We recently discussed the settlement Warner Chilcott reached with the Department of Justice, which also announced criminal charges against the former president of the company’s pharmaceutical division. This former executive, however, is not the only individual swept into the criminal charges, as three lower level Warner Chilcott sales force members and a physician who served as a speaker for the company have previously been charged or pled guilty. The details in the charging materials may provide insight into the government’s post-Yates memo approach to targeting and using individuals to build a criminal case against corporations.

Perhaps the most interesting aspect of the charging materials is the nature of the allegations against the physician, who was charged (see here) with violating the Anti-Kickback Statute as a result of receiving approximately $23,500 from Warner Chilcott in speaker fees. The indictment states that the number of Warner Chilcott prescriptions written by this physician increased once she began receiving payments for speaker events, but that her prescription volume significantly decreased after her contact at Warner Chilcott left the company. The government’s reliance, at least on the face of the indictment, on a mere temporal connection between consultant fees and prescriptions raises questions as to the extent prosecutors will use data mining initiatives in future fraud and abuse enforcement actions. The physician was also charged with obstruction for lying during an interview about her financial relationship with Warner Chilcott.

Although the company’s criminal plea focuses heavily on kickback allegations, the criminal informations filed against the three sales employees do not allege any violations of the AKS. Instead, the government focuses on their alleged improper participation in the prior authorization process, advancing the notion (information available here) that “As [sales manager] knew and understood, no one outside of the physician’s office, including a sales representative from a pharmaceutical company, were permitted to have any involvement in the preparation of a [prior authorization (“PA”)].” The sweeping statement that anyone outside of the provider’s office should have “no involvement in the preparation of a PA” raises significant questions as to the government’s posture towards indirect assistance by manufacturers in the PA submission process. Two employees face charges for conspiracy to commit healthcare fraud under 18 U.S.C. § 1347 as a result of their involvement with PAs. This provision protects any health plan, including private payors, from fraud, which means similar allegations could also leave companies vulnerable to private payor follow-on litigation.

The third employee faces charges solely under HIPAA for accessing PHI (information available here). This employee allegedly viewed PHI not only during the course of assisting providers with PAs, but by “flagging” charts with brochures for Warner Chilcott products. Although his conduct exceeded solely PA-related activities, this criminal charge serves as a cautionary tale for life sciences companies whose sales forces interact with PHI.