Bankruptcy strikes corporate sister of controversial mass torts case generator

August 29, 2016

(Reuters) – A Florida corporation called Excelium Management petitioned for Chapter 11 bankruptcy last week in federal bankruptcy court in Miami. The filing comes as one of Excelium’s corporate relatives is fighting to stave off accusations of improper conduct in the sprawling litigation accusing makers of transvaginal pelvic mesh of injuries to women implanted with the device.

Excelium Management is one component in a complex network of small Florida companies operating under the umbrella Excelium Group. Among the Excelium Group businesses, which are run from the same Ft. Lauderdale office building, is Law Firm Headquarters – a legal marketing business that says it has generated more than 20,000 personal injury cases in the past few years, including more than 10,000 cases against manufacturers of pelvic mesh. In 2015, the Houston firm AkinMears allegedly paid $45 million to four tiny law firms with close ties to Law Firm HQ in order to acquire mass torts dockets generated by Law Firm HQ.

Last March, the mesh defendant American Medical Systems subpoenaed Law Firm HQ, AkinMears and the other law firms, alleging that Law Firm HQ improperly solicited plaintiffs in the 100,000-case mesh litigation, which is centered in federal court in Charleston, West Virginia. AMS has since claimed Law Firm HQ was at the heart of an “illicit enterprise” that steered mesh plaintiffs into unnecessary surgery in order to inflate damages claims.

As I’ve reported, Law Firm HQ and related entities¬†are fighting the AMS subpoenas. Their lawyers at Chadbourne & Parke contend AMS is improperly attempting to invade attorney-client privilege and that the defendant’s demands for information are irrelevant to the real issue of AMS’ liability to women implanted with mesh.

Chadbourne partner Abbe Lowell, lead outside counsel for the Law Firm HQ parties, has called the AMS subpoenas a delay tactic. He has also said Law Firm HQ’s intention was to help women harmed by AMS products.

In an email Monday, Lowell said Excelium’s bankruptcy will have no effect on Law Firm HQ’s fight against AMS’ demand for documents and testimony. “Excelium Management’s filing has nothing to do with, does not result from, has no connection to and has no impact on LFHQ’s subpoena litigation with AMS,” he said. U.S. Magistrate Judge Cheryl Eifert of Charleston, who is overseeing the discovery dispute, is holding a hearing tomorrow on AMS’ subpoenas.

Excelium Management’s bare-bones Chapter 11 petition lists the company’s landlord as its largest creditor, with claims of more than $320,000. According to the filing, the company has less than $50,000 in assets. The bankruptcy court in Miami has set a Sept. 7 deadline for additional information from Excelium, including the company’s equity holders and liabilities.

The lawyer who filed the bankruptcy petition, Paul DeCailly, said in an email statement that Law Firm HQ is not a creditor of Excelium, which he described as “one of many vendors to LFHQ.” He said the bankruptcy filing will facilitate a restructuring of Excelium’s relationships with creditors and is not related to Law Firm HQ.

(This post has been corrected. An earlier version incorrectly described LFHQ as a defendant in the subpoena dispute.)

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