By Rebecca Mayo, J.D.
In an alleged scheme where drug manufacturers, drug distributors, and healthcare providers work in concert and their actions result in the oversupply and overuse of opioid drugs, one of the three prongs cannot be severed to create diversity jurisdiction. A Maryland federal court granted the City of Baltimore’s Motion to Remand after finding that there was not complete diversity among the parties and the court did not have subject matter jurisdiction over the action (Mayor & City Council of Baltimore v. Purdue Pharma L.P., April 25, 2018, Russell, III, G.).
Background. The City of Baltimore filed a complaint against multiple drug manufacturers, drug distributors and a Baltimore healthcare provider alleging harms stemming from opioid abuse. Baltimore alleges that the manufacturers fraudulently marketed and promoted opioids, the health care provider fraudulently over-prescribed opioids, and the distributors failed to limit fraudulent or suspicious distribution of opioids, causing widespread opioid use and exacting a high monetary cost to Baltimore. Two manufacturers filed a notice of removal from the state court to federal court on diversity jurisdiction and Baltimore filed a Motion to Remand.
Severability. The manufacturers urged the court to deny the motion because the healthcare provider is unnecessary and dispensable and therefore may be severed to create complete diversity jurisdiction. However, the court held that Baltimore’s claims against the health care provider do not involve legal standards or factual inquiries distinctly different from its claims against the manufacturers. Baltimore alleges that the false claims made by the manufacturers caused the healthcare provider to repeat and disseminate those same false claims, and to oversupply patients with massive quantities of prescription opioids. Therefore, the claims against the healthcare provider are factually and legally intertwined with its claims against the manufacturers and distributors, making them necessary and indispensable. The healthcare provider is not severable and complete diversity fails.
Fraudulent misjoinder. The manufacturers asked the court to apply the fraudulent misjoinder doctrine to ignore the citizenship of the nondiverse healthcare provider in this action. Fraudulent misjoinder is an assertion that claims against certain defendants, while provable, have no real connection to the claims against other defendants in the same action and were only included in order to defeat diversity jurisdiction and removal. There is no fraudulent misjoinder where the plaintiff has satisfied the requirements of permissive joinder of claims.
The court held that Baltimore’s claims against the healthcare provider are logically related to its claims against the manufacturers and distributors and therefore the claims arise from the same transaction or occurrence. Specifically, the issue of whether the manufacturers violated the False Claims Act turns, in part, on whether the manufacturers caused the healthcare provider to present false or fraudulent claims or use false statements to get false or fraudulent claims paid or approved by Baltimore. The claims against the parties also raise at least one common question of law and fact which completes the permissive joinder of claims requirements, meaning the parties are not fraudulent misjoined.
The case is No. GLR-18-800.
Attorneys: Andre M. Davis, Baltimore City Department of Law, for Mayor & City Council of Baltimore.
Companies: Purdue Pharma L.P.; Purdue Pharma, Inc.; The Purdue Frederick Co., Inc.; Teva Pharmaceuticals USA, Inc.
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