One Man’s $50 Billion Vendetta Against Opioids
(Bloomberg) -- The place might sound familiar, even if you’ve never been there: the Appalachian foothills, down by the Ohio River, where the sirens scream addiction and death.
Twenty-six overdoses in one afternoon. The highest death rate in the state. One in 10 babies born dependent. Huntington, West Virginia, is the capital of America’s opioid epidemic.
Paul Farrell knows all about it. He grew up here, went off to college, and returned home. He watched the calamity unfold. First it was prescription pills like OxyContin. Then it was heroin, $20 a hit.
Now, Farrell is looking to set things right. He’s the engine behind one of the most daunting legal endeavors in modern U.S. history: more than 800 lawsuits brought by cities and counties against central figures in the opioid tragedy—the makers of prescription painkillers and the companies that distribute them.
For now, he’s working out of a carpeted, windowless office barely big enough for his desk, some chairs and a pair of folding tables in an old bank building downtown. The lock on the building’s shared bathroom doesn't work.
But if Farrell succeeds in making the industry pay for the epidemic’s toll, he stands to become wildly rich: By one estimate, the recovery in the opioid cases—which could be years away—could exceed $50 billion. Twenty-five percent of his clients’ portion would go directly to his firm and the firms he is working alongside.
With so much money at stake, it might be easy to view Farrell as one of the greatest ambulance-chasers of all time. He makes no apologies.
“We eat what we kill,” Farrell, 46, says. “Sometimes it’s a feast. Sometimes it's a famine.”
On the opioid cases, he says: “I’m stalking. I'm stalking the herd.”
More famous lawyers are hunting, too—Mike Moore, for one. As the attorney general of Mississippi, Moore helped negotiate the largest corporate legal settlement in U.S. history: a $246 billion deal with the tobacco industry in 1998. Lately, Moore has been going after the drug industry over opioids, crisscrossing the U.S. to recruit people to his cause. Hundreds of cases have been consolidated before a federal judge in Ohio for what’s called multidistrict litigation.
But Farrell is spearheading the legal fight for many communities, notably in the Ohio River Valley, where tired coal and steel towns have come to symbolize the crisis. His five-lawyer firm and legal consortium represents more than half of the suing communities.
His legal theory begins with West Virginia Code Section 7-1-3KK. The public nuisance law was written to address relatively workaday issues such as landfills and environmental waste. Farrell is basically arguing that drug makers and wholesalers created an epic public nuisance that is costing governments many millions to clean up.
Suits have been filed against Purdue Pharma LP, Johnson & Johnson, Endo International Plc, Teva Pharmaceutical Industries Ltd. and drug distributors. The companies recognize there’s an opioid crisis but say they’re not responsible, adding that litigation is the wrong way to address the issue. After all, they didn’t write the prescriptions, and they say they complied with all federal regulations.
On this brisk spring morning in April, Farrell leafs through half a dozen maps in his office. The images trace the legal contours of his stake in a geography of despair: hundreds of hard-hit communities, places like Logan County, West Virginia, and its 6.9 percent unemployment rate. Each 8-by-11-inch map is color-coded—red, green, blue, yellow—to show which local law firm Farrell is working with in that particular area.
“If you drop a nuclear bomb right there—boom!—this is the fallout,” Farrell says, jabbing his finger at the Ohio River Valley, the 203,000-square-mile stretch where states battle the nation’s highest overdose rates. In 2015, 22,000 Americans died from prescription-painkiller overdoses.
Farrell, an intense and blunt speaker, seems to have been made for his mission. At Huntington East High School, he served as student body president and captained the soccer team before enrolling in the ROTC at University of Notre Dame. Farrell has maintained the trademark aggressiveness of any field general. A military history buff, he even once named researchers working with him Team Sun Tzu.
“If he decides he’s onto something,” says Atlanta mass tort lawyer Henry Garrard, “he’s like a little bulldog that sinks his teeth in until he brings it down.” Says Mississippi lawyer Michael Fuller: “It’s like playing chess with someone who knows all the moves of the game before you even get started.”
Farrell’s mother was a trailblazer in hospice, known as end-of-life-care, which Farrell says taught him a sense of compassion. After graduating from West Virginia College of Law, he followed his father and two uncles into the family law firm. He decided it wasn’t for him and left to become a plaintiff’s lawyer. “I was writing very large checks to dumbass lawyers, and I thought to myself, ‘I’d like to be one of those dumbasses that gets one of these checks,’” Farrell said.
His father, now a Circuit Court judge here, is blunt about his son’s lawyering.
“I told him when he left our law firm, ‘You don’t have to be an a--hole to be a plaintiffs’ lawyer, but he kind of ignores that at times,” Paul Farrell Sr. says.
But the elder Farrell adds that this is what it takes to be a mass torts attorney. “They’re aggressive, they’re smart and—most of all—they’re prepared,” he says.
For all his successes here—Farrell has won multimillion-dollar cases as a medical malpractice lawyer and became president of the state trial lawyers’ association before he was 40—his roots seem to have placed a chip on his shoulder. He gets worked up if he thinks the establishment is trying to play him. In the 2016 presidential election, he ran as a protest candidate against Hillary Clinton. He outpolled her in nearby Mingo County.
“People have been underestimating me for a very long time,” Farrell says. “I’m accustomed to being stereotyped as the Appalachia, redneck hillbilly.”
Yet what hurts most is how drugs have devastated his hometown. “I have people my age that I know that are addicted to opioids,” says Farrell, who is married with three kids. “I know people that have children in their early 20s that they have lost.”
Farrell is one of three lead attorneys in the litigation, along with Joe Rice and Paul Hanly, veterans of the Big Tobacco pact whose experience together includes some 40 multidistrict litigations. This is Farrell’s second, yet he’s fit in naturally.
“He’s a gladiator,” Hanly says. “He feels he’s on a mission to correct some wrongs that have adversely affected his state worse than any other state in the nation.”
Opioids swallowed Huntington for years before Farrell waded in. He sued the distributors on behalf of several counties in January 2017 after West Virginia’s attorney general, Patrick Morrisey, reached settlements totaling $36 million with Cardinal Health Inc. and AmerisourceBergen Corp. The settlements came too quickly and were too small, Farrell says.
“It pissed me off that we got handled like that,” he says.
Morrisey, a former lawyer and lobbyist for the pharmaceuticals industry, is now running for U.S. Senate as a Republican; his wife, Denise, lobbied for Cardinal for 17 years and represents drug companies.
Chief Deputy Attorney General Anthony Martin says Morrissey’s private sector work didn’t include opioid matters and asserts that the office is aggressive in holding the industry accountable.
“Monday morning quarterbacks don’t usually understand the matters they criticize,” he says. The settlement received wide support, and “its success spurred the filing of approximately 1,000 other lawsuits.”
Morissey’s wife declined to comment.
What makes this wave of opioids litigation different from the tobacco saga is that scores of cities and counties—communities on the front lines of this crisis—are taking matters into their own hands, rather than relying on states to fight for them.
Mostly, municipalities want the influx of prescription opiates to be contained and for the drug industry to be held accountable.
“I don’t expect a dime, but I’d like to see someone’s hide on the fence for allowing this to happen,” says Bob Pasley, a county commissioner in Wayne County, West Virginia, which hired Farrell.
Farrell began at home, in Cabell County, and fanned out. He met with local governments and their lawyers, tapping his legal network, and soon captured most of the Midwest. His coalition includes four national law firms and scores of local ones stretching from North Carolina to California.
Much of the legal drama will unfold in Cleveland, in room 18B of the Carl B. Stokes United States Court House on West Superior Avenue. During a February hearing there before Judge Dan Polster, Farrell listened as a U.S. Drug Enforcement Administration lawyer argued against releasing federal data on where distributors shipped painkillers. The companies themselves have said that revealing such details could harm their businesses. The DEA lawyer added that disclosure could jeopardize investigations and help criminals.
Farrell had printed copies of distributors’ websites and showed that anyone with an Internet connection could find their facilities. He told the judge that addresses were included in job applications and mentioned in press releases. “He completely did his homework,” says Russell Budd, a prominent Texas lawyer working with Farrell’s. “He knew they were going to make that argument.”
A DEA spokeswoman says the agency doesn’t comment on pending litigation. Polster has since ordered the DEA to give the plaintiffs detailed prescription sales data from 2006 to 2014 .
Conventional wisdom holds that the consolidated litigation will be settled, though perhaps not until after the first federal trial, a so-called test case set for March 2019. Farrell says the litigation should be settled only if doing so would bring an end to the opioid epidemic—a high bar that would seem almost impossible to clear.
Farrell also doesn’t care if some of the companies in his sights are driven to bankruptcy. Out of fear of wider economic damage, the federal government has sought to avoid driving companies into insolvency since the collapse of Arthur Andersen following the accounting firm’s conviction on obstruction-of-justice charges in the Enron scandal almost two decades ago.
Some of these companies have already been hammered in the stock market. Endo, for instance, has watched its market value plummet by 90 percent in the past three years. Teva, the world’s largest generics manufacturer, is highly leveraged and restructuring. (Farrell’s uncle, Michael, represents a subsidiary of Endo; a May hearing served as a courtroom family reunion. Michael didn’t respond to requests for comment).
Farrell is pushing to lay blame at companies’ feet. That may be why he’s eying McKesson Corp., AmerisourceBergen and Cardinal, distributors of 94 percent of prescriptions drugs in the country, according to Drug Channels Institute. The companies have vigorously denied the claims. They say they are working within a regulated system and have met their obligations.
“There’s nobody in the litigation who knows the distributor case as well as he does,” says Budd.
Should Farrell prevail against the three distributors, the implications for the companies could be enormous. George Hill, an analyst at RBC Capital Markets, says the companies might run into trouble if they were forced to pay more than $10 billion annually.
Farrell is reluctant to give a settlement estimate. Polster, the judge, has issued a gag order barring lawyers from disclosing negotiation details.
Still, Farrell is developing a model that he hopes would be used to help determine funding for communities. By his reckoning, Cabell County, for example, would get $500 million over 10 years for law enforcement, treatment centers and education.
“We would like to keep the pharmaceutical companies from dumping into Cabell County. That’s why we got the law firm,” says Commissioner Bob Bailey. The sheriff, Chuck Zerkle, says any funds would address fiscal problems worsened by the crisis. “The county commission funds the senior centers, they fund the parks and things around the county,” says Zerkle. “There’s no money to fund those things.”
Yet, given the contingency fees, such a settlement might net all the law firms working with Farrell a check in the billions. Farrell, who drives around Huntington in a black Chevrolet Silverado pickup, concedes that folks in his hometown might look askance at such a payday. Yes, communities like Huntington would win. But the lawyers would profit handsomely, too—and ordinary people might not view that kindly.
The thought gives Farrell pause, and then the moment passes. After all, he may never see a dime from any of this. In the meantime, he’s working away—and people in his hometown are dying.
“My mother has told me since a very young age—she would whisper in my ear—that God has a special plan for me,” Farrell says. “I think, deep and intrinsically, perhaps what I am doing now is it.”
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