Eli Greenblat
Healthcare company CSL is
instigating a decades-old legal precedent to try to clear its name.
Mobster Roger Touhy linked to
blood supply price queries.
It has all the characteristics
of any great true crime story: blood, Al Capone, gangsters, prohibition-era
bootleggers and a star witness that could spill the beans on an alleged global
conspiracy involving billions of dollars in ill-gotten gains.
But this is a modern-day tale
being played out in the corporate world involving one of Australia's most
respected healthcare companies, CSL, and although a long way from the mean
streets of 1920s Chicago the two worlds have now strangely coalesced.
For more than four years CSL,
which produces and supplies life-saving blood plasma around the world, has
faced allegations from a handful of hospitals that it orchestrated a cartel
along with its major competitors to fix the price of plasma in the North
American market.
CSL has consistently said the
claims are baseless and that it intends to vigorously defend the civil action.
It has also brushed off the issue as a ''cost of doing business'' in the US.
Still snaking its way through
the courts for years with no end in sight, the class action has now taken a
peculiar turn.
CSL has linked arms with its
competitor and alleged co-conspirator, Baxter International, to compel the
powerful US Food and Drug Administration to present a star witness whose
testimony they believe will prove their innocence and potentially snuff out the
class action in an instant.
The witness, named as Dr Mark
Weinstein in US court documents obtained by BusinessDay, is a high-ranking
official at the FDA in charge of regulating blood suppliers since the 1990s and
is therefore, CSL and Baxter argue in their 188-page motion, able to provide
first-hand evidence that could undermine the billion dollar lawsuit.
''Plaintiffs are seeking in
excess of a billion dollars from [CSL and Baxter], alleging that defendants
conspired to reduce the supply of two [blood products] - immune globulin and
albumin - over a seven-year period in violation of antitrust laws,'' lawyers
for CSL and Baxter argue in their court documents.
''Many of the plaintiffs'
allegations directly involve conduct by the FDA. Indeed, plaintiffs reference
the FDA 17 times in their consolidated complaint.''
But until now the FDA is
refusing to allow Dr Weinstein to testify, placing CSL in an awful position of
believing evidence exists that will prove its case but which it is unable to
produce in court.
''FDA representative Dr Mark
Weinstein has unique, firsthand knowledge regarding these issues at the heart
of the dispute. The agency, however, has refused to produce Dr Weinstein (or
any witness) in response to defendants' limited subpoena,'' CSL and Baxter
argue.
Enter 1920s Irish-American
mobster and former Al Capone rival Roger Touhy. A bootlegger in the 1920s,
Roger ''The Terrible'' Touhy and his brothers sold illegal beer and liquor in
Chicago's north-west suburbs, ran a loan shark business and supplied beer to
notorious Chicago mob boss Al Capone.
Touhy soon became a problem for
Capone, and was eventually framed by corrupt cops for the kidnapping of John
''Jake the Barber'' Factor, a brother of cosmetics manufacturer Max Factor.
From jail, Touhy served a
subpoena upon an FBI agent seeking the production of various Department of
Justice files, which he said would prove his conviction was due to fraud. When
an FBI agent refused to hand over the evidence he was jailed for contempt.
Since then companies or
individuals seeking crucial information from US government departments, often
to help in court cases, have used a procedure nicknamed a ''Touhy request'' to
compel the release of information or testimony. It's this mobster move that CSL
has also now used.
CSL and Baxter served a
detailed Touhy request on the FDA in April seeking Dr Weinstein's testimony
regarding seven narrow topics that revolve around the allegations of the
companies being involved in a blood plasma cartel.
''Despite defendants' [CSL and
Baxter] offers to compromise, the FDA denied defendants' request on May 2,
2013, objecting that producing the requested testimony would be unduly
burdensome and not in the public's interest,'' lawyers argue in the court
documents.
Much like poor Roger Touhy
rotting in his Illinois jail cell for a crime he didn't commit, CSL is now
being left hung out to dry by a government agency that might have crucial
exculpatory evidence.
''Due to the importance of the
issues in this high stakes lawsuit, and because the FDA's position is contrary
to law, defendants are left with no choice but to move to compel.''
CSL and Baxter hope the motion
to compel will flush Dr Weinstein from the FDA bunker to offer up his knowledge
of CSL's activity when the conspiracy to limit plasma supplies and push up
prices allegedly occurred. Critically for CSL, it believes Dr Weinstein can
testify to four key allegations aimed at it by the billion-dollar lawsuit.
Namely, that an FDA data reporting
system to monitor blood supplies was not used to ''police the conspiracy'' as
claimed by the class action but rather implemented at the request of the FDA.
The class action claims CSL and
Baxter misled the FDA by denying there was a plasma shortage in 2005-06. But
CSL argues that documents show the FDA performed its own independent analysis
and concluded no shortage existed.
''[The class action] alleges
that the 'groundwork' for the conspiracy was laid during a blood plasma product
shortage in the late 1990s and that the conspiracy began 'in earnest' during a
period of oversupply in 2003.
''Defendants need FDA testimony
to establish that FDA actions shaped market conditions, including the 1990s
shortage.''
Hopefully CSL will have a
better fate than Roger Touhy. Sentenced to 99 years, he spent 25 years in jail
before the courts ruled the kidnapping was a hoax. A few weeks after his
release he was cut down by five shotgun blasts by unknown killers.
