Bont: White collar update: Sacklers, Flynn elude criminal charges

Criminal Justice: Jonathan BontIn the current administration, it is somewhat unusual for the government to prosecute corporate wrongdoing using every weapon in its arsenal. Particularly given the Department of Justice’s recent practice of publicly announcing decisions not to prosecute corporations that have been under criminal investigation, the recent announcement of resolved criminal charges against Purdue Pharma is unique. Purdue pleaded guilty to conspiracy to defraud the Drug Enforcement Administration by representing that it maintained an effective program combatting the illicit prescribing of controlled substances, most notably Oxycontin, when in fact Purdue continued to market its drugs to more than 100 health care providers whom the company had good reason to believe were prescribing Oxycontin without a legitimate medical purpose. As part of the plea, Purdue also admitted to criminal anti-kickback charges for paying lucrative speaker fees to doctors in order to induce them to prescribe more Oxycontin. The criminal financial penalty levied against Purdue as part of the plea is in excess of $5 billion. The government separately pursued a civil False Claims Act case against Purdue and members of the Sackler family who own the company. False Claims Act liability is far more common in the government’s efforts to eradicate corporate wrongdoing, but still the amount of the Purdue civil settlement — $2.8 billion — is staggering. The Sackler family independently settled with the Government for $225 million. It is noteworthy that while the government pursued individual civil liability against the Sackler family under its “Yates memo” criteria, it has thus far declined to bring a criminal prosecution against them. Indeed, the Sacklers maintain publicly that they acted ethically and lawfully and have blamed the wrongful conduct on Purdue’s management team. There has been no formal declination to prosecute the Sacklers by the current administration, and time will tell if they are still negotiating a resolution to their personal woes, or if the next administration decides to prosecute them.

Also related to healthcare offenses, the government has recently prosecuted a series of cases in the Tennessee Appalachian Region involving doctors who have admitted to prescribing prescription narcotics without a legitimate medical purpose in violation of the Controlled Substances Act. Focusing on a particular geographic region for its prevalence of healthcare abuses is customary under the Department’s “strike force” model. However, whereas in the past the government has focused its efforts in larger metropolitan areas that are close to points of entry to the United States, e.g., Detroit, Miami, this is an indication that the government will be increasingly focused on the Midwest in its efforts to combat the opioid epidemic. Both former Attorney General Jeff Sessions and Attorney General William Barr have announced takedowns where hundreds of defendants, including medical professionals, have been arrested in the same day. In addition to criminal prosecutions, the Department of Justice has also obtained civil injunctions in some cases to bar physicians and other healthcare professionals from prescribing prescription narcotics. As well, the Drug Enforcement Administration has initiated administrative proceedings to revoke prescribers’ registrations if there is suspicion of diverting controlled substances for recreational uses. Prescribers, particularly those in practices such as pain management who prescribe narcotics on a regular basis, should have compliance plans in place to avoid unwittingly running afoul of DEA regulations as well as a plan for how to respond to an unannounced DEA investigation. Such investigations are becoming more commonplace.

In other white collar news, former National Security Advisor Michael Flynn was granted a presidential pardon for the charge pending against him for lying to the FBI. You’ll recall that Flynn pleaded guilty to that charge and then moved to withdraw his guilty plea in the District of Columbia. With that motion still pending, the government moved to dismiss the charge against Flynn. The Court of Appeals for the D.C. Circuit ruled that the district judge could hear argument from interested third parties as to the basis for the government’s unique motion. With roughly a dozen amicus briefs pending before the district court, the President granted Flynn a full pardon, and the Government filed another motion to dismiss the case, this time as moot.•

Jonathan Bont practices in the areas of criminal defense, business litigation and government compliance at Paganelli Law Group. Opinions expressed are those of the author.

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