Harkonen v. Sebelius
| Decision Date | 22 October 2013 |
| Docket Number | No. C 13-0071 PJH,C 13-0071 PJH |
| Parties | W. SCOTT HARKONEN, M.D., Plaintiff, v. KATHLEEN SEBELIUS, Secretary, Department of Health and Human Services, Defendant. |
| Court | U.S. District Court — Northern District of California |
The parties' cross-motions for summary judgment came on for hearing before this court on September 11, 2013. Plaintiff appeared by his counsel Mark E. Haddad, and defendant appeared by Assistant United States Attorney Erica Hitchings. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby GRANTS defendant's motion and DENIES plaintiff's motion.
This is a case brought under 42 U.S.C. § 1320a-7(f) and 42 U.S.C. § 405(g), seeking review of a decision by the Secretary of the U.S. Department of Health and Human Services ("the Secretary" of "HHS") to exclude plaintiff W. Scott Harkonen, M.D. from participation in federal health care programs for five years.
Dr. Harkonen was formerly the Chief Executive Officer of a company that developed,marketed and sold a drug known as Actimmune. On March 18, 2008, a grand jury returned an indictment alleging that Dr. Harkonen had knowingly and intentionally devised a scheme to defraud that included the issuance of a press release containing false statements regarding a clinical study of Actimmune, and charging him with two felony counts - wire fraud and felony misbranding.
Following the trial, the jury returned a verdict on September 29, 2009, finding Dr. Harkonen guilty of wire fraud, but acquitting him of felony misbranding. See United States v. Harkonen, No. CR 08-0164 MHP (N.D. Cal.). On December 4, 2009, Dr. Harkonen filed a motion to dismiss the indictment, a motion for judgment of acquittal, and a motion for a new trial. On July 27, 2010, the court issued an order denying the post-trial motions in full. See United States v. Harkonen, 2010 WL 2985257 (N.D. Cal. July 27, 2010).
On November 10, 2010, Dr. Harkonen requested leave to file a motion for reconsideration of the order denying the post-trial motions. On January 7, 2011, Dr. Harkonen filed a motion for a new trial based on alleged Brady violations, and for production of additional Brady evidence. On February 14, 2011, Dr. Harkonen filed another motion for a new trial, based on "newly discovered evidence" contained in an amicus brief relating to the role of statistical evidence in evaluating clinical data, filed by the United States in a case pending before the U.S. Supreme Court.
Sentencing finally went forward on April 13, 2011. Although the prosecution had requested a stiffer sentence, Dr. Harkonen was sentenced to three years' probation, six months' home detention, 200 hours of community service, a $20,000 fine, and a $100.00 special assessment. Judgment was entered on April 18, 2011 (with an amended judgment to correct clerical errors entered on May 26, 2011).
Also on April 18, 2011, the court issued an order denying the two pending motions for a new trial. Dr. Harkonen filed a notice of appeal with the Ninth Circuit on April 25, 2011 (amended notice of appeal filed June 7, 2011), seeking review of the conviction and judgment, the ruling on one of the Secretary's motions in limine, the rulings on the post-trial motions, "and all other adverse orders." On May 12, 2011, the Secretary filed a notice ofappeal of the sentence.
On August 31, 2011, the Office of the Inspector General ("OIG") of HHS notified Dr. Harkonen that, due to his felony conviction for wire fraud, he was being excluded from federal health care programs pursuant to Section 1128(a)(3) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(3), for a period of five years, effective September 20, 2011.
42 U.S.C. § 1320a-7(a)(3) (emphasis added). Neither the statute nor the implementing regulations provide a definition for "in connection with" or "delivery of."
On October 28, 2011, Dr. Harkonen requested administrative review of the OIG's notice of exclusion. On May 14, 2012, an Administrative Law Judge ("ALJ") in the Civil Remedies Division of HHS' Departmental Appeals Board issued a decision affirming the OIG's exclusion order. Dr. Harkonen appealed the ALJ's decision to the Appellate Division of the Departmental Appeals Board ("DAB"), which affirmed the ALJ's order on November 9, 2012.
Dr. Harkonen filed this action on January 7, 2013, against Kathleen Sebelius, Secretary of HHS, and Daniel R. Levinson, Inspector General of HHS, seeking review of the final exclusion order pursuant to § 1128(f) of the Social Security Act, and 42 U.S.C. § 405(g), and also seeking declaratory and injunctive relief. Mr. Levinson was subsequently dismissed from the case pursuant to stipulation.
On March 12, 2013, the Ninth Circuit issued an unpublished memorandum affirmingDr. Harkonen's conviction and sentence. See United States v. Harkonen, No. 11-10209, 510 Fed. Appx. 633, 2013 WL 782354 (9th Cir. March 4, 2013) (unpublished decision). Dr. Harkonen sought en banc review; that petition was denied on May 7, 2013. The mandate issued on May 20, 2013. On August 5, 2013, Dr. Harkonen filed a petition with the U.S. Supreme Court seeking a writ of certiorari.
Dr. Harkonen served as the CEO of InterMune, Inc. ("InterMune") from February 1998 through June 30, 2003 and was a member of its Board of Directors from February 1998 through September 2003. InterMune developed, marketed and sold drugs, including a drug sold under the brand name Actimmune. Actimmune was approved by the U.S. Food and Drug Administration ("FDA") to treat two rare disorders that primarily affect children, chronic granulomatous disease and severe, malignant osteopetrosis. It was not approved by the FDA to treat idiopathic pulmonary fibrosis (IPF), a fatal lung disease that mainly affects middle-aged people.
In October 2000, InterMune began a Phase III clinical trial - the GIPF-001 trial - to determine whether treating IPF patients with Actimmune was effective. By August 2002, the data from that clinical trial had failed to show that Actimmune was effective in treating IPF. Dr. Harkonen discussed the results of the trial with his staff at InterMune and directed them to conduct additional analyses on subgroups of patients. This analysis suggested a survival trend for patients whose IPF was described by InterMune as "mild to moderate."
On August 27, 2002, Dr. Harkonen and other InterMune employees spoke with the FDA about the results of the GIPF-001 Phase III trial and additional subgroup analyses of patient deaths. The FDA medical reviewer staff advised Dr. Harkonen that the trial data were not sufficient to gain FDA approval for Actimmune to treat IPF and that further clinical testing would be required to determine whether Actimmune could delay death for IPF patients.
Nevertheless, on August 28, 2002, InterMune issued a press release announcing the results of the GIPF-001 Phase III clinical trial ("the Press Release"). The headlinestated, "InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF," with the subheading "Reduces Mortality by 70% in Patients With Mild to Moderate Disease." Administrative Record ("AR") 515. Dr. Harkonen wrote the headline and subheading and controlled the content of the entire Press Release; and also caused the Press Release to be posted on InterMune's website and to be sent to a wire service for release to news outlets nationwide.
AR 515, 516.
In March 2008, Dr. Harkonen was indicted for wire fraud in violation of 18 U.S.C. § 1343, and felony misbranding of a drug in violation of 21 U.S.C. §§ 331(k), 333(a)(2), and 352(a). AR 501-513. Both counts were based on the same set of facts and allegations, which included a detailed recitation of Dr. Harkonen's and InterMune's marketing strategy, and Dr. Harkonen's fraudulent scheme to induce doctors to prescribe, and patients to take, Actimmune to treat IPF.
While the indictment did not allege that the data were falsely reported, it did challenge the interpretation and presentation of the data in the study, specifically asserting that the Press Release "contained materially false and misleading information regarding Actimmune and falsely portrayed the results of a GIPF-001 Phase III trial as establishing that Actimmune reduces mortality in patients with IPF." AR 509.
On September 29, 2009, the jury convicted Dr. Harkonen of wire fraud...
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