Court Opinion

ID: 2702905
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:00:16.440045+00
Date Added: 2024-06-11T12:51:09.419248
License: Public Domain

NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                ____________

                               Nos. 13-4244 & 13-4729
                                    ____________

                          IN RE: DIET DRUGS
            (PHENTERMINE/FENFLURAMINE/DEXFENFLURAMINE)
                    PRODUCTS LIABILITY LITIGATION

                                    Tom S. Yeary,
                                             Appellant in 13-4244

                                    Melanie L. Groce,
                                          Appellant No. 13-4729
                                   ____________

                     On Appeal from United States District Court
                        for the Eastern District of Pennsylvania
             (E.D. Pa. 2-99-cv-20593, 2-11-md-01203 & 2-16-md-01203)
                     District Judge: Honorable Harvey Bartle, III
                                     ____________

                   Submitted Pursuant to Third Circuit LAR 34.1(a)
                                   June 10, 2014

             Before: FISHER, COWEN and TASHIMA,* Circuit Judges.

                               (Filed: August 4, 2014)
                                    ____________

                                     OPINION
                                   ____________

TASHIMA, Circuit Judge.

      *
       The Honorable A. Wallace Tashima, Senior Circuit Judge for the Ninth Circuit
Court of Appeals, sitting by designation.
              Tom Yeary and Melanie Groce (together, AAppellants@) appeal decisions1

of the United States District Court for the Eastern District of Pennsylvania denying them

recovery under the terms of the Diet Drug Nationwide Class Action Settlement

Agreement (the ASettlement Agreement@). We will affirm.

                                             I.

       We write principally for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we will set forth only those facts necessary to our

analysis.2

       This case is part of an ongoing multi-district litigation concerning diet drugs called

APondimin@ and ARedux,@ previously sold by Wyeth.3 Under the Settlement Agreement,

Wyeth was required to contribute funds to a trust for the payment of claims. The

resulting Settlement Trust (the ATrust@) is responsible for administering and reviewing

class members= claims to determine eligibility for benefits.

       To qualify for benefits, claimants must submit a AGreen Form@ disclosing their

personal and medical information. Part II of the Green Form requires a board-certified

       1
              The District Court denied Yeary=s claims in Pretrial Order (APTO@) 9149
and Groce=s claims in PTO 9166. Their claims were briefed separately on appeal, but
will be resolved together.
       2
              We have previously described the diet drugs litigation in detail. See, e.g.,
In re Diet Drugs, 582 F.3d 524, 529-32 (3d Cir. 2009); In re Briscoe, 448 F.3d 201, 206-
08 (3d Cir. 2006); In re Diet Drugs, 401 F.3d 143, 147-48 (3d Cir. 2005); In re Diet
Drugs, 385 F.3d 386, 389-92 (3d Cir. 2004); In re Diet Drugs, 282 F.3d 220, 225-29 (3d
Cir. 2002).
       3
              Prior to March 11, 2002, Wyeth was known as American Home Products
Corporation.

                                              2
cardiologist or board-certified cardiothoracic surgeon (Aattesting physicians@) to attest to

the claimant=s level of valvular heart disease, based on a reading of an echocardiogram

videotape. Claimants qualify for benefits if they suffer from, among other things,

moderate or more severe mitral regurgitation. Benefits are calculated based on several

factors, including age, duration of diet drug use, and severity of disease.

       The Settlement Agreement directs the Trust to audit 15% of submitted claims.

When a claim is selected for audit, the Trust forwards the claimant=s medical history and

echocardiogram to an independent board-certified cardiologist (an Aauditing physician@).

The auditing physician reviews the medical file and determines whether a reasonable

medical basis supports the findings of the claimant=s attesting physician. As part of the

audit, the Trust also reviews the claimant=s Green Form for any intentional material

misrepresentations of fact.

       Appellants submitted completed Green Forms in the fall of 2002. Their attesting

physicians4 submitted findings that Appellants suffered from moderate mitral

regurgitation, abnormal left atrial dimension, and reduced ejection fraction in the range of

50% to 60%. Based on such findings, Appellants would be entitled to Matrix A-1, Level

II benefits B approximately $500,000 each.

       Unexpectedly, the Trust was inundated with claims B by November 2002, the

Trust was expected to receive more than 75,000 claims, more than twice the number of

       4
             Dr. Dominic Pedulla was Yeary=s attesting physician, and Dr. Howard
Brazil was Groce=s attesting physician.

                                              3
claims anticipated at the time of settlement. See PTO No. 2662 at 8. The District Court

determined that many of these submissions were unreliable due to mass screening

programs implemented by various law firms in which aardiologists made broad-sweeping

and unreasonable judgments concerning the evidence of valid claims. See In re Diet

Drugs, 543 F.3d 179, 182 n.4 (3d Cir. 2008). To address this problem, the District Court

modified the Settlement Agreement=s 15% auditing cap to allow for the audit of every

claim. PTO No. 2662.

       In early 2004, the Trust audited Appellants= claims. The auditing physicians5

determined that the findings of Appellants= attesting physicians were supported by a

reasonable medical basis. Based on the audits, the Trust issued Post-Audit Determination

Letters awarding benefits. The letters informed Appellants that Athe Trust may seek

additional information . . . or call for additional steps with regard to your claim, even if

these procedures or information . . . are not anticipated at this time.@ Trust Supp. App.

(Yeary) 70sa; Trust Supp. App. (Groce) 40sa.

       Before the Trust paid Appellants benefits, however, the District Court stayed the

processing of claims pending implementation of the Seventh Amendment to the

Settlement Agreement.6 At the time of the stay, there were 968 claims that had passed

       5
              Dr. David Lieb audited Yeary=s application, and Dr. Steven Fein audited
Groce=s application.
       6
              The Seventh Amendment was adopted in an attempt to hasten the 100%
auditing procedure ordered by the court. See In re Diet Drugs, 226 F.R.D. 498 (E.D. Pa.
2005).

                                              4
audit but remained unpaid, known as Pre-stay Payable Post-Audit Determination Letter

(APADL@) claims. The Trust alleged that 580 PADL claims, including Appellants=,

contained intentional material misrepresentations of fact that were not detected during the

initial audit.

        The District Court ordered the Trust to re-review the 5(a) claims7 and provide

claimants with Aa report stating with the specificity required by Fed. R. Civ. P. 9(b) and

Audit Rule 23(c) the specific factual basis for the Trust=s assertion that there was a

material misrepresentation.@ PTO No. 3883 at 5. The District Court determined that

review of 5(a) claims should proceed as follows:

        To ensure that all issues relating to these claims are reviewed on a claim-
        by-claim basis, the Trust shall promptly review the entire claim file for
        each pre-stay payable PADL claim and issue new Post-Audit
        Determinations. Claimants may contest such determinations and, after
        considering any contested materials, the Trust shall issue Final Post-Audit
        Determinations. If any claimant challenges a Final Audit Determination,
        his or her claim shall then proceed through the show cause process as
        established in PTO No. 2807.

PTO No. 5625 at 7.

        The Trust issued new initial Post-Audit Determination Letters denying Appellants=

claims based on substantial evidence of intentional material misrepresentation. The

letters included findings from another auditing cardiologist, Dr. Joseph Kisslo, who, in

        7
               These are the 580 PADL claims referred to above. They are sometimes
called A5(a) claims,@ based on paragraph 5 of PTO No. 3883, which directs the Trust to
categorize all PADL claims in one of three categories, including A(a) Pre-Stay Payable
PADL claims where the Trust alleges that there was intentional misrepresentation . . . in
connection with the claim (>Paragraph 5(a) Claims=).@ PTO No. 3883 at 3.

                                              5
addition to agreeing with the Trust=s ultimate determinations of intentional

misrepresentation, concluded that there was no reasonable medical basis for finding

moderate mitral regurgitation based on Appellants= echocardiograms.

       Appellants contested the Trust=s determinations, but the Trust reaffirmed its

decision in its Final Post-Audit Determinations. Appellants, disputing the Trust=s Final

Post-Audit Determinations, then requested that their claims proceed through the show

cause process. The Trust applied to the District Court to require Appellants to show

cause why their claims should be paid, and the District Court issued the show-cause

orders. The District Court referred Appellants= claims to a Technical Advisor, Dr. Gary

Vigilante, to prepare a Technical Advisor Report. In his report, Dr. Vigilante agreed with

Dr. Kisslo that there was no reasonable medical basis for Appellants= attesting physicians=

findings of moderate mitral regurgitation. He also agreed that the echocardiogram Awas

not conducted in a manner consistent with medical standards.@ Trust. Supp. App. (Yeary)

239sa; Trust Supp. App. (Groce) 168sa.

       After examining the record, including Dr. Vigilante=s report, the District Court

held that Appellants failed to meet their burden of proving that a reasonable medical basis

existed to support their claims. The District Court did not address whether Appellants=

claims contained intentional material misrepresentations of fact. Appellants now appeal

to this Court.

                                             6
                                             II.

       The District Court had jurisdiction over all terms of the Settlement Agreement

under 28 U.S.C. '' 1332 and 1407. We exercise jurisdiction over a final order of the

District Court under 28 U.S.C. ' 1291.

       AWe review a District Court=s exercise of its equitable authority to administer and

implement a class action settlement for abuse of discretion.@ In re Diet Drugs, 543 F.3d

at 184 n.10. An abuse of discretion exists if the District Court=s decision Arest[s] on a

clearly erroneous finding of fact, an errant conclusion of law or an improper application

of law to fact.@ Id. (quoting In re Nutraquest, Inc., 434 F.3d 639, 645 (3d Cir. 2006))

(internal quotation marks omitted).

                                             III.

Appellants raise two primary issues on appeal. First, Appellants argue that the District

Court clearly erred in holding that Appellants= claims were not supported by a reasonable

medical basis. Second, Appellants argue that the Trust=s second review of their claims

violated the Settlement Agreement, their right to due process, and the District Court=s

PTOs. We disagree with both of these contentions.

                                            A.

       AOnce the Trust denies a claim and the claim advances to a show cause

proceeding, the claimant has the burden of proving there was a reasonable medical basis

                                              7
for the attesting physician=s representations.@ Id. at 189. Appellants contend they met

this burden because their claims were supported by the findings of their attesting

physicians, as well as the Trust=s own auditing cardiologists. The District Court denied

Appellants= claims on the ground that Appellants failed to rebut the findings of Dr. Kisslo

and Dr. Vigilante, who each determined that Appellants= attesting physicians improperly

measured regurgitation and failed to conduct the echocardiogram in a manner consistent

with medical standards.

       We hold that the District Court=s findings are not clearly erroneous. AThe test is

not what this court would have done under the same circumstances; that is not enough.

The court must feel that only one order could have been entered on the facts.@ In re

Orthopedic Bone Screw Prods. Liab. Litig., 246 F.3d 315, 320 (quoting In re Gypsum

Antitrust Cases, 565 F.2d 1123, 1128 (9th Cir. 1977)) (internal quotation marks omitted).

Without rebutting Dr. Kisslo=s and Dr. Vigilante=s findings, Appellants cannot

demonstrate that the only conclusion that may be drawn from their echocardiograms is

that of moderate mitral regurgitation. Because the record supports a finding that there is

no reasonable medical basis for Appellants= attesting physicians= Green Form findings,

we cannot conclude that the District Court abused its discretion in holding that

Appellants failed to meet their burden of proving that there was a reasonable medical

basis for their attesting physicians= Green Form findings.

                                             8
                                            B.

       Appellants= three arguments challenging the Trust=s second review of claims are

unavailing. First, the Settlement Agreement permitted the District Court to order the re-

audit of Appellants= claims and to rule against Appellants in show cause proceedings on

reasonable-medical-basis grounds. The Agreement expressly authorized the District

Court to Aorder the Trustees and/or Claims Administrator(s) to perform such additional

audits and/or adopt such additional claims administration procedures as the Court deems

appropriate.@ 8 Settlement Agreement VI.E.8. It also clearly authorized the District Court

to deny Appellants= claims during the show cause process A[i]f the Court determines that

there was no reasonable medical basis to support a material representation made by a

physician in support of a Claim.@ Id. Thus, the District Court did not violate the

Settlement Agreement by ordering the second audit of Appellants= claims or by denying

the claims on grounds that they were not supported by a reasonable medical basis.

       Second, no due process violation occurred because Appellants had notice of the

District Court=s procedures and ample opportunity to be heard. Mullane v. Cent. Hanover

       8
               Appellants cite in their supplemental letters In re Deepwater Horizon, 753
F.3d 509 (5th Cir. 2014), in support of their argument that authorizing the second audit
exceeded the District Court=s authority. That case is inapplicable here because, in that
case, the Fifth Circuit determined that the claims administrator exceeded its authority by
requiring claims to meet a condition for approval that the settlement agreement expressly
did not require. See id. at 512. By contrast, the Settlement Agreement here expressly
authorized the District Court to order additional audits.

                                             9
Bank & Trust Co., 339 U.S. 306, 314 (1950). In fact, both Appellants were heard during

their respective show cause proceedings, albeit without oral argument.

       Third, we reject Appellants= arguments that the Trust violated PTO Nos. 3883 and

5625. The Trust did not violate PTO No. 3883 because it timely furnished Appellants

with individual reports that specified the factual basis for the Trust=s findings of material

misrepresentation. Neither did the Trust violate PTO No. 5625 because the Trust did not,

contrary to Appellants= argument, exceed the scope of review authorized by the order.

       Accordingly, we reject Appellants= arguments challenging the second review of

their claims.

                                             IV.

       For the foregoing reasons, we will affirm the District Court=s orders denying

Appellants= claims for benefits.

                                             10