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Jon Lewis
Jon Lewis
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Punitive Damages Reduced

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According to an Associated Press article in the Birmingham News on Friday, June 20, 2008, Montgomery County Circuit Judge Charles Price upheld Alabama’s verdict against AstraZeneca Pharmaceuticals LP, but reduced the verdict. The original verdict of $215 milllion obtained by InjuryBoard member Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. was reduced to $160 million. Judge Price reduced the punitive damages from $175 million to $120 milllion as required by the law.

The original case stemmed from the State of Alabama’s claim of fraud against the pharmaceutical company. According to the State, and confirmed by the jury, the company overcharged for prescription drugs for Medicaid recipients. This was the first verdict in lawsuits filed by the State against more than 70 drug companies for similar allegations.

Judge Price agreed with the jury that AstraZeneca’s actions were “reprehensible”. Unfortunately, Alabama’s laws put a cap on punitive damages which rewards the company for fraudulent conduct. The jury determined the damages based upon the evidence. This is a jury of twelve individuals who came to a unanimous decision. The caps came from the push by tort reform advocates regarding lawsuits and damages, and the statute is set forth below.

This verdict will be appealed and will probably be reduced further by the Supreme Court of Alabama which has consistently reduced verdicts over the last several years. Who should be making these decisions? Twelve jurors who were seated according to our Constitution or lobbyists and judges?

section 6-11-21

punitive damages not to exceed certain limits.

(a) except as provided in subsections (b), (d), and (j), in all civil actions where an entitlement to punitive damages shall have been established under applicable laws, no award of punitive damages shall exceed three times the compensatory damages of the party claiming punitive damages or five hundred thousand dollars ($500,000), whichever is greater.

(b) except as provided in subsections (d) and (j), in all civil actions where entitlement to punitive damages shall have been established under applicable law against a defendant who is a small business, no award of punitive damages shall exceed fifty thousand dollars ($50,000) or 10 percent of the business’ net worth, whichever is greater.

(c) “small business” for purposes of this section means a business having a net worth of two million dollars ($2,000,000) or less at the time of the occurrence made the basis of the suit.

(d) except as provided in subsection (j), in all civil actions for physical injury wherein entitlement to punitive damages shall have been established under applicable laws, no award of punitive damages shall exceed three times the compensatory damages of the party claiming punitive damages or one million five hundred thousand dollars ($1,500,000), whichever is greater.

(e) except as provided in section 6-11-27, no defendant shall be liable for any punitive damages unless that defendant has been expressly found by the trier of fact to have engaged in conduct, as defined in section 6-11-20, warranting punitive damages, and such defendant shall be liable only for punitive damages commensurate with that defendant’s own conduct.

(f) as to all the fixed sums for punitive damage limitations set out herein in subsections (a), (b), and (d), those sums shall be adjusted as of january 1, 2003, and as of january 1 at three-year intervals thereafter, at an annual rate in accordance with the consumer price index rate.

(g) the jury may neither be instructed nor informed as to the provisions of this section.

(h) this section shall not apply to class actions.

(i) nothing herein shall be construed as creating a right to an award of punitive damages or to limit the duty of the court, or the appellate courts, to scrutinize all punitive damage awards, ensure that all punitive damage awards comply with applicable procedural, evidentiary, and constitutional requirements, and to order remittitur where appropriate.

(j) this section shall not apply to actions for wrongful death or for intentional infliction of physical injury.

(k) “physical injury” for purposes of this section, means actual injury to the body of the claimant proximately caused by the act complained of and does not include physical symptoms of the mental anguish or emotional distress for which recovery is sought when such symptoms are caused by, rather than the cause of, the pain, distress, or other mental suffering.

(l) no portion of a punitive damage award shall be allocated to the state or any agency or department of the state.

(acts 1987, no. 87-185, p. 251, §2; act 99-358, p. 563, §1.)