%1

A federal judge has rejected Johnson & Johnson’s efforts to remove to federal court a lawsuit that is set to be the first talc-related case to come before a Philadelphia jury, the Legal Intelligencer reported. U.S. District Judge Mark Kearney of the Eastern District of Pennsylvania on Tuesday remanded the case Kleiner v. Rite Aid to the Philadelphia Court of Common Pleas, denying arguments from the pharmaceutical giant that the case needed to be sent to bankruptcy court in Delaware. J&J, which has been slammed with verdicts as high as $4.7 billion over its talc products, had argued that indemnifications and shared insurance it has with its talc supplier, Imerys, meant that thousands of talc cases needed to be handled in federal bankruptcy court because, earlier this year, Imerys filed for bankruptcy. Kearney, however, in a 14-page opinion, agreed with the plaintiff, Ellen Kleiner, that her case linking talcum powder to her ovarian cancer was not sufficiently “related to” the pending bankruptcy, since any indemnification enforcement would need to be pursued through separate litigation.

The bankruptcy of Insys Therapeutics Inc. could complicate a closely watched trial against major opioid drugmakers and distributors set to begin in October in Ohio federal court, WSJ Pro Bankruptcy reported. The specialty pharmaceutical company, which makes the opioid drug Subsys, filed for chapter 11 protection on Monday and has asked for a court order barring government bodies from taking legal action against it while it is in bankruptcy. The trial scheduled for October is part of a mass litigation where cities, counties, American Indian tribes and individuals harmed by opioid addiction are seeking damages running into the tens of billions of dollars. The bellwether or test case set to be heard in the fall could indicate what might happen if other cases go to trial and provide a reference point for potential settlements. The bellwether trial has implications for roughly 800 individual cases from around the country in the mass litigation that is being handled by the Ohio court. Defendants, including Purdue Pharma LP, Endo International PLC and Johnson & Johnson, are accused of profiting from an epidemic of drug abuse.

Drugmaker Insys Therapeutics Inc. filed for chapter 11 protection today, about a week after agreeing to pay $225 million to settle a U.S. probe into bribes that it paid to doctors for prescribing a powerful opioid medication, Reuters reported. The filing in the U.S. Bankruptcy Court in the District of Delaware made Insys the first drug manufacturer to turn to bankruptcy due to legal expenses brought on by accusations of responsibility in the deadly U.S. opioid epidemic. Insys said that it intends to continue operating its business while it pursues the sale of substantially all its assets under a court-supervised sale process. Chandler, Ariz.-based Insys, which manufactured the fentanyl spray Subsys, agreed on June 5 to settle the U.S. Justice Department probe and have a subsidiary plead guilty to fraud charges. A month earlier, a federal jury in Boston found Insys founder John Kapoor and four other former executives and managers guilty of engaging in a vast racketeering conspiracy.

The power generators that supply bankrupt utility giant PG&E Corp. were dealt a major blow as a judge ruled that federal regulators can’t keep their supply contracts from getting killed, Bloomberg News reported. Power giants including NextEra Energy Inc. and Exelon Corp. had enlisted the help of the Federal Energy Regulatory Commission in ensuring that their long-term contracts with PG&E survive the biggest utility bankruptcy in U.S. history. But Bankruptcy Judge Dennis Montali decided on Friday that the commission doesn’t have the jurisdiction that it has asserted it does. The ruling could set up heavy losses for generators who have $42 billion worth of long-term agreements with PG&E, should those deals get tossed by Montali. The fate of these contracts has been thrown into question as the utility grapples with an estimated $30 billion worth of liabilities tied to wildfires its equipment may have ignited. The mere prospect of the contracts getting killed has already rattled the power industry, which relies on long-term agreements like these to attract financing for capital-intensive projects. In presuming to have “concurrent” jurisdiction over the contracts, the federal energy commission “has and continues to have the effect of undermining the function of the bankruptcy court,” Judge Montali said in a scathing, 31-page judgment. “FERC must be stopped and the division and balance of power and authority of the two branches of government restored.” Judge Montali went on to warn that, if necessary, the court will “enjoin FERC from perpetuating its attempt to exercise power it wholly lacks.” The federal energy commission didn’t immediately respond to requests for comment on Saturday.

PG&E Corp. has spoken to lawmakers about putting together a pool of capital worth about $11 billion to settle claims related to wildfires blamed on the bankrupt California utility, Bloomberg News reported. The utility has considered the plan in consultation with law firm Jones Day and boutique investment bank PJT Partners Inc., which are advising a group of PG&E’s equity holders that recently helped overhaul its board and appoint Bill Johnson as chief executive officer. The holders include Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management, which collectively own about 10 percent of PG&E’s shares. The plan calls for PG&E to set up a special purpose vehicle into which it would redirect about $400 million a year in earnings. The fund would help finance a pool of capital that would earmark about $8 billion to settle wildfire claims from 2017 and 2018, one of the people said. At least another $3 billion would be earmarked for future claims. The proposal wouldn’t require assistance from the state, taxpayers or customers of the utility. It also wouldn’t address any claims from the 2017 Tubbs fire or others that regulators determined PG&E wasn’t responsible for. Details of the plan haven’t been finalized, and the terms may still change.

Insys Therapeutics Inc. agreed to pay $225 million, and an operating unit will plead guilty to fraud, to settle probes into their payment of kickbacks to induce doctors to prescribe highly addictive opioids, the U.S. Department of Justice said yesterday, Reuters reported. Prosecutors said Insys used kickbacks and other illegal marketing practices to boost sales of Subsys, an under-the-tongue spray meant to treat pain in adult cancer patients and that contains fentanyl, an opioid 100 times stronger than morphine. The settlement followed the May 2 conviction by a federal jury in Boston of five former Insys executives, including founder and former billionaire John Kapoor, of racketeering charges for contributing to the nation’s opioid epidemic. Wednesday’s settlement calls for the operating unit, Insys Pharma, to plead guilty to five mail fraud counts. The Chandler, Ariz.-based company will pay a $2 million fine, forfeit $28 million, and pay $195 million to settle charges that it defrauded the government under the False Claims Act.

California, Hawaii, Maine and the District of Columbia filed lawsuits Monday against Purdue Pharma, bringing the total number of states accusing the OxyContin maker of helping to ignite the nationwide opioid crisis to at least 48, CNBC.com reported. Like other states, the four new lawsuits accuse the privately held company and its owners, the Sackler family, of downplaying the risks of addiction to OxyContin while exaggerating its benefits. Prosecutors say the company’s marketing practices encouraged doctors to push higher doses of the narcotic and contributed to a public health crisis that has caused thousands of overdoses in the U.S. each year. “Purdue and the Sacklers traded the health and well being of Californians for profit and created an unprecedented national public health crisis in the process,” California Attorney General Xavier Becerra said on Monday. “We will hold them accountable.” OxyContin is a prescription drug used to treat moderate-to-severe pain in adults. From 1999 to 2017, nearly 218,000 people died in the United States from overdoses related to prescription opioids, according to the U.S. Centers for Disease Control and Prevention. OxyContin first came on the market in 1996. The attorneys representing Purdue say accusations against the company are “not supported by facts and are fundamentally flawed,” adding its opioid painkiller represents less than 2% of the U.S. market. They also say recent lawsuits are in many regards a repurpose of old allegations.

Almost as soon as an attorney stood up in a U.S. Bankruptcy Court in Delaware last week and announced that a tentative $44-million deal had been struck between Harvey Weinstein, his former film studio’s board and a number of women who have accused the disgraced movie mogul of sexual misconduct, the squabbling began anew, the Los Angeles Times reported. At once, the proposed settlement was denounced as offering inadequate compensation to the victims while enabling Weinstein and the directors of the Weinstein Co. to evade accountability or liability. The Hollywood producer behind such Oscar-winning hits as “Shakespeare in Love,” “Chicago” and “The King’s Speech” was fired from his company in October 2017 after dozens of women accused him of sexual misconduct.
Attorneys for two of the alleged victims rejected the proposal outright, while another questioned whether this was an attempt to derail the deal and maximize their clients’ position and grab the lion’s share of compensation. Victims expressed disgust at the entire process; one called it “absolutely re-traumatizing.”

A group of PG&E Corp. creditors could preempt the embattled California utility’s own attempt to claw its way out of bankruptcy by presenting a restructuring plan that could be worth at least $45 billion, Bloomberg News reported. The plan builds on a proposal floated earlier this year. The updated plan includes substantially more cash for compensating existing wildfire victims, establishing a new statewide wildfire liability fund and recapitalizing PG&E, said the people, who asked not to be identified because the details are private. The plan could be presented to the bankruptcy judge before a rival plan being developed by PG&E’s newly reconstituted board and management is finalized to help accelerate the utility’s exit from court protection. The ad-hoc committee of creditors — led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Management — originally floated a $35 billion plan with lawmakers and other stakeholders. Representatives for PG&E and Pimco weren’t immediately available for comment. Representatives for Elliott and Davidson Kempner declined to comment.

Quest Diagnostics Inc. said that one of the billing collections firms it works with experienced a data breach on its web payment system that may have affected 11.9 million patients, the Wall Street Journal reported. The data breach may have involved the collection of patients’ financial information, such as credit-card numbers and bank-account information, as well as medical information and personal details, the company said Monday. The billing collections vendor, American Medical Collection Agency, notified the company of the breach on May 14, the company said. Quest outsourced its billing operations to health-care revenue manager Optum360 LLC, which contracted AMCA. Quest said laboratory results weren’t given to AMCA and therefore weren’t affected by the breach.