schizophrenia, dementia, ADHD, etc.) while concealing its role; it pled guilty in 2012 and paid $1.6 billion in criminal and False Claims Act resolutions.
- Two welfare-benefit plans (Payors) sued under RICO seeking treble damages and class certification for third‑party payors, alleging they were injured by Abbott’s off‑label marketing.
- District court originally dismissed as time‑barred; this court remanded to permit discovery about when a reasonable Payor should have known of the scheme.
- No meaningful discovery or class certification occurred; the district court instead dismissed on proximate‑causation grounds, finding the causal chain from physician‑directed marketing to Payor losses too attenuated for RICO.
- The Seventh Circuit affirmed, holding that misrepresentations made to physicians (rather than directly to Payors) do not satisfy RICO’s proximate‑cause requirement for Payors given intervening decisions and possible injuries to patients and physicians.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Payors’ RICO claim is time‑barred | Tolling applied because qui tam suits were sealed; Payors could not have known earlier | Promotion began years earlier; Payors should have discovered injury sooner | Earlier remand required factfinding on discovery; not dispositive here (earlier opinion discussed statute of limitations) |
| Whether Payors are the direct (proximate) victims of physician‑directed off‑label promotion | Payors are the first economic losers because they pay most prescription costs | The immediate wrong was against physicians/patients; Payors’ injury is derivative and too remote | Held for Abbott: Payors are several steps removed; proximate causation not satisfied for physician‑directed misrepresentations |
| Whether RICO permits recovery when the defendant’s misrepresentations were not made directly to the plaintiff | Bridge supports recovery when a wrong to A directly injures B | Abbott argues Bridge does not cover multi‑step pharmaceutical marketing chains | Court distinguished Bridge: the chain here is longer and more contingent; Bridge does not permit Payor recovery for physician‑targeted marketing |
| Whether statistical/regression proof could plausibly show causation at pleading stage | Plaintiffs say regression can link regional promotion intensity to off‑label prescriptions | Abbott and court note absence of any such study in the record and methodological limits | Court found no plausible causal showing on the complaint; regression issues raise substantial obstacles to proving causation |
Key Cases Cited
- Agency Holding Corp. v. Malley‑Duff & Associates, Inc., 483 U.S. 143 (statute‑of‑limitations framework for RICO civil actions)
- Rotella v. Wood, 528 U.S. 549 (RICO accrual and discovery rules)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (RICO proximate cause can be satisfied when a wrong against A directly injures B)
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (proximate‑cause principle: law generally limits recovery to the first step)
- Hemi Group, LLC v. New York City, 559 U.S. 1 (recovery barred where causal chain is too indirect/contingent)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (limitations on RICO proximate cause for economic harms)
- UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir.: physician‑directed promotion yields attenuated causation for Payors)
- Sergeants Benevolent Ass'n Health & Welfare Fund v. Sanofi‑Aventis U.S. LLP, 806 F.3d 71 (2d Cir.: similar holding on attenuation between marketing and Payor injury)
- In re Neurontin Marketing & Sales Practices Litigation, 712 F.3d 21 (1st Cir.: distinguishes direct‑to‑Payor misrepresentations from physician‑directed ones)
- In re Avandia Marketing, Sales Practices & Product Liability Litigation, 804 F.3d 633 (3d Cir.: allows RICO where misrepresentations go directly to Payors and change formulary decisions)
- Ironworkers Local Union 68 v. AstraZeneca Pharmaceuticals, LP, 634 F.3d 1352 (11th Cir. discussion supporting view that chains from marketing to Payors are often too attenuated)
AFFIRMED