United States v. Vascular Solutions, Inc.

• Decision Date: 27 January 2016
• Docket Number: Case No. SA-14-CR-926-RCL
• Citation: 181 F.Supp.3d 342
• Parties: United States of America, Plaintiff, v. Vascular Solutions, Inc., (1) and, Howard Root, (2) Defendants.
• Court: U.S. District Court — Western District of Texas

181 F.Supp.3d 342

United States of America, Plaintiff,

v.Vascular Solutions, Inc., (1) and, Howard Root, (2) Defendants.

Case No. SA-14-CR-926-RCL

United States District Court, W.D. Texas, San Antonio Division.

Signed January 27, 2016

Bud Paulissen, Christina Laura Playton, United States Attorney's Office, San Antonio, TX, Charles John Biro, Michael S. Blume, Timothy T. Finley, U.S. Department of Justice, Washington, DC, for Plaintiff.

Christopher L. Peele, The Ashcroft Law Firm, Johnny K. Sutton, Ashcroft Sutton Ratcliffe, LLC, Austin, TX, Jeffrey S. Bucholtz, John C. Richter, Michael R. Pauze, Robert K. Hur, King & Spalding LLP, Washington, DC, Dulce J. Foster, John W. Lundquist, Kevin C. Riach, Fredikson & Byron, P.A., Minneapolis, MN, John E. Murphy, Attorney At Law, San Antonio, TX, for Defendants.

MEMORANDUM AND ORDER

ROYCE C. LAMBERTH, United States District Judge

This case comes before the Court on defendants' Motion [158] in Limine to Set Ground Rules for Trial Regarding the First Amendment, the government's response thereto, and defendants' reply in support thereof, as well as defendants' Motion [160] to Exclude Evidence of the Company's Subjective Intent to Market the Vari-Lase Device, the government's response [181] and defendants' reply [192] thereto. Upon consideration of these filings, the applicable law, and the entire record in this case, defendants' motions are DENIED for the reasons set forth below.

I. BACKGROUND

Defendants sell, under the brand name Vari-Lase, a medical device which permanently closes poorly-performing veins (often called varicose veins

) using a laser. This process allows healthier veins to move blood. Human legs have two major vein networks—the deep venous system, which is closer to the bone, and the superficial one, which is closer to the skin. Veins connecting the two systems are called perforator veins. The government's position is that the FDA approved Vari-Lase devices for treatment of superficial veins only.

Defendants' superseding indictment features five counts. Counts Two through Five are misbranding counts, which allege that defendants caused the introduction into interstate commerce of misbranded Vari-Lase medical devices. The devices were allegedly misbranded in that (1) defendant Vascular Solutions, Inc. had failed to provide the Food and Drug Administration ("FDA") with required notification of a new intended use, namely use with perforator veins, and (2) the devices' labeling lacked adequate directions for that new intended use. Count One alleges a conspiracy to commit the above substantive offenses, and to defraud the United States by concealing the sale of these devices for the unapproved use.

In the motions under consideration here, defendants present two arguments. Noting that cases like U.S. v. Caronia, 703 F.3d 149 (2d Cir.2012), have held that the Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301 et seq., does not criminalize mere truthful promotion of off-label uses for FDA-approved medical devices, defendants now assert that the government's case against them risks violating the First Amendment in various ways. Defendants propose the following remedy: First, the Court "should hold that speech is constitutionally protected if ‘it is either true or only potentially misleading,’ Byrum v. Landreth, 566 F.3d 442, 446 (5th Cir.2009) (emphasis added), and that speech loses protection only if the government proves beyond a reasonable doubt that it is actually or inherently misleading." Second, the Court "should hold that speech about an off-label use of a medical device is not misleading merely because FDA has not approved that off-label use or reviewed or approved the speech." Third, the Court should hold that for the government to prove a communication actually misleading, it must show "that the communication misled a substantial subset of its intended audience." Fourth, the Court "should hold that speech does not lose constitutional protection ‘merely because it fails to tell the whole truth about [a] product.’ " Dunagin v. City of Oxford, Miss., 718 F.2d 738, 743 (5th Cir.1983). Finally, "the Court should exercise its discretion to order the government to disclose the speech on which it intends to rely. Then, the Court should determine whether a jury could find beyond a reasonable doubt that each communication was false or misleading."

Defendants also contend that the "intended use" of Vari-lase may only be determined by examining communications and representations they made to the marketplace because, they explain, 21 C.F.R. § 801.4 says the "intended use" of a device is determined by the "objective intent of the persons legally responsible for the devices," and "objective intent" cannot be demonstrated by internal deliberation or communication. Consequently, defendants argue, the Court should exclude what they deem evidence of mere "subjective intent," namely, evidence "regarding the company's and its employees' hopes or expectations with respect to use of the Vari-Lase device, knowledge of how the Vari-Lase device would be used, and communications regarding the use of the Vari-Lase device that were internal to the company and not made to the market."

II. LEGAL STANDARDS

The Supreme Court has unanimously held that "[t]he First Amendment ... does not prohibit the evidentiary use of speech to establish the elements of a crime or to prove motive or intent." Wisconsin v. Mitchell, 508 U.S. 476, 489, 113 S.Ct. 2194, 124 L.Ed.2d 436 (1993).

As relevant here, "intended use" is defined as follows:

The words intended uses or words of similar import in §§ 801.5, 801.119, and 801.122 refer to the objective intent of the persons legally responsible for the labeling of devices. The intent is determined by such persons' expressions or may be shown by the circumstances surrounding the distribution of the article. This objective intent may, for example, be shown by labeling claims, advertising matter, or oral or written statements by such persons or their representatives. It may be shown by the circumstances that the article is, with the knowledge of such persons or their representatives, offered and used for a purpose for which it is neither labeled nor advertised. The intended uses of an article may change after it has been introduced into interstate commerce by its manufacturer. If, for example, a packer, distributor, or seller intends an article for different uses than those intended by the person from whom he received the devices, such packer, distributor, or seller is required to supply adequate labeling in accordance with the new intended uses. But if a manufacturer knows, or has knowledge of facts that would give him notice that a device introduced into interstate commerce by him is to be used for conditions, purposes, or uses other than the ones for which he offers it, he is required to provide adequate labeling for such a device which accords with such other uses to which the article is to be put.

21 C.F.R. § 801.4

III. ANALYSIS

The government has represented that it "does not plan to use promotional speech to doctors to prove the intended use of the devices for perforator vein ablation," and will instead rely on conduct alone. The government says that though it is not obliged to do this, it has done so in order to "eliminate [ ] any possibility that the misbranding offenses criminalize promotional speech." Should the government change its plan and decide to use promotional speech to prove intended use, or should the Court become concerned that the government is indeed pursuing a theory that the FDCA prohibits even truthful non-misleading off-label promotion, the Court will address this issue at that time.

The government does represent, however, that it currently plans to, but need not (due to the existence of other evidence), rely on statements to doctors for the purpose of proving the conspiracy charge, noting that a lawful act may serve as the "overt act" in furtherance of a conspiracy. See United States v. Archbold – Newball, 554 F.2d 665, 684 (5th Cir.1977) ("A prosecution for conspiracy is not the equivalent of a prosecution for having done or performed the overt act, for an overt act may not, itself, be unlawful at all.") (citing Yates v. United States, 354 U.S. 298, 334, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1956) ). Defendants respond that, "as a matter of conspiracy law, truthful speech is not an act taken ‘to effect the object of the conspiracy.’ " Defendants offer no support for this proposition, and there is ample support to the contrary. See, e.g., United States v. Donner, 497 F.2d 184, 192 (7th Cir.1974) ("While that which occurred at the November 20th press conference constituted words rather than action, constitutionally protected speech may nevertheless be an overt act in a conspiracy charge.") (citing United States ex rel. Epton v. Nenna, 446 F.2d 363, 368 (2d Cir.1971), cert. denied, 404 U.S. 948, 92 S.Ct. 282, 30 L.Ed.2d 265 ); United States v. Lanier, 920 F.2d 887, 893 n. 48 (11th...