I have a concern that a recent South Carolina Supreme Court decision undermines the state’s reputation for treating business fairly. If allowed to stand, it will impede our collective efforts to improve the quality of life with new jobs and investment.
In March, the court upheld a $136 million award in civil penalties against McNeil-Janssen Pharmaceuticals, the maker of the antipsychotic drug, Risperdal. The court based its ruling on its interpretation of the South Carolina Unfair Trade Practices Act.
The award is 12 times higher than any other affirmed appellate award in the state’s history.
The highest until the Janssen ruling was $11 million against an insurance company that refused to honor a policy for an AIDS victim. In that case there was a real victim with a real case.
There is neither in the Janssen decision. During court hearings, the State of South Carolina, which is the plaintiff, produced no evidence that any patient was harmed.
Since there is no victim, only two parties will benefit: trial lawyers employed by the state who will make millions, and the State of South Carolina, which will enjoy a one-time windfall. But that pales in comparison to the potential loss of attracting new jobs and investments to our state.
The judgment is so out of line that the state’s three leading business groups, the Chamber of Commerce, Manufacturers Alliance and BIPEC, have requested the Supreme Court to rehear the case and allow them to be a part of the proceedings.
“This case creates significant concerns for the South Caroina manufacturing community, and finding a solution to the competitiveness issue it will create for us is essential,” said Lewis Gossett, president and CEO of the S.C. Manufacturers Alliance.
The unprecedented judgment against Janssen resulted from two questionable findings by the court.
First, that the company did not have sufficient basis to represent in 2003 and 2004 that its antipsychotic drug, Risperdal, causes less weight gain and a lower diabetes risk than a competitive drug. But even the state’s experts admitted under oath that, in the intervening years, those claims turned out to be true.
Second, the court concluded that side effects of the drug were listed on the wrong section of the label, even though the Food and Drug Administration approved its placement. Court records indicate no evidence was presented that the intended audience for the label — doctors — was misled by it.
The business community is concerned that the Supreme Court ignored state law that directs state standards for unfair trade practices to be guided by federal standards. Many also think that the court’s decision subjects South Carolina businesses to more stringent standards than statutes passed by the General Assembly allow.
“A resolution introduced in the Senate noting that the statutory language is plain on its face speaks volumes about the courts’ decisions,” said Tom DeLoach, president and CEO of BIPEC. “The courts in these decisions have provided further confusion, not clarity, to existing and prospective businesses and industries in South Carolina,” he said.
This decision raises troubling questions about legislating from the bench and the state’s historical practice of hiring expensive trial lawyers to argue cases and split the proceeds.
State laws adopted over many decades carefully protect alleged victims’ rights to pursue justice in court and it is done every day. The same laws also hold individuals and companies accountable for misdeeds.
But the Janssen judgment, with no victim or even an allegation of one, establishes a dangerous precedent. It is not only the highest judgment affirmed on appeal in South Carolina history, but also the highest among all Southern states, the same states South Carolina competes against for jobs.
It is at odds with South Carolina’s history of fair appellate decisions that reject excessive verdicts and our international reputation for being business-friendly.
In the competition for jobs and economic growth, the Supreme Court has dealt the people a serious setback.
Paul Campbell, a Republican, represents District 44 (parts of Berkeley, Charleston and Dorchester counties) in the S.C. Senate.