Pharmaceutical Phonies: The Entanglement of Fraud, Third-Party Payors, and Proximate Cause in Civil RICO Cases

Authors

Merrick Max Dillard Hayashi, Texas A&M University School of Law (Student)Follow

Document Type

Arguendo (Online)

Abstract

This Case Note analyzes the Ninth Circuit’s approach to the issue of whether patients and doctors destroy proximate cause in cases where third-party payors (“TPPs”) sue drug companies for fraudulently misrepresenting the health risks associated with their products. In the 2019 case Painters & Allied Trades District Council 82 Health Care Fund v. Takeda Pharmaceuticals Co., the Ninth Circuit held that TPPs suing to recover damages from a pharmaceutical company for the fraudulent omission of a drug’s health risks could satisfy the proximate cause requirement for a civil cause of action under § 1964(c) of the Racketeer Influenced and Corrupt Organizations Act (“RICO”).[1]

The Ninth Circuit’s decision is satisfactory in that it faithfully (1) observes the Supreme Court’s direct relation test and (2) follows precedent establishing that a plaintiff satisfies the proximate cause requirement when their alleged injury is a foreseeable and natural consequence of the defendant’s fraud. As a matter of public policy, this holding is positive because it hamstrings pharmaceutical companies’ ability to escape liability by hiding behind patients, doctors, and other actors inhabiting the chain of causation. Additionally, the Ninth Circuit’s holding is positive in that it adheres to Supreme Court precedent and helps deter future injurious conduct.

In support of these assertions, this Case Note begins by examining the factual background and procedural posture of Painters. The Note continues by analyzing the majority’s opinion with respect to related case law and closes by suggesting ways to address some of the potential problems that could stem from the Ninth Circuit’s decision.

[1] Painters & Allied Trades Dist. Council 82 Health Care Fund v. Takeda Pharms. Co., 943 F.3d 1243, 1260 (9th Cir. 2019), writ denied, 141 S. Ct. 86 (2020); 18 U.S.C. § 1964(c).

DOI

10.37419/LR.V9.Arg.1

First Page

1

Last Page

11

Recommended Citation

Merrick Max Dillard Hayashi, Pharmaceutical Phonies: The Entanglement of Fraud, Third-Party Payors, and Proximate Cause in Civil RICO Cases, 9 Tex. A&M L. Rev. Arguendo 1 (2021).
Available at: https://doi.org/10.37419/LR.V9.Arg.1