Individuals Face Greater Risks in FDA Cases
By: ROBERT J. KLEPINSKI & DULCE J. FOSTER
November 19, 2010
The vast preponderance of FDA enforcement scrutiny in recent years has been on companies, with prosecutors focusing on recovering company fines and penalties. Recently, however, there have been a number of unsettling signs suggesting the focus is shifting to individuals, particularly to doctors and company officials in responsible positions. Among the recent omens are:
- FDA has made oral comments that individual doctors may be the focus of off-label enforcement, for example, in the comments of FDA Regulatory Counsel Deborah Wolf on September 20, 2010 at the Food and Drug Law Institute’s Advertising and Promotion Conference in Washington, D.C.
- In March 2010, FDA Commissioner Margaret Hamburg sent a letter to Senator Chuck Grassley announcing the FDA’s intent to increase misdemeanor prosecutions of responsible corporate officers (http://grassley.senate.gov/about/upload/FDA-3-4-10-Hamburg-letter-to-Grassley-re-GAO-report-on-OCI.pdf).
- On November 9, 2010, the Department of Justice announced the indictment of the Associate General Counsel of GlaxoSmithKline LLC on charges of obstruction and making false statements about off-label uses of a drug (http://www.justice.gov/opa/pr/2010/November/10-civ-1266.html).
- On October 20, 2010, the Office of the Inspector General published new guidance on how and when individuals may be excluded from federal health care programs, such as Medicare (http://oig.hhs.gov/fraud/exclusions/files/
permissive_excl_under_1128b15_10192010.pdf).
These signs all point to greater scrutiny of the role of individuals in the dissemination of off-label information. The new focus increases the need to be vigilant about personal behavior while working in FDA-regulated businesses.
Enforcement actions can involve the full range of civil and criminal penalties, however, the most surprising shift recently is the focus on excluding individuals for business activity. While this penalty has been available to the FDA for some time, the OIG’s recent publication of explanatory guidance on how and when individuals will be excluded is a clear indication of its new focus on the individual. While exclusion does not lead to potential incarceration and does not carry the same public stigma as a criminal conviction, it can have devastating personal consequences for the individuals against whom it is imposed. For most, being excluded from federal health care is a career-ending sanction. No U.S. medical device company, pharmaceutical company or health care provider that seeks to stay in business can afford to retain an excluded individual, and almost all future employment opportunities in the industry will be foreclosed.
The OIG published the guidance to explain how it plans to exercise its authority to exclude individuals permissively. The guidance differentiates between owners and management. To exclude an owner, the OIG must find at least some evidence that he or she “knew or should have known” about the sanctioned activity. Without such evidence, the owner cannot be excluded. If the OIG determines that this knowledge standard has been met, however, it will apply a presumption in favor of exclusion. This presumption may be overcome if the OIG finds that other, significant factors weigh against excluding the owner.
In contrast, the OIG may exclude officers and managing employees without any showing of knowledge or intent. Such employees may be excluded no matter what they knew or should have known. In other words, an officer’s job title and responsibilities alone are enough to result in his or her exclusion from the Medicare program. In its guidance the OIG offers cold comfort, stating that it does not intend to use this strict liability standard to exclude all officers or managers of companies found to have violated the law. Instead, it will take the individual’s mental state into consideration, and apply a presumption in favor of exclusion only if there is evidence that the individual knew or should have known of the misconduct. As with owners, this presumption may be overcome if the OIG finds significant factors weigh against exclusion.
In its guidance, the OIG lists four factors to be used in determining whether to exclude:
1. Circumstances of the Misconduct and Seriousness of the Offense:
What was the nature and scope of the sanctioned conduct? Was any other misconduct involved? At what level of the entity did the misconduct occur? What was the criminal sanction or criminal fine imposed? Was there actual or potential harm to individuals, or financial harm to any federal health care program? Was the misconduct an isolated incident or part of a pattern of wrongdoing?
2. Individual’s Role in Sanctioned Entity:
Did the individual hold his or her current position at the time of the underlying misconduct? What degree of managerial control or authority did the individual have? What was the relationship between the individual’s position and the underlying misconduct? Did the misconduct occur within the individual’s chain of command?
3. Individual’s Actions in Response to the Misconduct:
Did the individual take steps to stop the underlying misconduct? Did these actions take place before or after the individual had reason to know of an investigation? Did the individual disclose the misconduct to the appropriate federal or state authorities? Did the individual cooperate with investigators and prosecutors and respond in a timely manner?
4. Information About the Entity:
Has the sanctioned entity or a related entity previously been convicted of a crime? If so, what was the basis for the conviction? What is the size of the entity? What is its corporate structure?
These factors establish a wide range within which the OIG can exercise a great deal of discretion in reaching an exclusion decision. The guidance neither narrows nor expands the scope within which the OIG can act, but gives both government officials and corporate officers a general framework to consider in assessing whether exclusion is a potential sanction. Moreover, the mere publication of these guidelines is a strong signal that discussions are ongoing within the OIG about which doctors, owners, officers, and managers should beware.