United States v. Stepanets

• Decision Date: 26 February 2021
• Docket Number: No. 19-1471, No. 19-1595, No. 19-1600,19-1471
• Citation: 989 F.3d 88
• Parties: UNITED STATES of America, Appellee, v. Alla V. STEPANETS, Defendant, Appellant. United States of America, Appellee, v. Gene Svirskiy, Defendant, Appellant. United States of America, Appellee, v. Christopher M. Leary, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

989 F.3d 88

UNITED STATES of America, Appellee,

v.Alla V. STEPANETS, Defendant, Appellant.

United States of America, Appellee,

v.Gene Svirskiy, Defendant, Appellant.

United States of America, Appellee,

v.Christopher M. Leary, Defendant, Appellant.

No. 19-1471

No. 19-1595

No. 19-1600

United States Court of Appeals, First Circuit.

February 26, 2021

John H. Cunha, Jr., with whom Helen Holcomb, Charles Allan Hope, Boston, MA, and Cunha & Holcomb, P.C. were on brief, for appellant Alla V. Stepanets.

Christopher M. Iaquinto, with whom Jeremy M. Sternberg, Zachary D. Reisch, Boston, MA, and Holland & Knight LLP were on brief, for appellant Gene Svirskiy.

Paul V. Kelly, with whom Sarah W. Walsh, Boston, MA, and Jackson Lewis, P.C. were on brief, for appellant Christopher M. Leary.

Ross B. Goldman, Criminal Division, Appellate Section, United States Department of Justice, with whom Andrew E. Lelling, United States Attorney, Amanda P.M. Strachan, Assistant United States Attorney, Donald C. Lockhart, Assistant United States Attorney, Brian A. Benczkowski, Assistant Attorney General, and John P. Cronan, Deputy Assistant Attorney General, were on brief, for appellee.

Before Thompson, Selya, and Barron, Circuit Judges.

BARRON, Circuit Judge.

These consolidated appeals, like the appeals in United States v. Cadden, 965 F.3d 1 (1st Cir. 2020), and United States v. Chin, 965 F.3d 41 (1st Cir. 2020), trace back to tragic events that occurred in the fall of 2012. See Cadden, 965 F.3d at 6-7. Around that time, patients across the country began falling seriously ill after having been injected with a contaminated medication compounded by the New England Compounding Center ("NECC"), a pharmacy that operated out of Framingham, Massachusetts. See id. Many of these patients eventually died, and a federal investigation, including a criminal one, ensued. See id.

The defendants here -- Alla Stepanets, Gene Svirskiy, and Christopher Leary -- are, like the defendants in Cadden and Chin, former NECC employees. However, unlike the defendants in those cases, these three defendants are not accused of playing any role in compounding the medication alleged to have caused the patient illnesses and deaths. Cf. Cadden, 965 F.3d at 6-7. Rather, they each were tried and convicted for a number of federal offenses that relate to other aspects of NECC's operations but that were identified in the course of the federal criminal investigation spurred by the nationwide outbreak that was ultimately attributed to NECC's medication. The defendants now appeal each of those convictions and, in Stepanets's case, her sentence as well. We affirm.

I.

For a more detailed recitation of the background to the federal criminal investigation into the nationwide outbreak itself and to NECC's operations, we refer the reader to our opinion in Cadden. See id. at 6-7. For present purposes, we focus initially on the travel of these three appeals, reserving a more detailed recounting of the facts that are relevant to each of them to our consideration of the specific challenges raised by each appellant.

Suffice it to say for now that NECC was a compounding pharmacy, which combined drugs with other substances to create specialized medications for patient use, see Chin, 965 F.3d at 45, and that Stepanets, Svirskiy, and Leary were NECC pharmacists who were each engaged in different parts of the company's operations. In December of 2014, a grand jury in the District of Massachusetts returned a 131-count indictment that charged each of them -- as well as Barry Cadden, NECC's founder and president; Glenn Chin, NECC's supervising pharmacist; and nine others affiliated with NECC -- with committing a range of federal offenses.

The trials of Cadden, Chin, and several other defendants were severed, and a number of the other defendants pleaded guilty. The three appellants, however, went to trial in October of 2018 along with three of their co-defendants.

The trial lasted ten-and-a-half weeks. The jury found Stepanets, Svirskiy, and Leary each guilty of committing multiple federal crimes. They each now appeal their convictions and, in the case of Stepanets, with whose challenges we begin, her sentence as well.

II.

Stepanets was charged in the indictment with the following federal crimes: racketeering conspiracy, see 18 U.S.C. § 1962(d), conspiracy to defraud the United States, see id. § 371, and seven counts in connection with the introduction of "misbranded" drugs into interstate commerce with the intent to defraud and mislead in violation of the Federal Food, Drug, and Cosmetic Act ("FDCA"), see 21 U.S.C. §§ 353(b)(1), 331(a), 333(a)(2). The jury found Stepanets not guilty of the racketeering conspiracy and conspiracy to defraud counts. She was convicted, however, on six of the seven FDCA counts. Her appeal focuses on those six convictions.

We begin by describing the counts that underlie those convictions more fully, as well as the relevant procedural background to Stepanets's challenges to those convictions. We then consider each of her challenges to her convictions on those six counts, as well as her challenge to the sentence that she received.

A.

The FDCA criminalizes, among other things, "[t]he following acts and the causing thereof ... : The introduction or delivery for introduction into interstate commerce of any ... drug ... that is ... misbranded." Id. § 331. Various provisions of the FDCA then describe the ways in which a drug can be deemed "misbranded."

The drugs at issue in Stepanets's convictions were alleged to be "misbranded" under § 353(b)(1). That subsection provides that "[t]he act of dispensing a drug" meeting certain criteria without a written or oral prescription by a licensed practitioner "shall be deemed to be an act which results in the drug being misbranded while held for sale." Id. § 353(b)(1).

Thus, the government's theory as to why the medications in the shipments at issue in the six counts were "misbranded" within the meaning of the FDCA was that they were "dispensed" for patient use without a valid prescription. See id. In support of that charge, the indictment alleged that the medications at issue were dispensed for patient use pursuant to fictional prescriptions, given the evidence linking the medications to prescriptions for patients like "Wonder Woman" and "Bud Weiser."

In the fall of 2015, Stepanets and two other defendants filed motions to dismiss the FDCA counts in the indictment. See United States v. Stepanets, 879 F.3d 367, 371 (1st Cir. 2018). They argued in those motions, among other things, that the indictment did not fairly allege the "dispensing" element of the misbranding offense. See id.

In seeking the counts' dismissal, the motions argued that the dispensing element required the government to have alleged in the indictment that the defendants had engaged in conduct that amounted to them personally having dispensed the drugs at issue, even though there was no valid prescription for those drugs. The motions contended that the indictment included no such allegation, because it merely alleged that the defendants "worked in the packing area [of NECC] checking orders prior to shipment," which, if true, the motions further asserted, would make them "shipping clerk[s]" and not dispensers.

The District Court granted the motions to dismiss. See id. In explaining why, the District Court relied on a dictionary definition of the word "dispensing" according to which "a pharmacist dispenses a drug when she acts in her role as a licensed professional authorized to fill (put together) a medical prescription for delivery to a patient." Id. The District Court then concluded that the indictment alleged that the defendants had engaged in conduct that was at most "incidental" to the "dispensing" of the drugs at issue. Id.

We reversed that ruling on an interlocutory appeal. See id. at 376. We explained that "the allegations in the indictment [were] sufficient to apprise the defendant[s] of the charged offense[,]" because the allegations specified and connected the relevant statutory provisions, elements, and facts. Id. at 372 (quoting United States v. Savarese, 686 F.3d 1, 7 (1st Cir. 2012) ). We further explained that, contrary to the defendants' contention, nothing in the indictment committed the government to the view that the defendants could be convicted of the offense even if they were mere shipping clerks. See id. at 374. We thus explained that the issue of whether the dispensing element ultimately could be met was a question of fact to "be resolved at trial rather than on pretrial motions to dismiss." Id.

The case then proceeded to trial, at which the jury found Stepanets guilty of the six FDCA counts at issue here. The jury did not find that Stepanets acted with an intent to defraud or mislead on any of these counts, which is a finding that, had it been made, would have increased her maximum sentence beyond the one-year term of imprisonment. See 21 U.S.C. § 333(a)(2). The District Court sentenced Stepanets to twelve months' probation on each of the counts of conviction, to be served concurrently with one another.

B.

.

Stepanets's lead challenge to her convictions takes aim at what she contends was a lack of sufficient evidence concerning the dispensing element. Our review is de novo, and we construe the evidence in the light most favorable to the verdict. Cadden, 965 F.3d at 10. We may reverse her convictions on this basis only if we conclude that, reading the record as a whole in that light, no rational jury could have found that the government proved the dispensing element beyond a reasonable doubt. See id.

The statute does not define "dispensing," as used in § 353(b)(1). See Stepanets, 879 F.3d at 369. But, according to Stepanets, we held in the interlocutory appeal from the District Court's dismissal of these counts in the indictment that "dispensing" involves "the kind of checking that pharmacists regularly do when filling prescriptions, i.e., confirming that legit...