A federal judge rejects healthcare company’s “C” plea as not good enough. Lessons from this decision apply to any healthcare provider trying to negotiate a specific sentence with the federal government. A summary of the judge’s criticism follows a short background about a C plea.

Types of Guilty Pleas

Federal Criminal Rule 11(c)(1) governs plea agreement procedure. It includes a limitation: “The court must not participate in these discussions.” The subsection describes three types of guilty pleas. Subsection (A) covers the common plea agreement in which the government dismisses charges as part of the agreement. Under subsection (B), the government agrees to recommend, or not oppose, the defendant’s request for a particular sentence. The C plea is named after its subsection, 11(c)(1)(C). A C plea agreement establishes that “a specific sentence or sentencing range is the appropriate disposition of the case.” A crucial difference is that the C plea operates only “once the court accepts the plea agreement.” In other words, the court has specific power to reject a C plea.

Need to Prepare Answers

In this case, US District Judge William Young of Massachusetts rejects the deal. The judge does not say what terms he will accept in a C plea. He feels that would be too close to bargaining. Nonetheless, the judge asks questions and expresses his dislike of a C plea for policy reasons.

A healthcare provider should prepare to answer a crucial question posed directly by the judge. Should the company be allowed to “collapse in disgrace?” Judge Young wonders why not partly because of circumstances of the alleged crime.

The Alleged Crime

With the knowledge of management, the company deceptively marketed a cholesterol medication for a rare genetic disease. These deceptions caused some patients, including elderly and children, to experience adverse reactions. The company netted a gross gain of more than $15.5 million.

Other Specific Concerns

“Most problematic” among his specific concerns is that the deal required restitution only to the government and payors. The deal provided nothing for elderly and children who received wrongfully diagnoses. A healthcare provider should prepare to explain compensation offered to victims who suffered mental and physical harm.

The judge also wants to know

  • Why no presentence report will be prepared. The judge considers this a “complex case” that he wants to understand better.
  • Whether the calculations proposed by the parties for the Sentencing Guidelines are correct. In particular, should upward adjustments be added for sophisticated means and vulnerable victim.
  • What particulars in the company’s finances justify a lower fine amount.
  • Should an external compliance monitor be appointed, even though the internal compliance program is “adequate.

The “Larger Issue”

The judge criticizes the “two-tier criminal justice system.” In his view, corporations strike C pleas “after closed door negotiations” with the government and limited judicial scrutiny. In addition to using arbitration clauses to avoid courtrooms, corporations also obtain “cozy” certainty through C pleas to which the executive branch accedes.

Individuals, on the other hand, do not obtain C pleas. According to the judge, individuals “plead guilty and face a truly independent judge.”

Judge Young finds this system “neither fair nor just.” He takes this position even while acknowledging the parties negotiated in good faith and recognizing “much to commend in the proffered plea.”

Next?

Because the judge poses questions without providing answers, time will tell what happens next in the case. However, a prudent healthcare company trying to negotiate a C plea will prepare answers in order to avoid this situation.