Former GSK Lawyer Exonerated
Shortly after our March Alert was published, the charges against former GlaxoSmithKline lawyer Lauren Stevens were refiled and the case went to trial. (Ms. Stevens had previously left the company for unrelated reasons.) You may recall that she was originally indicted in November 2010 on four counts of making false statements, one count of obstruction of justice, and one count of falsifying and concealing documents. The investigation focused on GSK's supposed marketing of a specific drug for uses unapproved by the FDA, a practice known as off-brand marketing. The original indictment was dismissed by the judge on the ground the government failed to properly advise the grand jury that handed down the indictment about the advice of defense counsel. Ms. Stevens had consulted extensively with outside counsel and colleagues within GSK's Legal Department in framing the responses given to FDA.
Following the dismissal of the original indictment, it was a only matter of days before a new indictment was handed down, and, just few days after that, the case went to trial. The charges in the new indictment were obstruction of proceedings, falsification and concealment of documents, false statements, and aiding and abetting. Even with revisions to the factual allegations underpinning the new indictment, the case never got to the jury. As soon as the prosecution rested, the judge dismissed the charges, even going so far as to say:
"There is an enormous potential for abuse in allowing prosecution of an attorney for the giving of legal advice. I conclude that the defendant in this case should never have been prosecuted and she should be permitted to resume her career."
The Stevens case attracted a lot of attention for a variety of reasons. For lawyers generally, it renewed the long-held sensitivity to prosecutorial overreaching and agency actions that appear to be overbearing. It also caused in-house lawyers to wonder when they might find themselves in the government's cross-hairs.
It is important to keep in mind that GSK was being asked to voluntarily provide documentation. There was no subpoena issued or served; nothing compelled production. GSK wanted to be a cooperative party, but it could have said no. Obviously, saying no would be an unwise action and probably would have led immediately to a subpoena or other formal enforcement action by the requesting agency, which is what happened eventually anyway. At the same time, it is clear a quite different outcome would likely have resulted had the government taken the time to do things differently.
As is all too often the case, instead of carefully thinking through its options, agencies do the equivalent of throwing a temper tantrum and demanding their way. Employees of the agency go to the U.S. Attorney and demand action. U.S. Attorneys and employees from a given agency or department frequently work together as a team. While it is understandable the U.S. Attorney assigned to the case might be reluctant to say no to an agency representative, shouldn't the U.S. Attorney know the available alternative procedures and evaluate their relative merits? We too often see a prosecution or civil enforcement action in circumstances, like this one, where a bit of calm rational thinking and a few extra steps would have yielded the result the agency wanted, without ignoring due process. By way of illustration, once the response of GSK was deemed inadequate by the FDA, how would the outcome have differed if, instead of initially going after Ms. Stevens, the FDA had issued a subpoena or sought a search warrant? The FDA and Justice did that later and got the desired documentation, without looking vindictive and ineffectual as the prosecutors did in this case. Surely there was evidence of possible violations already in the FDA's hands and the Agency knew what documentation it was after. Why didn't the FDA take the time to proceed appropriately and subpoena the documents at the outset?
We frequently see cases similar to the one brought against Lauren Stevens where you wonder - what happened to the FDA management's common sense? Where were the FDA lawyers who should have been advising the Agency? Why did the U.S. Attorney's Office, known for not wanting to bring cases that might be lost, bring the case in such questionable circumstances? At what point do taxpayers get to weigh in on the tremendous waste of their tax dollars?
Last summer, FDA management warned industry that it was planning to find ways to use an old court decision, U.S. vs. Park, 421 U.S. 658 (Sup. Ct. 1975), to increase its enforcement arsenal. In that case, an executive at a food company had relied on subordinates to make sure best practices were employed to keep food in its warehouses in sanitary conditions. When that food became significantly rodent-invested, the FDA proceeded with criminal charges. The company pled guilty to five (5) misdemeanor counts of adulteration, but Mr. Park, the CEO, pled not guilty to those same counts. He was found guilty, the matter went up on appeal, and the U.S. Supreme Court was eventually asked to address the jury instructions that were given so as to make clear the level of knowledge and intent the CEO needed to have before he could be found guilty for the failings of his subordinates and for his company's procedures, about which he had no direct knowledge. The verdict was overturned and case returned to the lower court for the admission of additional evidence on several key issues. However, the Supreme Court's holding sets the standard for the principle that a company executive can be found guilty for one or more misdemeanor violations, even where he has no direct knowledge of the actual FDA violations.
The FDA has since updated its Regulatory Procedures Manual (RPM) at 6-5-3 to include guidance on proceeding with such cases. Specifically, the FDA states: "The Park Doctrine, as established by Supreme Court case law, provides that a responsible corporate official can be held liable for a first time misdemeanor (and possible subsequent felony) under the Federal Food, Drug, and Cosmetic Act ('the Act') without proof that the corporate official acted with intent or even negligence, and even if such corporate official did not have any actual knowledge of, or participation in, the specific offense. A Park Doctrine prosecution, for the purposes of this section, refers to a recommended prosecution of a responsible corporate official for a misdemeanor violation of the Act."
The RPM goes on to state:
"When considering whether to recommend a misdemeanor prosecution against a corporate official, consider the individual's position in the company and relationship to the violation, and whether the official had the authority to correct or prevent the violation. Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.
Other factors to consider include but are not limited to:
- Whether the violation involves actual or potential harm to the public;
- Whether the violation is obvious;
- Whether the violation reflects a pattern of illegal behavior and/or failure to heed prior warnings;
- Whether the violation is widespread;
- Whether the violation is serious;
- The quality of the legal and factual support for the proposed prosecution; and
- Whether the proposed prosecution is a prudent use of agency resources."
It makes one wonder if/when other agencies will tweak the context a bit and then seek to expand Park's reach beyond FDA rules and regulations.