FDA Misdemeanor Cases—Not Always A Sure Win for the Government

June 4, 2012By John R. Fleder

By John R. Fleder

It is often said that a grand jury would indict a ham sandwich if asked to do so by a prosecutor.  Some lawyers also say that the government cannot lose an FDA misdemeanor prosecution against current and former company officials because the intent bar is so low, namely the prosecutor does not need to prove that a defendant had any mens rea.  A recent FDA criminal case does nothing to refute the first saying, but it calls into question the accuracy of the second.

On December 29, 2009, the Justice Department announced that Spectranetics Corporation had agreed to pay $5 million in civil damages and forfeiture to resolve claims arising from the company’s alleged involvement in importing unapproved medical devices, namely medical lasers and peripheral devices for those lasers.  In addition, Spectranetics agreed to enter into an HHS corporate integrity agreement.  In return, the federal government agreed that it would not criminally prosecute the company.  However, the government did not agree that it would forgo criminally prosecuting Spectranetics’ former executives.

On August 26, 2010, a grand jury in Denver, Colorado returned a felony indictment against former Spectranetics’ officials, including its former president.  The charges stemmed from complaints that company employees had made to the United States Attorney’s Office.  Before the charges were filed, an agent from FDA’s Office of Criminal Investigations and a Special Agent from Immigration and Customs Enforcement executed a search warrant.  During execution of the warrant, the former president agreed to a voluntary interview.  Statements made during that interview formed the basis for one of the criminal charges filed in the case.

The case went to trial against two of the individual defendants, including the former president.  The trial involved twelve counts: one count of a conspiracy to defraud the United States (18 U.S.C. 371), one count of making false statements (18 U.S.C. 1001(a)(2)),  three counts of illegally bringing merchandise into the United States (18 U.S.C. 545), three counts of introducing adulterated and misbranded devices into interstate commerce (21 U.S.C. 331(a) and 333(a)(2)), and four counts of receiving adulterated and misbranded devices in interstate commerce (21 U.S.C. 331(c) and 333(a)(2)).

Of the two defendants who went to trial, one was acquitted on all of the counts.  The former president was acquitted on eleven of the counts, but was convicted on the twelfth count involving making a false statement to the government when the search warrant was executed.

Particularly noteworthy in assessing the jury’s rejection of the government’s case is that the jurors were presented with two opportunities to convict the defendant who was acquitted on all counts.  The jury was allowed to find the defendant guilty of felony violations of the FDC Act, but was also given the alternative of finding that defendant guilty of a lesser included offense for those alleged violations, namely that the defendant was guilty of misdemeanor charges for the same acts.  In other words, the jury was allowed to convict that defendant without any showing of mens rea.  Nevertheless, the jurors acquitted that defendant on all FDC Act counts, including the three lesser included offenses counts.

After conviction of the former president on that one count, the government sought an “upward departure” for his sentence, meaning that it sought a sentence that was harsher than what would otherwise be provided for under the U.S. Sentencing Guidelines.  The government recommended a sentence of two years imprisonment.  However, on May 31, 2012, the Court squarely rejected the government’s recommended sentence.  The former president was put on probation for one year, was prohibited during that period from engaging in the sale of medical devices not approved by FDA, and also was ordered to complete 100 hours of community service.

The threat of any criminal charge under the FDC Act can be a life changing event for any person.  Going to trial carries the reward of having a jury acquit a person on all counts.  However, going to trial runs the risk that a person will be convicted, and almost certainly face a harsher sentence than the person would have faced had he pleaded guilty before trial.  This case demonstrates that sometimes that risk is worth the reward.  It also demonstrates that even if the government charges a responsible corporate officer with a misdemeanor for FDC Act violations, the government’s case is not always open and shut. It does serve as a reminder that there are risks for prosecutors at trial as well, even when the charge is an FDC Act misdemeanor.

The other lesson from the outcome of this case is that it is almost never a good idea to voluntarily speak with government criminal investigators without legal counsel.  As noted above, a voluntary interview formed the basis of the sole charge on which the jury convicted.  We’ll have more to say about this topic in our June 20, 2012  webinar, “Garbage Runs, Fake Identities, and Surprise Home Visits Strategies to Deal With FDA’s Nontradition Investigative Tools.”