The Arkansas Supreme Court today reversed the $1.2 billion verdict for  the state of Arkansas against two pharmaceutical companies for billing Medicaid for off-label use of the antipsychotic drug Risperdal.

There are two separate decisions and separate opinions.


In short: The Supreme Court overturned two key findings in the case, dismissing one and sending a deceptive trade practices act complaint back to circuit court. That kills the $1.2 billion award. In a separate decision written by Justice Courtney Goodson, the court, on account of the reversal, also reversed the lower court’s award of $180 million in attorney fees.

A jury had found against Johnson & Johnson and Janssen Pharmaceuticals. Judge Timothy Fox assessed a $5,000 fine for each Risperdal prescription. The companies, which have been sued over this issue in other states, said the verdict was excessive.


The Supreme Court, in an opinion written by Justice Karen Baker, said the circuit court had erred in saying the Medicaid false claim act applied in the case for false statements  about use of Risperdal. The opinion said the statute applied to false statements about the certification process for operation of facilities such as nursing homes, not about use of prescription drugs. The opinion said the drug companies also had been prejudiced by admission into evidence of a federal warning letter about the use of the drug. The letter arose from a specific investigation and thus was inadmissible hearsay in the class action case, though it was referenced multiple times in the trial.

The complaint on the false Medicaid claim was reversed and dismissed. The claim on deceptive trade practices was reversed and remanded to circuit court. Justice Paul Danielson disagreed that the evidence in the unfair trade complaint was hearsay. Chief Justice Jim Hannah and Justice Donald Corbin joined Danielson, which meant three of the seven judges would have allowed the evidence that led to the reversal.


I’m seeking comment from Attorney General Dustin McDaniel on where this leaves the state in terms of a retrial on the trade practices complaint. The anticipation of state receipt of this verdict has figured in recent legislative planning for future budgets. That windfall won’t be arriving any time soon, if ever.

UPDATE: A statement from McDaniel:

We pursued this case based on the belief we continue to hold, which is that the General Assembly intended to give the Attorney General’s Office the authority to pursue penalties against those that would enter our state and blatantly deceive the public. I am disappointed that the Court viewed the law differently. Nevertheless, I will keep working to protect consumers against fraud and the kinds of irresponsible and greedy actions shown by Johnson & Johnson and Janssen Pharmaceuticals in their marketing of the drug Risperdal.

McDaniel has not responded to my question on the chances of retrial of the remaining count without the inadmissible evidence. Here’s some good background on the case about misuse of the drug and an earlier $2.2 billion settlement with the U.S. government on use of the drug.