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Walmart Opioid Lawsuit a Long Shot to Thwart Federal Enforcement

Oct. 23, 2020, 8:00 PM

Walmart Inc.'s bid to avoid responsibility for the opioid epidemic by suing the Justice Department is a long shot, lawyers said.

“This is not a case where there’s any real belief on the part of Walmart that it has any chance of relief coming out of this case,” said Harry Nelson, co-founder of Nelson Hardiman, a Los Angeles-based health-care law firm.

Walmart “was filing this case to make a statement and I think that statement is aimed at the public and the narrative,” he added.

The largest retailer in the world filed the suit on Thursday, arguing that the DOJ and the Drug Enforcement Administration are scapegoating the company’s pharmacy to distract from the agencies’ own failures in the opioid crisis. The lawsuit is an attempt to stave off civil enforcement actions from the DOJ after the agency allegedly dropped a criminal investigation into the retail giant, attorneys said.

At the very least, Walmart wanted to “beat DOJ to the punch,” said Hunter Shkolnik, a partner in Napoli Shkolnik who represents hundreds of local governments in the multidistrict litigation against the entire opioid supply chain.

“Walmart is in the bullseye of a serious investigation,” he said. “Historically, whenever I’ve seen a defendant go after the DOJ in a preemptive attack, it’s usually ended up badly.”

The company is asking the court to issue a declaratory judgment that would clarify the obligation of pharmacists to intervene if they suspect illegal or dangerous prescribing habits. To that end, Walmart wants the court to interpret the Controlled Substances Act in a way that limits the liability for pharmacies.

Investigation Killed

The lawsuit was filed in the Eastern District of Texas, the same place where U.S. attorneys were reportedly forced to drop their criminal investigation into Walmart’s alleged role in the opioid crisis after lobbyists for the retailer appealed to DOJ officials in Washington.

Public pressure to renew the investigation grew in the months since ProPublica first reported that Trump administration officials had intervened on Walmart’s behalf and successfully killed the investigation.

Now, Walmart says the DOJ intends to pursue a civil enforcement action against the company.

“This civil action would likely be run by the same group of DOJ lawyers that negotiated the recent settlement with Purdue and the Sacklers,” said David Noll, a law professor at Rutgers University who is watching the case.

“Walmart is asking the district court to declare that the interpretations of the Controlled Substances Act that the civil enforcement action is based on are incorrect,” he added. “The government would be bound by that declaration, so if Walmart’s suit succeeds it will get a ‘get out of jail free card’ for civil actions to enforce the civil enforcement action brought by DOJ.”

The Argument

Walmart argues in the complaint that “DOJ and DEA are placing pharmacists and pharmacies in an untenable position by threatening to hold them liable for violating DOJ’s unwritten expectations for handling opioid prescriptions.”

The company says those expectations “are directly at odds with state pharmacy and medical practice laws, the expert judgment of federal health agencies, and even DEA’s own public statements.”

Walmart also says the DEA should have prevented the crisis by stemming production and flow of opioids at the manufacturing level, vetting doctors, and even revoking the medical licenses of those who had suspicious prescribing habits.

“It’s the same defense they are using in the MDL [multidistrict litigation] for the chain pharmacy cases,” Shkolnik said. “These are the very issues that are at the heart of the MDL.”

Walmart’s preemptive strike is likely to be an uphill battle, because the law governing declaratory judgments requires an “actual controversy,” which courts interpret as meaning an imminent threat of litigation, Noll said.

“I’m not persuaded that Walmart’s gambit will succeed,” he said, adding that the company provided few details about the DOJ enforcement action that it is anticipating.

The case is Walmart Inc. v. Justice Dep’t, E.D. Tex., No. 20-cv-00817, Complaint 10/22/20

To contact the reporter on this story: Valerie Bauman in Washington at vbauman@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Andrew Childers at achilders@bloomberglaw.com

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