As founders of one of the first and biggest litigation funding companies, the trio behind what was once Gerchen Keller Capital (GKC) became known for bringing financial innovation to a staid profession’s books.
Now, they’re taking on the opioid crisis by putting a new twist on an en vogue type of litigation: Suing manufacturers and distributors for allegedly causing higher insurance premiums.
Adam Gerchen, Ashley Keller and Travis Lenkner quietly launched Keller Lenkner, a plaintiff-side litigation firm, earlier this year following their departure from daily operations at Burford Capital Ltd., which purchased GKC for $160 million in late 2016.
Last week, Keller Lenkner was listed as counsel on five class action suits that seek to hold opioid manufacturers liable for the increased cost of private health insurance caused by opioids and the misleading marketing that makers of such drugs allegedly engaged in, all of which is part of a national addiction crisis that the suits claim has caused more than 350,000 deaths since 1999.
Opioid makers are now facing a deluge of litigation. Cities, counties across the country and numerous Native American tribes have filed some 400 suits against manufacturers of drugs such as OxyContin, as well as drug distributors and pharmacies.
Lenkner said the suits his firm filed last week represent the first to seek damages from the epidemic’s alleged impact on private insurance premiums. The suits name 18 corporate defendants ranging from some of the largest pharmaceutical companies to drug distribution giants.
The complaints, filed in California, Illinois, Massachusetts, New Jersey and New York, assert that private insurance claims rose 3,200 percent nationwide between 2007 and 2014, and that in 2015 the cost of care for insured patients with opioid dependency was 550 percent higher than for the average insured patient.
“The economic harm created by the opioid epidemic is not limited to the government,” Lenkner said. “And study upon study shows very large numbers—in the billions of dollars—of annual costs to private health insurance and privately paid health care as a result of the epidemic.”
Keller Lenkner is joined in the suits by national co-counsel from two other firms: The well-known, Chicago-based class action firm Edelson and Consovoy McCarthy Park, a litigation boutique co-founded in 2014 by two former Wiley Rein partners.
Lenkner would not comment on whether his firm is using a litigation funder or some other financing vehicle to back the cases. He said that the three founders of GKC were the equity partners in Keller Lenkner, and that, like other plaintiff firms, they would not comment on how they finance their business.
Judges have largely avoided requiring the disclosure of third-party litigation finance deals, although last month the U.S. Chamber of Commerce successfully backed a groundbreaking Wisconsin law requiring such disclosures.
On Monday, in the multidistrict litigation overseeing more than 600 opioid complaints across the country, U.S. District Judge Dan Polster in Cleveland ordered any plaintiffs with third-party litigation finance deals to submit to his chambers a description of the deals.
Polster said the lawyers and their financiers must attest that the deals do not create a conflict of interest or “give to the lender any control over litigation strategy or settlement decisions.” He noted that any nonconforming deals would be deemed unenforceable and could lead to sanctions. Polster also said he would not allow discovery by defendants into the deals “absent extraordinary circumstances.”
Litigation funders have long said their agreements do not grant them any control over settlement decisions.
Lenkner said their firm specifically represents plaintiffs in large, complex litigation where there are “significant damages” at stake.
“These cases have all of those hallmarks,” Lenkner said. “And that’s the sort of thing you’ll see from us going forward.”
➤➤ Want more reporting on the evolving legal industry? Sign up here for The Law Firm Disrupted by Roy Strom. Each week, Roy offers a levelheaded discussion of trends rocking the legal sector, examines how industry leaders are coping (or not) and offers insight on the tactics and strategies of would-be disrupters.