Court Opinion

ID: 2759898
Source: CourtListenerOpinion
Date Created: 2014-12-11 21:00:42.545786+00
Date Added: 2024-06-11T10:38:13.205261
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                               ________________

                                      No. 14-1300
                                   ________________

             In re: Diet Drugs (Phentermine/Fenfluramin/Dexfenfluramine)
                              Products Liability Litigation

                                          Vivian A. Lambert,
                                                      Appellant

                                   ________________

                     Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
        (D.C. Civil Action No. 2-99-cv-20593, 2-11-md-01203, 2-16-md-01203)
                      District Judge: Honorable Harvey Bartle, III
                                   ________________

                       Submitted Under Third Circuit LAR 34.1(a)
                                  November 17, 2014

                 Before: AMBRO, SCIRICA, and ROTH, Circuit Judges

                           (Opinion filed: December 11, 2014)

                                   ________________

                                       OPINION*
                                   ________________

AMBRO, Circuit Judge

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
       Vivian Lambert appeals the District Court’s Order affirming AHP Settlement

Trust’s final post-audit determination letter, which denied Lambert’s claim for benefits

from the Trust. We affirm the Order.

                                              I.

       After taking the diet drugs that are the subject of this litigation, Lambert received

the now-questioned diagnosis of moderate mitral regurgitation, a dangerous heart

condition the drugs can cause. She is one of many thousands who allege entitlement to

compensation from AHP Settlement Trust, an entity established to carry out the 1999

Settlement Agreement between the plaintiffs’ class and Wyeth, the corporate successor to

American Home Products (which manufactured the diet drugs). The Settlement

Agreement provides, among other things, a detailed process for claiming benefits and an

audit process to make sure claims are evaluated properly. In August 2002, Lambert

submitted a claim for what are known as “Matrix Benefits” (a method of compensation

for certain injuries). By November 2002, the number of claims for Matrix Benefits far

exceeded the expectations of the parties to the Settlement Agreement. Investigation

determined that many of the claims were based on echocardiograms (“EKGs”) that had

been deliberately manipulated to show moderate mitral regurgitation when in fact any

regurgitation was mild at most.

       In order to protect the integrity of the claims process, the District Court ordered

that the Trust audit all claims for Matrix Benefits. The purpose of the audit was to review

whether there was a reasonable medical basis for the claim, a relatively low threshold, or

whether the claim was based on an intentional misrepresentation of a material fact. In

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February 2004, Lambert’s claim passed the audit and was deemed payable. However, by

May 2004 it had become clear that the audit was inadequate and that some of the payable

claims were based on manipulated EKGs. The District Court therefore stayed the

payment of claims like Lambert’s, and the parties negotiated a procedure to determine

which claims should be paid.

       The stay of the Court affected 968 claims that had passed the Trust’s audit. It

ordered the Trust to classify the 968 claims as either not payable because of an

intentional misrepresentation of material fact (called in the District Court’s Order

“Paragraph 5(a) Claims”), not payable for some other reason, or payable. Lambert’s is a

Paragraph 5(a) Claim.

       In order to determine whether Paragraph 5(a) Claims should be paid, the District

Judge ordered Court Approved Procedure (“CAP”) 13, giving claimants a choice: submit

to a final and binding medical review pursuant to the terms of the Seventh Amendment to

the Settlement Agreement or have the Trust review the claims in accordance with the

Settlement Agreement without the Seventh Amendment. Lambert opted for the latter

process; the Trust reviewed her claim and determined that it had no reasonable medical

basis and was supported by intentional misrepresentations of material facts. Lambert

challenged the Trust’s conclusion in the District Court, which ruled that there was no

reasonable medical basis for Lambert’s claim and declined to decide whether there was

an intentional misrepresentation.

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                                             II.

       Lambert raises six arguments on appeal, which we discuss in a slightly different

order from her brief. Her second and third contentions stem from the view that, after

Lambert opted out of CAP 13, the Trust and the District Court could not analyze whether

there was a reasonable medical basis for her diagnosis because the Trust’s assertion of

intentional misrepresentation of a material fact was the only reason her claim was subject

to reexamination. Lambert argues that neither the Trust nor the District Court could

revisit the conclusion made before the stay that a reasonable medical basis did exist.

       While Lambert’s analysis has a certain intuitive appeal, the parties did not bargain

for the limited review she would prefer. Lambert agreed to have her claim evaluated in

accord with the Settlement Agreement. It requires an auditing cardiologist to “make a

determination as to whether or not there was a reasonable medical basis for the

representations made by any physician in support of the Claim.” Settlement Agreement

§ VI.E.6. If there is “no reasonable medical basis . . . or if the Trustees and/or Claims

Administrator(s) determine that the Class member . . . intentionally made a material

misrepresentation of fact,” the claim is denied. Id. § VI.E.7 (emphasis added). If the

claimant is not satisfied with the audit, she may require the Trust to file an application

with the District Court to show cause why the claim should not be denied. In the Show

Cause process, “[i]f the Court determines that there was no reasonable medical basis . . .

or that the Class member . . . intentionally made a material misrepresentation of fact,” the

Court may grant appropriate relief, including disallowing the claim. Id. § VI.E.8 &

VI.E.8.a (emphasis added). At each stage of the Settlement Agreement’s review process,

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which Lambert chose by opting out of CAP 13, a lack of a reasonable medical basis is a

valid reason to deny a claim, and thus Lambert’s second and third arguments on appeal

fall short.

       Lambert’s fourth contention is that the District Court deprived her of due process

by not giving her notice that she would have to prove that there was a reasonable medical

basis for her claim. As discussed above, the Settlement Agreement outlines that

reasonable medical basis is a subject of the audit process and the Court’s review. The

end result of the audit process is a Final Post Audit Determination Letter, which in

Lambert’s case has a two-page section headed “Your Contest Fails to Demonstrate a

Reasonable Medical Basis.” Appellant’s App’x 1174. Lambert challenged this

determination via the Settlement Agreement’s Show Cause proceedings, which required

the Trust to file a Statement of the Case before the special master appointed by the

District Court. In its Statement of the Case, the Trust described one of the questions

presented as “Does [Lambert] in fact have moderate mitral regurgitation . . . ? Suggested

Answer: No.” Id. at 1193. In response, Lambert “again [took] issue with their

assertion,” and she expressed her confidence “that the Special Master’s Technical

Advisor [will] confirm her qualifying injury during the Show Cause process.” Id. at

1201. She was therefore on actual notice throughout the audit and Show Cause processes

that the reasonable medical basis for her claim was at issue, and her due process claim

must fail.

       Lambert also contends that it was clearly wrong for the District Court to find that

there was no reasonable medical basis for her diagnosis, but the only reason she offers is

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that, before the Trust’s stay, an auditing cardiologist and her own doctor determined there

was such a basis. These findings were not binding on the District Court, and indeed it

issued CAP 13 because many claims for benefits were unreliable and many audit

determinations were wrong. Lambert provides no reason to doubt the District Court’s

actual analysis of the evidence. The Court considered the technical advisor’s report and

the Trust’s expert and noted that Lambert’s expert did “not identify any particular error”

in the determinations that she suffered only mild mitral regurgitation. In re Diet Drugs

Products Liab. Litig., No. 2:16-md-1203, 2014 WL 92324, at *6 (E.D. Pa. Jan. 9, 2014).

It thus was entitled to side with the Trust’s expert and did not err in doing so.

       Lambert also offers no reason to accept her argument that the District Court

“rubber-stamped” the technical advisor’s report. Its Memorandum Opinion in this matter

reflects a careful, individualized determination that permissibly relied on an advisor “to

educate [the Court] in the jargon and theory disclosed by the [evidence] and to think

through the critical technical problems.” Reilly v. United States, 863 F.2d 149, 158 (1st

Cir. 1988). It did not abuse its discretion in appointing a technical advisor, and it has not

abdicated its judicial role to that advisor.

       And last, we need not address whether the District Court impermissibly placed the

burden on Lambert to disprove fraud. The Court only ruled that she lacked a reasonable

medical basis for her diagnosis, and thus the burden of proof on the intentional

misrepresentation issue is immaterial.

                                *       *      *     *       *

       For these reasons, we affirm.

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