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Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 1 of 299 PageID #: 1UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF KENTUCKYLOUISVILLE DIVISIONBAPTIST HEALTHCARE SYSTEM,INC. d/b/a BAPTIST HEALTH CORBIN,BAPTIST HEALTH LA GRANGE,BAPTIST HEALTH LEXINGTON,BAPTIST HEALTH LOUISVILLE,BAPTIST HEALTH PADUCAH, andBAPTIST HEALTH FLOYD;andCOMPLAINT3:18-cv-558-CHBCASE NO.JURY TRIAL DEMANDEDBAPTIST HEALTH MADISONVILLE,INC. d/b/a BAPTIST HEALTHMADISONVILLE;andBAPTIST HEALTH RICHMOND, INC.d/b/a BAPTIST HEALTH RICHMOND;andBOWLING GREEN WARREN COUNTYCOMMUNITY HOSPITALCORPORATION d/b/a THE MEDICALCENTER AT BOWLING GREEN, THEMEDICAL CENTER AT CAVERNA,AND THE MEDICAL CENTER ATSCOTTSVILLE;This Action Relates to:Case No. 1:17-MD-2804Hon. Dan A. PolsterUnder:Organized Crime Control Act of 1970, IX,Racketeer Influenced and CorruptOrganizations Act, P.L. No. 91-452, 84State. 922 (1970), (codified at 18 U.S.C. §§1961-1967 (2012) (“RICO”)Breach of Implied Warranty of Fitness fora Particular Purpose, KRS 355.2-315andKentucky Consumer Protection Act, KRS367.170THE MEDICAL CENTER AT CLINTONCOUNTY, INC. d/b/a THE MEDICALCENTER AT ALBANYNegligenceandNegligence Per SeTHE MEDICAL CENTER ATFRANKLIN, INC. d/b/a THE MEDICALCENTER AT FRANKLINNegligent MarketingPlaintiffs,v.AMERISOURCEBERGEN DRUGCORPORATION;Wanton NegligenceNegligent DistributionNuisanceUnjust Enrichment
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 2 of 299 PageID #: 2CARDINAL HEALTH, INC.;MCKESSON CORPORATION;PURDUE PHARMA L.P.;PURDUE PHARMA, INC.;THE PURDUE FREDERICKCOMPANY, INC.;TEVA PHARMACEUTICALINDUSTRIES, LTD.;TEVA PHARMACEUTICALS USA,INC.;CEPHALON, INC.;JOHNSON & JOHNSON;JANSSEN PHARMACEUTICALS, INC.;ORTHO-MCNEIL-JANSSENPHARMACEUTICALS, INC. n/k/aJANSSEN PHARMACEUTICALS, INC.;JANSSEN PHARMACEUTICAL INC.n/k/a JANSSEN PHARMACEUTICALS,INC.;NORAMCO, INC.;ENDO HEALTH SOLUTIONS INC.;ENDO PHARMACEUTICALS, INC.;INSYS THERAPEUTICS, INC.;ALLERGAN PLC f/k/a ACTAVIS PLS;WATSON PHARMACEUTICALS, INC.n/k/a ACTAVIS, INC.; WATSONLABORATORIES, INC.;ACTAVIS LLC;ACTAVIS PHARMA, INC. f/k/aWATSON PHARMA, INC.;MALLINCKRODT PLC;MALLINCKRODT LLC;CVS HEALTH CORPORATION;WALGREENS BOOTS ALLIANCE,INC.;WAL-MART, INC.; andMIAMI-LUKEN, INC.Defendants.
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 3 of 299 PageID #: 3TABLE OF CONTENTSI.INTRODUCTION . 2A. The Opioid Crisis . 2B. Impact of Opioids on Kentucky Hospitals . 13C. Financial Impact of Defendants’ Activities on Plaintiffs . 19D. The Roles of Defendants in Causing and Perpetuating the Opioid Crisis . 22II.JURISDICTION AND VENUE . 25III. PARTIES . 25A. PlaintiffS . 25B. Defendants . 271. Marketing Defendants . 27a. Purdue and Associated Companies . 27b. Cephalon and Associated Companies . 28c. Janssen and Associated Companies . 30d. Endo and Associated Companies . 32e. Insys Therapeutics, Inc. . 34f. Mallinckrodt Entities . 34g. Actavis and Associated Companies . 372. Distributor Defendants . 38a. AmerisourceBergen Drug Corporation . 38b. Cardinal . 39c. McKesson Corporation. 39d. Miami-Luken, Inc. . 413. National Retail Pharmacies . 41a. CVS Health Corporation . 41b. Walgreens Boots Alliance, Inc. . 41c. Wal-Mart Inc. . 41C. Defendants’ Agents . 42IV. CONTINUING VIOLATIONS . 42V.FACTUAL BACKGROUND . 42A. The History of Opioids . 42B. The Opioid Epidemic . 45C. Legislative Responses to Opioid Crisis . 48i
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 4 of 299 PageID #: 4D. The Marketing Defendants’ False, Deceptive, and Unfair Marketing of Opioids. 49E. Each Marketing Defendant Used Multiple Avenues To Disseminate TheirFalse and Deceptive Statements About Opioids. . 511. Direct Marketing . 52a. Falsehood #1: The risk of addiction from chronic opioid therapy is low . 53i. Purdue’s misrepresentations regarding addiction risk . 54ii Endo’s misrepresentations regarding addiction risk . 60ii Janssen’s misrepresentations regarding addiction risk . 61iv Cephalon’s misrepresentations regarding addiction risk . 62v. Mallinckrodt’s misrepresentations regarding addiction risk. 63b. Falsehood #2: To the extent there is a risk of addiction, it can be easilyidentified and managed . 65c. Falsehood #3: Signs of addictive behavior are “pseudoaddiction,”requiring more opioids . 67d. Falsehood #4: Opioid withdrawal can be avoided by tapering . 70e. Falsehood #5: Opioid doses can be increased without limit or greaterrisks . 71f. Falsehood #6: Long-term opioid use improves functioning . 73g. Falsehood #7: Alternative forms of pain relief pose greater risks thanopioids . 79h. Falsehood #8: OxyContin provides twelve hours of pain relief . 82i. Falsehood #9: New formulations of certain opioids successfully deterabuse . 87i. Purdue’s deceptive marketing of reformulated OxyContin andHysingla ER . 88ii. Endo’s deceptive marketing of reformulated Opana ER . 91iii.Other Marketing Defendants’ misrepresentations regarding abusedeterrence . 952. The Marketing Defendants Disseminated Their Misleading MessagesAbout Opioids Through Multiple Channels . 973. The Marketing Defendants Directed Front Groups To Deceptively PromoteOpioid Use . 97a. American Pain Foundation . 99b. American Academy of Pain Medicine and the American Pain Society . 102c. Federation of State Medical Boards . 105d. The Alliance for Patient Access . 108ii
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 5 of 299 PageID #: 5e. The U.S. Pain Foundation . 112f. American Geriatrics Society . 113g. American Chronic Pain Association . 1154. The Marketing Defendants Paid Key Opinion Leaders To DeceptivelyPromote Opioid Use. 116a. Dr. Russell Portenoy. 118b. Dr. Lynn Webster . 121c. Dr. Perry Fine . 122d. Dr. Scott Fishman . 1255. The Marketing Defendants Also Spread Their Misleading Messages toReputable Organizations . 1276. The Marketing Defendants Disseminated Their MisrepresentationsThrough Continuing Medical Education Programs . 1297. The Marketing Defendants Used “Branded” Advertising To PromoteTheir Products to Doctors and Consumers . 1328. The Marketing Defendants Used “Unbranded” Advertising To PromoteOpioid Use for Chronic Pain Without FDA Review . 1339. The Marketing Defendants Funded, Edited and Distributed PublicationsThat Supported Their Misrepresentations . 13410. The Marketing Defendants Used “Detailers” To Directly DisseminateTheir Misrepresentations to Prescribers. 13611. The Marketing Defendants Used Speakers’ Bureaus and Programs ToSpread Their Deceptive Messages. . 14012. The Marketing Defendants Targeted Vulnerable Populations. 14013. Insys Employed Fraudulent, Illegal, and Misleading Marketing SchemesTo Promote Subsys . 141F. The Marketing Defendants’ Scheme Succeeded, Creating a Public HealthEpidemic . 1461. The Marketing Defendants Dramatically Expanded Opioid Prescribingand Use. 1462. The Marketing Defendants’ Deception in Expanding Their MarketCreated and Fueled The Opioid Epidemic. . 149G. The Marketing Defendants’ Marketing Scheme Misrepresented the Risksand Benefits of Opioids . 1501. The Marketing Defendants Embarked Upon A Campaign of False,Deceptive, and Unfair Assurances Grossly Understating and Misstatingthe Dangerous Addiction Risks of the Opioid Drugs. . 150iii
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 6 of 299 PageID #: 62. The Marketing Defendants Targeted Susceptible Prescribers andVulnerable Patient Populations . 151H. The Marketing Defendants Made Materially Deceptive Statements andConcealed Material Facts . 1531. Purdue . 1532. Endo . 1573. Janssen . 1594. Cephalon . 1605. Actavis . 161I. Marketing Defendants’ Prior Bad Acts. 162J. The Distributor Defendants’ Unlawful Distribution of Opioids . 163K. Defendants Throughout the Supply Chain Deliberately Disregarded TheirDuties To Maintain Effective Controls and To Identify, Report, and TakeSteps To Halt Suspicious Orders . 1641. All Defendants Have a Duty To Guard Against, and Report, UnlawfulDiversion and To Report and Prevent Suspicious Orders . 165a. Pain Care Forum . 175b. Healthcare Distribution Alliance . 1762. Defendants Were Aware of and Have Acknowledged Their ObligationsTo Prevent Diversion and To Report and Take Steps To Halt SuspiciousOrders . 1823. Defendants Kept Careful Track of Prescribing Data and Knew AboutSuspicious Orders and Prescribers . 1834. Defendants Failed To Report Suspicious Orders or Otherwise Act ToPrevent Diversion. 1895. Defendants Delayed a Response to the Opioid Crisis by Pretending ToCooperate with Law Enforcement . 1936. The Distributor Defendants Breached Their Duties . 197a. McKesson . 200b. Cardinal . 202c. AmerisourceBergen . 2057. The Distributor Defendants Have Sought To Avoid and HaveMisrepresented Their Compliance with Their Legal Duties. 205L. The National Retail Pharmacies Were on Notice of and Contributed to IllegalDiversion of Prescription Opioids . 2121. The National Retail Pharmacies Have a Duty To Prevent Diversion . 213iv
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 7 of 299 PageID #: 72. Multiple Enforcement Actions Against the National Retail PharmaciesConfirms Their Compliance Failures. 217a. CVS . 217b. Walgreens . 220M. The Marketing Defendants’ Unlawful Failure To Prevent Diversion andMonitor, Report, and Prevent Suspicious Orders . 2231. Defendants’ Unlawful Conduct and Breaches of Legal Duties Causedthe Harm Alleged Herein and Substantial Damages. 228N. Conspiracy Allegations . 2301. The Defendants Conspired To Engage in the Wrongful ConductComplained of Herein and Intended To Benefit Both Independently andJointly From Their Conspiracy . 230a. Conspiracy Among Marketing Defendants . 230b. Conspiracy Among All Defendants . 2332. Statutes of Limitations Are Tolled and Defendants Are Estopped FromAsserting Statutes of Limitations as Defenses . 235a. Continuing Conduct . 235b. Equitable Estoppel and Fraudulent Concealment . 2363. Facts Pertaining to Punitive Damages . 238a. The Marketing Defendants Persisted in Their Fraudulent SchemeDespite Repeated Admonitions, Warnings, and Even Prosecutions . 239i. FDA Warnings to Janssen Failed To Deter Janssen’s MisleadingPromotion of Duragesic . 239ii. Governmental Action, Including Large Monetary Fines, Failed ToStop Cephalon From Falsely Marketing Actiq for Off-Label Uses . 240iii.FDA Warnings Did Not Prevent Cephalon From Continuing Falseand Off-Label Marketing of Fentora. 241iv. A Guilty Plea and a Large Fine Did Not Deter Purdue FromContinuing Its Fraudulent Marketing of OxyContin . 242v. Repeated Admonishments and Fines Did Not Stop Defendants FromIgnoring Their Obligations To Control the Supply Chain and PreventDiversion . 243O. Facts Pertaining To Claims Under Racketeer-Influenced and CorruptOrganizations (“Rico”) Act. 2491. The False Narrative Enterprise . 249a. The Common Purpose and Scheme of the False Narrative Enterprise . 249b. The Conduct of the False Narrative Enterprise Violated Civil RICO . 253v
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 8 of 299 PageID #: 8c. The False Narrative Enterprise Defendants Controlled and Paid FrontGroups and KOLs To Promote and Maximize Opioid Use . 257d. Pattern of Racketeering Activity . 2582. The Opioid Supply Chain Participants . 261VI. CLAIMS AND PRAYER FOR RELIEF . 270First Claim for Relief . 270Second Claim for Relief. 274Third Claim for Relief . 275Fourth Claim for Relief . 275Fifth Claim for Relief. 278Sixth Claim for Relief . 279Seventh Claim for Relief . 280Eighth Claim for Relief . 283Ninth Claim for Relief . 285Tenth Claim for Relief . 286Eleventh Claim for Relief . 289Prayer for Relief . 290VII. JURY DEMAND . 290vi
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 9 of 299 PageID #: 9The decade of the 1990s was the era of the blockbuster drug, the billion-dollar pill,and a pharmaceutical sales force arms race was part of the excess of the time . . . Apharmaceutical Wild West emerged. Salespeople stampeded into offices. Theymade claims that helped sell the drugs to besieged doctors. Those claims also ledyears later to blockbuster lawsuits and criminal cases against their companies.1COMPLAINTCome now the Plaintiffs, Baptist Healthcare System, Inc. d/b/a Baptist Health Corbin,Baptist Health La Grange, Baptist Health Lexington, Baptist Health Louisville, Baptist HealthPaducah, and Baptist Health Floyd; Baptist Health Madisonville, Inc. d/b/a Baptist HealthMadisonville; Baptist Health Richmond, Inc. d/b/a Baptist Health Richmond; Bowling GreenWarren County Community Hospital Corporation d/b/a The Medical Center at Bowling Green;The Medical Center at Clinton County, Inc. d/b/a The Medical Center at Albany; and TheMedical Center at Franklin, Inc. d/b/a The Medical Center at Franklin, by counsel, and for theirclaims against the Defendants, AmerisourceBergen Drug Corporation; Cardinal Health, Inc.;McKesson Corporation; Purdue Pharma L.P.; Purdue Pharma, Inc.; The Purdue FrederickCompany, Inc.; Teva Pharmaceutical Industries, Ltd.; Teva Pharmaceuticals USA, Inc.;Cephalon, Inc.; Johnson & Johnson; Janssen Pharmaceutica, Inc.; Ortho-McNeil-JanssenPharmaceuticals, Inc. n/k/a Janssen Pharmaceuticals, Inc.; Janssen Pharmaceutical Inc. n/k/aJanssen Pharmaceuticals, Inc.; Noramco, Inc.; Endo Health Solutions Inc.; EndoPharmaceuticals, Inc.; Insys Therapeutics, Inc.; Allergan plc f/k/a Actavis PLS; WatsonPharmaceuticals, Inc. n/k/a Actavis, Inc.; Watson Laboratories, Inc.; Actavis LLC; ActavisPharma, Inc. f/k/a Watson Pharma, Inc.; Mallinckrodt Plc; Mallinckrodt LLC.; CVS HealthCorp.; Walgreens Boots Alliance, Inc.; Wal-Mart, Inc.; and Miami-Luken, Inc. (collectivelySam Quinones, Dreamland: The True Tale of America’s Opiate Epidemic at 133 (Bloomsbury Press 2015)(hereinafter referred to as “Dreamland”).11
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 10 of 299 PageID #: 10“Defendants”), under the Organized Crime Control Act of 1970, IX, Racketeer Influenced andCorrupt Organizations Act, P.L. No. 91-452, 84 Stat. 922 (1970), (codified at 18 U.S.C. §§1961-1967 (2012) (“RICO”); Controlled Substances Act of 1970, 84 Stat. 1236, 1242 (codifiedat 29 U.S.C. § 801, et seq.) (2012); Breach of Implied Warranty of Fitness for a ParticularPurpose, KRS 355.2-315; Kentucky Consumer Protection Act, KRS 367.170; Negligence;Wanton Negligence; Negligence Per Se; Negligent Marketing; Negligent Distribution;Nuisance; and Unjust Enrichment, state as follows.I.INTRODUCTIONA.THE OPIOID CRISIS1.Hospitals in Kentucky and elsewhere encounter patients with opioid-relatedconditions daily. On one end, hospitals must deal with patients who have serious medicalconditions that require extra care and expense because the patient is opioid addicted, and on theother, hospitals must utilize their resources to handle the “pill seekers.” Take for example thissituation: Two very pregnant women present themselves for treatment – a healthy one and anopioid-addicted one. Both are admitted. Regardless of whether either patient can pay, they bothmust be admitted under prevailing federal and state law for medical and possible psychiatric care,even though the hospital knows it may not be compensated in full, or perhaps at all for its medicalservices. Both women give birth. The opioid-addicted mother has an opioid-addicted child, whoenters this world kicking and screaming as he or she goes through the addiction withdrawalprocess. That baby is taken to a neonatal intensive care unit, often referred to as the “NICU,” withsophisticated medical equipment, supplies and staff specially trained to treat the needs of opioidaddicted babies. The healthy mother’s and her child’s stay in the hospital are completed in two orthree days and cost a few thousand dollars, which is likely paid by an insurer. The opioid-addicted2
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 11 of 299 PageID #: 11mother and her addicted baby each require special treatment and attention for opioid withdrawal,which likely is uncompensated or undercompensated even if the mother has insurance. The motherstays as long as is necessary to stabilize her condition, but because of her opioid addiction her newbaby may spend months in the hospital receiving around-the-clock care. Ultimately, the hospitalhas a duty to treat both new mothers and their babies, yet the cost to the hospital for this duty ismuch greater for the opioid-addicted mother and baby, which results in higher uncompensatedcosts to that hospital.2.These two very different encounters play out daily at Plaintiffs’ hospitals. OneKentucky hospital alone, a Plaintiff herein, documented 335 total cases of drug-addicted newbornsat seven of its locations between January 2012 and April 2014.2 Throughout Kentucky, in the year2000, fewer than 30 infants were diagnosed with Neonatal Abstinence Syndrome (NAS) inKentucky hospitals resulting from the mother’s drug usage. For the year 2013, more than 950newborns were diagnosed with and treated for NAS in Kentucky hospitals.33.Kentucky hospitals, of course, are not unique in dealing with the opioid epidemic.Hospitals across the United States are the front-line treatment for victims of the opioid epidemic.Hospitals – legally and morally – are compelled to treat patients with opioid-related conditionsand, as a result, have been directly damaged by the epidemic. In addition to the cost of the opioiddrugs themselves, hospitals have and continue to incur millions of dollars in damages for the costsof uncompensated care as a result of the unlawful marketing, distribution and sale of opioids.Boyd, Terry, Addicted Babies Testing the Limits of Louisville’s Neonatology Units, INSIDER LOUISVILLE(July 3, 2014), its/.23Health Collaborative to Look at Best Practices for s/NAS%20program.htm.3AbstinenceSyndrome,
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 12 of 299 PageID #: 124.The United States is in the midst of an opioid epidemic caused by Defendants’unlawful marketing, sales, and distribution of prescription opioids that have resulted in addiction,criminal activity, serious health issues, and loss of life. 4 According to the Centers for DiseaseControl (“CDC”), from 1999 to 2014, the sales of prescription opioids in the U.S. nearlyquadrupled, but there was no overall change in the amount of pain that Americans reported.55.A particular tragedy of the opioid epidemic is that it has turned law-abiding citizens,who experience routine injuries, into drug addicts and, in some cases, it has ruined their lives. Theimpact of opioid abuse and dependence on the lives of people from all segments of society is thesubject of Beth Macy’s Dopesick, Little, Brown and Company (August 2018).6.Across the nation, hospitals are struggling from the relentless and crushing financialburdens resulting from the epidemic of opioid addiction and abuse. Every day, more than 115Americans lose their lives after overdosing on opioids.6 The effects of the opioid epidemic onhospitals may soon become even worse. The coverage rules under the Affordable Care Act (ACA)are in transition, thus creating the possibility of increased costs for hospitals for treatment ofopioid-addicted patients admitted under the Emergency Medical Treatment and Labor Act(“EMTALA”), 42 U.S.C. § 1395dd.7As used herein, the term “opioid” refers to the entire family of opiate drugs including natural, synthetic,and semi-synthetic opiates.45Centers for D
d/b/a baptist health richmond; and bowling green warren county community hospital corporation d/b/a the medical center at bowling green, the medical center at caverna, and the medical center at scottsville; and the medical center at clinton county, inc. d/b/a the medical center at albany and the medical center at franklin, inc. d/b/a the medical
