DIET-DRUG CASE Fake claims swamp trust for injuries, lawyers say

About 71,000 claims of heart-valve damage have been filed.
KNIGHT RIDDER NEWSPAPERS
PHILADELPHIA -- A $3.75 billion trust formed in 1999 to benefit injured diet-drug users has been targeted in a massive fraud, according to its lawyers.
In an unusual legal battle unfolding in U.S. District Court in Philadelphia, the trust contends that thousands of bogus heart-damage claims have been filed by lawyers working hand-in-hand with cardiologists around the country.
About 8,300 claims of severe heart damage were expected from dieters who used the weight-loss drugs Pondimin (an ingredient in a drug cocktail called fen-phen) and Redux in the 1990s.
But more than eight times that number -- 71,000 claims -- have been filed with the Philadelphia-based AHP Settlement Trust created by American Home Products, now Wyeth, the drug manufacturer, to pay claims.
Peter L. Zimroth, an attorney for Wyeth, declared in a court filing late last year that the claims process had been "hijacked by lawyers stamping out tens of thousands of baseless claims" and operating on a scale "beyond anything that could have been imagined."
About 2,700 claims -- at an average of $400,000 -- have been paid so far. At that rate, the trust is facing far more claims than it can pay.
Heart-valve damage
Pondimin and Redux were pulled off the market in 1997 after some users developed heart-valve damage.
Research studies later showed that the number of serious injuries among 6 million users were comparatively few. But Wyeth, of Madison, N.J., was besieged by claims. The company agreed to a nationwide class-action settlement in 1999.
Plaintiffs' lawyers now contend that Wyeth vastly underestimated the extent of heart damage caused by its drugs and that scientific data projecting only 8,300 serious injuries was wrong.
Wyeth counters that it did not underestimate injuries, but rather underestimated how much fraud might occur with the creation of a $3.75 billion settlement fund.
Much of the suspected fraud involves echocardiogram tests required to support claims of severe heart-valve damage.
Zimroth argues in legal pleadings that, after the 1999 settlement, plaintiffs' lawyers recruited clients through advertising, set up medical testing "mills" to conduct echocardiograms en masse, and then paid cardiologists millions of dollars to fill out claim forms listing exaggerated injuries.
Judge has had doubts
As far back as November 2002, U.S. District Judge Harvey Bartle III, who is presiding over the settlement, voiced doubt that the heavy flow of claims -- which then had not peaked -- could be legitimate. Bartle ordered a medical audit of every claim.
But the auditing process has proceeded slowly as lawyers for Wyeth and the trust have questioned increasing numbers of claims.
After the deadline for filing claims passed in May, the trust set up a "claims integrity program" and hired Richard L. Scheff, a former federal prosecutor, to ferret out fraud.
Scheff, a partner at Montgomery, McCracken, Walker & amp; Rhoads L.L.P., said in an interview that about 20 lawyers at the law firm were working with him on investigations into the conduct of lawyers, doctors and echocardiogram testing services.
"The trust has to ensure, as part of its fiduciary obligations, that it is paying legitimate claims," Scheff said. "We want to deter bogus claims. We want to recover money that shouldn't have been paid in the first place. We want claims that aren't valid to be withdrawn."