In United States v. Gurry, 2019WL6330788, a jury in the U.S. District Court of Massachusetts found the defendants, who were executives and managers of the pharmaceutical company, Insys, which manufactured, marketed, and sold a sublingual fentanyl spray called Subsys, guilty of conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) statute based on predicate acts of illegal distribution of a controlled substance, honest-services mail fraud, honest-services wire fraud, mail fraud, and wire fraud. After the trial, the defendants moved for judgment of acquittal and for a new trial. Judge Burroughs held that the government had not submitted sufficient evidence on the predicate acts of illegal distribution of a controlled substance and honest-services fraud and vacated those predicate-act convictions. The remaining convictions were not disturbed. This practice point will summarize the court's order behind the vacatur of the predicate acts of illegal distribution of a controlled substance and honest-services fraud. We encourage practitioners who are involved in these opioid-prosecution cases to read the full order.
The first predicate act the court vacated involved 21 U.S.C. § 841 of the Controlled Substances Act (CSA), which makes it unlawful for "any person knowingly or intentionally . . . to distribute, or dispense . . . a controlled substance" except as authorized by the statute. A healthcare practitioner licensed to prescribe Schedule II drugs, such as the fentanyl that is used in Subsys, violates the CSA "only if he intentionally prescribes a controlled substance for other than a legitimate medical purpose in the usual course of professional practice." United States v. Zolot, 968 F. Supp. 2d 411, 428 (D. Mass. 2013) (citing United States v. Moore, 423 U.S. 122, 124 (1975). The standard for criminal liability under section 841(a) states that “a practitioner becomes a criminal not when he is a bad or negligent physician, but when he ceases to be a physician at all.” United States v. Feingold, 454 F.3d 1001, 1011 (9th Cir. 2006).
The defendants sought reversal of the jury's verdict on the CSA predicate act arguing that the evidence presented at trial was insufficient to prove that any defendant agreed and specifically intended that a healthcare practitioner would prescribe Subsys outside the usual course of professional practice and without any legitimate medical purpose in violation of the CSA. The government rejected this contention and stated that the evidence supported an inference that the defendants had a "tacit understanding" to violate the CSA "implicit in their working relationship" with their co-conspirator prescribers. The government stated that the defendants developed and used the Insys Speaker Program to bribe healthcare practitioners to write more Subsys prescriptions. The court found that while the evidence presented at trial showed how Insys' fixation on increasing the number and dosage of Subsys prescriptions combined with prescribers' interest in increased speaker payments, did ultimately harm an untold number of patients, however, an inferential leap was required between that evidence and what was necessary to support a CSA predicate act. The court stated that although the evidence clearly shows that Defendants intended to try to sell as much Subsys as possible and wanted healthcare practitioners to prescribe it and to prescribe it at the higher and more expensive doses, there is no evidence sufficient to prove that Defendants specifically intended, much less intended beyond a reasonable doubt, that healthcare practitioners would prescribe Subsys to patients that did not need it or to otherwise abdicate entirely their role as healthcare providers.
The court went on to state that "the fact that the healthcare practitioners did in fact prescribe Subsys to patients that did not need it or at a higher than necessary dose is similarly not enough to prove that is what the Defendants intended." The court was critical of the government's theory that a "tacit understanding" between the defendants and co-conspirator prescribers was developed through the Insys Speaker Program where prescribers would then know that Insys would want them to illegally distribute Subsys based on how the speaker program bribed or incentivied the prescribers based on the number and amount of prescriptions written. The court further stated that while it would not have been unreasonable for the jury to infer that the nefarious tacit understanding the Government describes existed . . . it would have been equally reasonable for the jury to infer from the same evidence that no such tacit understanding existed and that there was only an understanding that healthcare practitioners would prescribe Subsys in exchange for bribes, but only to patients that needed such a medication and at an appropriate dose and that is not enough for the court to support a finding of guilty beyond a reasonable doubt.
The defendants next sought reversal of the jury's verdict on the honest-services mail-and-wire-fraud predicate acts for insufficient evidence on the second, third, and fourth elements, which addressed the existence of a bribe, breach of fiduciary duty, and deception. The court started its analysis with the breach-of-fiduciary-duty element, which ended up being dispositive. At trial, the jury was instructed that to convict the defendants of honest-services mail or wire fraud, they must find beyond a reasonable doubt that the defendants, "agreed and specifically intended that healthcare practitioners would breach their fiduciary duty to their patients by prescribing Subsys or a particular dose of Subsys outside the usual course of professional practice and not for a legitimate medical purpose." The defendants contend that the government's proof on this element "failed for the exact same reason it failed as to the CSA," i.e., there was insufficient evidence to show that the defendant specifically agreed and intended that healthcare practitioners would prescribe Subsys outside the usual course of professional practice and not for a legitimate medical purpose.
The government again argued there was sufficient proof of the honest-services fraud predicate acts as a jury could reasonably infer that the policies and procedures developed in the Insys Speaker Program showed that Insys intended for healthcare practitioners to prescribe Subsys outside the usual course of professional practice and not for a legitimate medical purpose. The court held that to demonstrate a breach of fiduciary duty for the purposes of the honest-services fraud predicate acts charged, the government needed to prove beyond a reasonable doubt that the defendants agreed and specifically intended that a healthcare practitioner would breach his or her fiduciary duty to patients by prescribing Subsys or a particular dose of Subsys outside the usual course of professional practice and not for a legitimate medical purpose. The court ruled that evidence viewed in the light most favorable to the government did not establish that any defendant agreed and specifically intended that a healthcare practitioner would prescribe Subsys outside the usual course of medical practice and without any legitimate medical purpose and, therefore, those predicate act convictions were vacated.
At the conclusion of her opinion, Judge Burroughs stated that she "only very reluctantly disturbs a jury verdict but finds it necessary to do so here." The court made it clear that it found the conduct of the defendants to be reprehensible and went on to state the purpose in overturning the verdicts on the CSA and honest-services fraud predicate acts is not meant to condone or minimize this behavior, but is simply a reflection of the fact that the Government did not prove the requisite intent on the part of Defendants, that is, an intent that healthcare practitioners prescribe the drug to people that did not need it or in unnecessarily high doses. The Government could have easily proved bribery, but it elected not to charge bribes or kickbacks and now must live with that decision.
Judge Burroughs seemed to be alluding to the fact that the government's decision on how to charge the defendants forced her hand in overturning the predicate acts relating to the CSA and honest-services fraud and, based on the evidence presented at trial, convictions for bribery or kickbacks could likely have been sustained.
As stated at the beginning of this practice point, opioid prosecutions continue, and a full review of this opinion would be helpful for any practitioner with a similar case. The court very clearly stated that the "tacit understanding" that was developed through the Insys Speaker Program was not enough to show that the defendants intended that healthcare practitioners prescribe Subsys to people that did not need it or in unnecessarily high doses. If you have a similar case, review your pleadings to see if the government in your case is proceeding under a similar theory and if a motion to dismiss or judgment of acquittal/motion for new trial could provide relief to your client.
Sheena Foye and James R. Wyrsch are with Wyrsch Hobbs Mirakian P.C. in Kansas City, Missouri.