Specialty Areas: Preventing Prosecution: Alleged Health Care Fraud and Violations of the Federal Anti-kickback Statute

Alleged Health Care Fraud and Violations of the Federal Anti-kickback Statute

Our client was a top-echelon officer of Boston Scientific Corporation (BSC), one of the world’s largest developers and manufacturers of minimally invasive medical devices. The client was one of BSC’s principal communicators with the Food and Drug Administration which is the government agency that regulates the medical device industry to assure that products are safe and effective for their intended use. Because of his status as a high-level corporate official and principal contact person with the FDA, our client could potentially be held criminally responsible on a “strict liability”, “no fault” basis for distribution of adulterated or misbranded devices, that is, devices that are not manufactured, or fail to perform, as required by FDA laws and regulations. The client could also be held criminally liable for false statements to, or misleading the FDA, if any such misconduct occurred. For this reason, the client’s corporate role inherently placed him in jeopardy of prosecution to a significantly greater degree than is typical of high-echelon executives in other industries.

After receiving FDA approval to distribute coronary stent delivery systems used to prop open blocked coronary arteries, BSC began receiving complaints that the device was malfunctioning. The frequency rate of complaints to BSC was at or below the rates experienced with competitive products, and the nature of the BSC product failures was less dangerous to patients. The client was involved in monitoring and investigating the cause of the malfunctions, keeping the FDA informed, and in decisionmaking concerning a possible withdrawal or recall of the product. After multiple communications with the FDA over a period of six weeks, BSC recalled the product.

Shortly after the recall, a federal grand jury began investigating whether the client and others should be prosecuted for distribution of adulterated and misbranded devices and for making false and misleading statements to the FDA for the purpose of delaying the recall. Subsequently, the client was informed that he and others were targets of the investigation. In order to demonstrate the product was neither adulterated nor misbranded and that no misleading statements had been made to the FDA, the firm participated in an intensive investigation and made several detailed presentions to the prosecutors on behalf of the client and jointly with lawyers for other clients. Several years after sending its target letter, the government decided not to prosecute the client.

Click here for a copy of the Boston Globe's December 26, 2004 article detailing the history and outcome of the investigation into Boston Scientific.

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Another client was a physician whose medical practice received payments from a pharmaceutical manufacturer. The payments were for consulting services, presentations to physicians and other health care professionals concerning available and new therapies for certain disorders, and for data collection services during clinical trials. A federal grand jury investigated whether the payments made to our client were inducements which corrupted our client’s prescription decisions.

During the investigation, our client received a federal grand jury subpoena demanding the medical records of over a thousand patients. We filed a sealed motion in court to quash the subpoena under the newly-enacted federal Health Information Privacy Protection Act (HIPPA), arguing that the laws of the state in which our client lived and practiced forbade him to disclose the records and made it a crime for him to do so. The government did not obtain the medical records. We also presented the court with sealed evidence that our client prescribed less of the pharmaceutical company’s drug after it began making payments to his practice than it had before the payments began. This pattern proved that the drug company’s payments were not improperly influencing our client to prescribe its drug. The government did not prosecute our client.

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Another client was an officer of a large company that manufactures certain diagnostic equipment. The client and his employer were investigated by a federal grand jury concerning certain lease payments to, and provision of equipment in, physician’s offices who used the manufacturer’s devices. After an intensive investigation of the company’s records, interviews with physicians, and other inquiries, we were able to demonstrate that there was no correlation between the physician’s use of the equipment and what was provided to the physicians. We also raised doubt about the government’s ability to prove that our client acted with the necessary intent to violate the anti-kick laws. The government did not prosecute our client or the company.

Next: Alleged Violations of Federal Cash Transaction Reporting Laws

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