For The Defense, October 2010 - DRI Today

D R U G A N D M E D I C A L D E V I C EDuces Tecum Special Grand Jury, Sept., 1986Term, 659 F. Supp. 628 (D. Md. 1987); butsee Martindell v. International Tel. and Tel.Corp., 594 F.2d 291, 295–296 (2d Cir. 1979).Coordinate with Criminal CounselIt is most important that you ensure thatthe defenses in civil and criminal actionsare consistent. If a company has hiredBe wary because agrand jury subpoena fortestimony may supersedea protective ordercriminal counsel to represent its interestsin criminal proceedings, coordination iscrucial. You will need to help the companyfight a two-front war, coordinating of positionsand defenses when possible to ensureconsistency in theme and positions.Be Skeptical—Question Your SourcesThe U.S. Securities and Exchange Commission(SEC) files a civil complaint againstthe manufacturer of a synthetic blood substituteand several of its corporate officersalleging that they fraudulently misrepresentedthe status of applications for FDAapproval of its product. Your client is oneof the executives, a senior vice presidentof regulatory affairs for the company. Yourclient could face civil penalties and administrativedebarment. Dr. Ras, your client’sphysician, calls you at the behest of yourclient to tell you that your client has cancer.Specifically, Dr. Ras tells you that yourclient was diagnosed with stage III colorectalcancer that has spread to his stomachand abdominal cavity. Your client providesyou with a letter from Dr. Ras stating thatyour client is undergoing surgery and chemotherapy.You move to sever your clientfrom the criminal action. Over the ensuingmonths, your client’s physician tells youthat the cancer has spread to your client’slymph nodes and subsequently provides anaffidavit stating that your client’s cancer isnow a stage IV cancer, your client is undergoingchemotherapy, radiation, and tumor54 n For The Defense n October 2010removal surgery, and your client has an 8 to15 percent- chance survival rate. You periodicallyprovide information to the court.The court severs your client’s action fromthe SEC litigation, stays the action, andlater stays final judgment, effectively endingthe litigation against your client. Otherexecutives, including the senior vice presidentand general counsel and the formerpresident and chief executive officer, signconsent decrees and agree to pay civil penaltiesof $40,000 to $120,000.Unfortunately, you learn that you haveeffectively perpetrated a fraud on the court.Your client does not and did not have terminalcancer. The “Dr. Ras” who called youwas actually your client. The affidavits thatyou submitted were actually phony affidavitsfrom your client. Your client ultimatelyconsents to a judgment in the SEC case,agrees not to work for any publicly tradedcompany, and to pay a $150,000 fine. He iscriminally indicted and ultimately is sentencedto 36 months in prison and fined$50,000 for concocting his terminal cancerstory.Sound far-fetched? It actually happened.Biopure Corp. was the company underinvestigation for its company’s Hempopureblood substitute in 2005, and Howard P.Richman was the former senior vice presidentof regulatory affairs who was ultimatelysentenced in 2009. Ex- Biopure ExecGets 36 Months In Jail For Faking TerminalCancer, 14 Mealey’s Emerg. Drugs &Devices, Issue # 20 (2009); see also Indictmentin United States v. Howard P. Richman,No. 1:08-cr-10282-MLW-1, Sept. 24,2008; Sentencing Hearing in United Statesv. Howard P. Richman, No. 1:08-cr-10282-MLW-1, Oct. 5, 2009.Your witnesses also may have countervailinginterests. Before indictments andwell before a company may even know thatthe government has initiated investigations,the government may have interviewed witnessesand obtained information. Well overseven months before Stryker and its seniormanagers were indicted in October 2009, aterritory manager agreed to waive indictment,submitted an agreed statement offacts, and pled guilty to a count of misbrandinga medical device. See Waiver ofIndictment, United States v. Demming, No.08-CR-10379-NG, Feb. 6, 2009 (D. Mass);Agreed Statement of Facts, United States v.Demming, No. 08-CR-10379-NG, Feb. 10,2009 (D. Mass.). Phones or communicationdevices of employees and witnesses mayalso be tapped. Current employees may alsoseek to be whistleblowers, whether yourclient engaged in truly actionable conductor not, for moral or monetary reasons andmay file a lawsuit under the qui tam provisionsof the False Claims Act.So what is the point? It is without questioncritical to locate and interview ordepose key witnesses with knowledge ofthe facts who will certainly be involved inyour case. However, witnesses will havecountervailing interests if criminal chargesrear their head, complicating your client’sdefense of the civil action. Be carefulwith and skeptical of information that youreceive from your clients when criminalactions exist or loom. As you gather factsfrom key witnesses, conscientiously delveinto the possible personal motivations of acompany’s employees. As you collect documentsfrom employees, impress uponthem that a plaintiff’s counsel will oftenuncover misrepresentations and obfuscations,which will make matters worsefor the company. Thoroughly review documentsand follow up in missing areas.Perform independent investigations andmeet with witnesses personally as necessaryto ensure that your defense theme anddefense of the case is based on fact, not outlandishtales.As for potentially hostile witnesses, usethe discovery process to determine a plaintiff’sawareness of and contact with potentiallyadverse witnesses so that you can findthose witnesses and possibly depose them.Advise on the Need for Separate CounselMake sure that you advise employee witnessesthat you represent the company.Absent potential or actual criminalaspects, company counsel can often representemployees of the company in depositionsand other proceedings. However, ifyou anticipate potential criminal actions,advise involved employees to obtain personalcounsel to protect their interests.If an employee hires a personal attorney,coordinating defenses is still possible,although it clearly raises concernsof the confidentiality of communicationswith defense counsel for that employee.Criminal, continued on page 86