United States v. Facteau
| Decision Date | 14 September 2020 |
| Docket Number | Criminal No. 15-cr-10076-ADB |
| Parties | UNITED STATES OF AMERICA v. WILLIAM FACTEAU and PATRICK FABIAN, Defendants. |
| Court | United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts |
BURROUGHS, D.J.
On July 20, 2016, a jury found William Facteau ("Facteau") and Patrick Fabian ("Fabian") (collectively, "Defendants") guilty of misdemeanor adulteration and misbranding of a medical device, and acquitted the Defendants of all other charges, including felony misbranding, conspiracy, and wire fraud. [ECF No. 432]. Currently before the Court is Defendants' post-trial motion for acquittal or a new trial, [ECF No. 437], which the government opposes, [ECF No. 497]. As no doubt evidenced by the time it has taken to resolve this motion, the Court finds the issues raised in these pleadings and at trial challenging. There is also a First Amendment overlay that further complicates the analysis. It seems clear that the statutory and regulatory scheme needs to be rethought. Currently there is no statute that specifically prohibits off-label marketing and yet the Government continues to prosecute the conduct by patching together the misbranding and adulteration regulations, thereby criminalizing conduct that it is not entirely clear Congress intended to criminalize. There are certainly important public policy considerations that warrant regulating the healthcare industry. At the same time, however, where a conviction can result in exclusion from healthcare programs, likely a death knell for any company, it is also important for the regulatory and law enforcement regime to clearly spell out what is and is not prohibited conduct. That being said, given the facts of this case, including the acquittals on all of the felony charges, for the reasons set forth below, the motion for judgment of acquittal and a new trial, [ECF No. 437], is DENIED.
On April 8, 2015, a grand jury returned an eighteen-count Indictment against Defendants. [ECF No. 1 ("Indictment")]. All of the charges in the Indictment related to the sale of a medical device known as the Stratus Microflow Spacer ("Stratus"), which was sold by Acclarent, Inc. ("Acclarent"), the Defendants' former employer. See [id. ¶¶ 1-2, 5].
The Indictment charged Defendants with:
See [Indictment]. Each of the adulteration and misbranding counts was charged as a felony and a misdemeanor. See [id.]. Shortly before the trial began, the Government dismissed Counts 2-4 and Count 8 of the Indictment, all of which related to securities fraud.
The case was tried to a jury in a twenty-seven-day trial that began on June 6, 2016. [ECF No. 364]. The jury returned its verdict on July 20, 2016, after approximately two and a half daysof deliberations. [ECF No. 432]. The jury acquitted the Defendants on Count 1 (conspiracy) and Counts 5-7 (wire fraud). [Id.]. As to Counts 9-13, which charged both felony and misdemeanor adulteration, and Counts 14-18, which charged both felony and misdemeanor misbranding, the jury acquitted Defendants on all of the felony counts but convicted on all of the misdemeanor counts. [Id.]. With regard to the misbranding convictions, the Indictment alleged three types of misbranding: false and misleading labeling; lack of adequate directions for use; and lack of required premarket notification for intended use. [Indictment ¶ 144]. The jury found that the Government had proven lack of required premarket notification for intended use but found the other two theories of misbranding not proven. [ECF No. 432].
Defendants filed a motion for a judgment of acquittal or new trial on August 1, 2016, [ECF No. 437], and filed a memorandum in support of the motion on August 31, 2016, [ECF No. 484]. The Government filed its opposition on September 30, 2016. [ECF No. 497]. Defendants filed a reply on October 17, 2016, [ECF No. 501], and the Government filed a sur-reply on November 22, 2016, [ECF No. 506].
Under the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. ("FDCA" or "the Act"), certain medical "devices" cannot be introduced into interstate commerce without the prior approval of the Food and Drug Administration ("FDA"). 21 U.S.C. § 331. The FDCA, as amended by the Medical Device Amendments of 1976, classifies medical devices into three categories "based on the risk that they pose to the public." Medtronic, Inc. v. Lohr, 518 U.S. 470, 476 (1996) (citing 90 Stat. 539). "Devices that present no unreasonable risk of illness or injury are designated Class I and are subject only to minimal regulation by 'general controls.'" Id. at 476-77. "Devices that are potentially more harmful are designated Class II; although theymay be marketed without advance approval, manufacturers of such devices must comply with federal performance regulations known as 'special controls.'" Id. at 477. "Finally, devices that either 'presen[t] a potential unreasonable risk of illness or injury,' or which are 'purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health,' are designated Class III." Id. (alteration in original) (internal citations omitted) (quoting 21 U.S.C. § 360(a)(1)(A-C)). "Class III devices must complete a thorough review process with the FDA before they may be marketed." Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 343 (2001). In this case, it was not disputed that the Stratus was a Class III device.
The FDCA and its implementing regulations also establish processes by which a device manufacturer must obtain FDA approval. With certain exceptions, a medical device may not be introduced into interstate commerce unless it has either an FDA-approved premarket application (a "PMA") or, alternatively, a "510(k) clearance." 21 CFR §§ 814, 807.92. A PMA approval means that a device has been approved by the FDA based upon a lengthy application and evaluation process, through which the manufacturer must demonstrate that the device is safe and effective when used in accordance with its labeling. 21 CFR § 814.44. In contrast, a 510(k) clearance means that the FDA has approved the device based on a demonstration that the device is "substantially equivalent" to another device that has gone through the PMA process (a "predicate device"). 21 C.F.R. § 807.92; see Buckman, 531 U.S. at 344-45 (). Accordingly, a 510(k) clearance usually allows—and is intended to allow—a manufacturer to bring a device to market more quickly than a device that goes through the PMA approval process. In order to obtain a 510(k) clearance, a medical device manufacturer must demonstrate, inter alia, that the device has the same intended use as the predicate device, that thedevice has the same technological characteristics or is as safe and as effective as the predicate device, and that it does not raise different questions of safety or efficacy. See 21 U.S.C. § 360e(b)(1)(B); 21 C.F.R. § 807.81.
The FDCA, 21 U.S.C. § 301 et seq., "was designed primarily to protect consumers from dangerous products." United States v. Sullivan, 332 U.S. 689, 696 (1948); see United States v. Dotterweich, 320 U.S. 277, 280 (1943); United States v. Dianovin Pharm., Inc., 475 F.2d 100, 103 (1st Cir. 1973). Accordingly, the FDCA regulates the marketing and sale of drugs and medical devices into interstate commerce and also sets forth criminal penalties for violations of the Act.
Section 301 of the Act prohibits the "adulteration" or "misbranding" of any food, drug, device, tobacco product, or cosmetic into interstate commerce, as well as the introduction or receipt of any such adulterated or misbranded article into interstate commerce. 21 U.S.C. § 331(a-c). The crime of adulteration or misbranding is, in its misdemeanor form, a strict liability offense, see 21 U.S.C. § 333(a)(1); Dotterweich, 320 U.S. at 281, but the offense is a felony if committed "with the intent to defraud or mislead," United States v. Orrego-Martinez, 575 F.3d 1, 4 (1st Cir. 2009) (quoting 21 U.S.C. § 333(a)(2)). To convict a defendant under the felony provisions of the Act, the Government must prove not only the defendant's knowledge of the adulteration or misbranding, but also that the defendant had a "specific intent to mislead or defraud" that was "connected to the misbranding." United States v. Mitcheltree, 940 F.2d 1329, 1351 (10th Cir. 1991). In this case, the jury found that the Defendants had the requisite knowledge but not the intent to mislead as defined, leaving the felonies unproven.
The Act defines "adulterated drugs and devices" and "misbranded drugs and devices" in Sections 501 and 502, respectively. See 21 U.S.C. §§ 351-352.
A drug or device can be "deemed adulterated" in a number of circumstances. For example, Section 501(a) provides that a drug or device is adulterated if it is "poisonous" or "insanitary," or has been prepared, packed, manufactured, or held in facilities with insanitary conditions, or whose manufacturing processes do not conform to "current good manufacturing practice" so as to ensure the product's safety. 21...
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