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Monday, May 29, 2006

Courts - Saga of alleged corruption in Kentucky fen-phen case continued

Andrew Wolfson of the Louisville Courier Journal has another story today on "Kentucky's massive fen-phen case." (See a list of earlier ILB entries here.) Some quotes from a very long report:

Her heart seriously damaged by the diet drug fen-phen, Connie Centers was supposed to collect $2.6 million, after attorney's fees, from a $200 million settlement in 2001 with the drug's manufacturer.

Instead, Centers says in court papers, one of her attorneys first told her she would get $1 million. When she balked, he raised it to $1.5 million.

She ultimately collected $1.8 million -- $800,911 less than the $2.625 million she should have netted, according to court records.

Like hundreds of other plaintiffs in Kentucky's massive fen-phen case, Centers, of Lawrenceburg, said she was never told the amount she was allotted, nor the total amount of the settlement.

For concealing those amounts -- and overpaying themselves -- a judge previously found that the three Lexington attorneys who represented the fen-phen plaintiffs breached their duty to their clients. Special Judge William Wehr said the lawyers passed out money from the settlement "like it was theirs to do with as they wish."

Court documents recently obtained by The Courier-Journal detail how the attorneys -- Shirley Cunningham Jr., William Gallion and Melbourne Mills Jr. -- exploited the settlement, client by client.

"Attorneys who settle their clients' cases for one amount and withhold settlement funds beyond their fees and expenses have engaged in fraud, pure and simple," said Angela Ford, who represents more than 400 of the original 440 Kentucky fen-phen plaintiffs in a lawsuit that is pending in Boone Circuit Court.

Ford's clients contend that up to $64.4 million was misappropriated from the settlement and have asked Wehr to force the lawyers to surrender all or some of their fees.

Wehr has not ruled on that motion, and his decision likely will be delayed by the attorneys' expected appeal of his ruling that they breached their duties, which made them liable for damages.

Cunningham and Gallion did not respond to requests for interviews, but Mills, who reaped a $23.6 million fee in the fen-phen case, said in a recent interview that he expects to be sanctioned by the Kentucky Supreme Court for failing to advise clients about terms of the settlement.

"There are several places I could have done better," he said.

But Mills contends that the figure listed in court records as the "settlement amount" for each client represented what would have been kept by the drug's manufacturer, American Home Products, if that plaintiff had refused to settle and insisted on going to trial.

"The purpose wasn't to pay each that amount," Mills said. Asked how much each plaintiff deserved to be compensated, he responded, "The amount he agreed to take."

In interviews and court papers, however, plaintiffs said they didn't know how much was on the table and thus settled for less than they were allotted by their own lawyers. * * *

Authorities on legal ethics say the three lawyers violated Kentucky's rules of professional conduct by concealing the settlement amounts and by taking excessive fees.

Hofstra Law School professor Monroe Freedman suggested the attorneys also may have broken the law. "It looks like embezzlement, let alone being unethical," Freedman said. * * *

Supreme Court Justice Donald Wintersheimer, based in Covington, said the burgeoning scandal is "an embarrassment to the profession." The high court enforces the ethics code for lawyers.

Joseph Bamberger, the judge who presided over the class-action lawsuit filed in 1998 in Boone Circuit Court, resigned in February rather than face possible removal from office by the Judicial Conduct Commission, which publicly reprimanded him.

The commission said the judge "shocked the conscience" by approving millions of dollars more in fees to lawyers and their aides than their clients.

The payments included more than $2 million to a close friend of the judge, Mark Modlin, who served as the attorneys' trial consultant.

Posted by Marcia Oddi on May 29, 2006 08:44 AM
Posted to Courts in general