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Avandia Insurance Case Returned to State Court

(CN) - Insurers that paid to treat the heart problems developed by users of Avandia and Paxil can seek reimbursement from GlaxoSmithKline in state court, a federal judge ruled.

UnitedHealth Group and Humana Health Plan took the British multinational drugmaker to court over health care expenses Medicare patients incurred after using the drugs, which have been linked to potentially life-threatening cardiovascular complications.

They filed in the Court of Common Pleas of Philadelphia County under the federal Medicare Secondary Payer Act, which gives private insurers a right to sue for reimbursement and allows for double damages.

The suit is part of the Avandia multidistrict litigation, which resulted in a $3 billion settlement from Glaxo in July 2012. Months later, Glaxo agreed to spread $90 million across 38 states to settle claims that it fraudulently misrepresented Avandia's safety risks.

The U.S. Supreme Court declined on April 15 to let Glaxo pursue claims that insurers cannot sue after they provide Medicare Advantage services and incur their own costs.

Glaxo removed UnitedHealth and Humana's claims to the Eastern District of Pennsylvania, arguing that the claims are exclusively within federal court jurisdiction under the Employee Retirement Income Security Act (ERISA).

U.S. District Judge Cynthia Rufe found this maneuver premature, however, because the insurers had merely filed a praecipe to issue a writ of summons and precomplaint interrogatories.

Under Section 1446(b) of 28 U.S.C., a defendant must file a removal notice within 30 days of receiving the complaint.

"The ruling has been interpreted in this district to mean that 'removal is not proper until a complaint has been served on the defendants,'" Rufe wrote Wednesday. "'Accordingly, because plaintiffs here have not served a complaint, defendants' notice of removal was not too late, it was too early.'

"The court appreciates that it appears likely that once complaints have been filed the state court actions will be removable on the basis of federal question jurisdiction under ERISA or [Class Action Fairness Act] CAFA but cannot hold that this is necessarily so, which is why the 'bright line rule' adopted by the Court of Appeals in Sikirica applies," she added, citing the 2005 decision of the 3rd Circuit in Sikirica v. Nationwide Insurance Co.

Rufe said the complaint is the operative document for removal.

"In ruling that removal is premature, the court affirms its earlier ruling in the first UnitedHealth removal, and follows the established law of this district and the 3rd Circuit in requiring a complaint before a case may be removed," the ruling states.

UnitedHealth cannot collect attorneys' fees, however, because Glaxo "had a colorable basis for its actions."

Glaxo has paid out at least $460 million for the litigation, CNBC reported.

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