A federal jury on Wednesday acquitted two former medical-device company executives on more than a dozen felony counts of fraud related to off-label marketing but convicted them of 10 misdemeanor counts on the same issue.
The mixed verdict came less than a year after U.S. Deputy Attorney Sally Quillian Yates issued a memo indicating that the Justice Department was committed to holding individuals, not just companies, accountable for corporate misconduct. It's the second recent case in which healthcare executives escaped serious consequences for alleged corporate misconduct.
The Boston jury convicted former Acclarent CEO William Facteau and former Acclarent Vice President of Sales Patrick Fabian of 10 counts of introducing adulterated and misbranded medical devices into interstate commerce Wednesday, according to the U.S. Attorney's Office for the District of Massachusetts. The trial lasted six weeks.
Fabian's attorney, Frank Libby, praised the jury's acquittal Wednesday.
“After a five-year investigation and six-week trial, the jury flatly rejected the government's core fraud and conspiracy theories and what was left are these misdemeanor counts, which required no finding of criminal intent,” said Libby, with the law firm LibbyHoopes in Boston.
He added that the misdemeanor convictions will face serious scrutiny during post-trial motions and in appeals court, if need be. Libby said healthcare industry leaders should be concerned about those misdemeanor convictions.
“They should be following this with some care and concern, frankly because the government doesn't have to show wrongful intent, doesn't even have to show the executive was even aware of the conduct in order to pin a misdemeanor conviction on them,” Libby said.
Libby said the indictment against his client predated the Yates memo, but was in line with the Department of Justice's increased efforts to go after individual executives.
An attempt to reach Facteau's lawyers was not immediately successful Wednesday afternoon.
The jury found that the pair caused the illegal distribution of a medical device known as the Relieva Stratus Microflow Spacer for uses not approved by the Food and Drug Administration. The company told the FDA that the device was meant to maintain an opening to a patient's sinus, but then released the product to be used as a steroid delivery device, according to the U.S. Attorney's Office.
The scheme was part of Facteau and Fabian's strategy to rapidly develop and market products to create a projected revenue stream that would make Acclarent attractive to potential buyers or investors during an initial public offering, according to the U.S. Attorney's Office. Johnson & Johnson subsidiary Ethicon bought Acclarent in 2010.
The maximum penalty for each count of violating the Food, Drug and Cosmetics Act is a year in prison, a year of supervised release and a fine of $100,000 or twice the money made or lost.
The verdict Wednesday followed another recent jury verdict in a case against the former president of drug company Warner Chilcott. In June, a federal jury, also in Boston, found W. Carl Reichel not guilty of conspiring with members of Warner Chilcott's sales force to pay kickbacks to doctors in exchange for writing prescriptions. In that case, the government had alleged that Reichel urged sales people to take doctors out to so-called medical education dinners that were actually social events and pay doctors to speak if they prescribed the company's drugs.
As a company, Warner Chilcott agreed in October to plead guilty to healthcare fraud and pay the government $125 million to settle civil and criminal allegations.