The final briefs are in as government lawyers want an appeals court to uphold the unprecedented 12-year debarment from healthcare work slapped on ex-Purdue Pharma general counsel Howard Udell and two other executives involved in the Oxycontin scandal. If they succeed, federal prosecutors will be handed a powerful threat to use on corporate execs in the future.
Lawyers for the trio, though, are asking the court either to strike down the 12-year exclusion, or to reduce the term to fewer than three years. If they succeed, the former executives could begin working again in healthcare immediately, since they were debarred more than three years ago.
The former executives—GC Udell, CEO Michael Friedman, and chief medical officer Paul Goldenheim—were excluded after they pled guilty to a criminal misdemeanor in 2007 for failing to properly supervise the marketing of a dangerous drug. They then sued the U.S. Health and Human Services Department for reinstatement, but lost in U.S. District Court.
The main issue for the U.S. Circuit Court of Appeals in Washington, D.C., is whether the government can rightly debar an executive from working at corporations with government contracts, such as Medicare, simply because he was a supervisor at a company found guilty of misbranding. It is a form of strict liability under the so-called “responsible corporate officer doctrine.”
Udell’s brief argues that exclusion was intended to be used when there is evidence of fraud. This type of misdemeanor doesn’t “share fraud’s core elements,” such as falsity and intent to deceive, it argues. The brief adds the three were guilty of “omissions and not acts.”
It continues, “Twelve-year exclusions for misdemeanor offenses involving no conscious wrongdoing are unprecedented and unreasonable.”
Even if the exclusion is upheld, the evidence doesn’t support a 12-year penalty, the brief argues. It says the proper starting point for figuring a term of debarment is generally three years, and the trio deserve less than that because they cooperated with authorities. In addition, the brief argues that there was not the requisite proof of financial losses to sustain the lengthy penalty.
The government, however, argued that by labeling Oxycontin less addictive than it was, Purdue Pharma caused “staggering financial losses” to U.S. programs that paid for the more expensive drug over less costly pain relievers, based on doctors believing the misstatements. Prosecutors also cited the emotional costs to victims’ families, whose loved ones became addicted or died because of the mislabeled drug.
For some of those family members, the execs’ debarment wasn’t nearly enough. They had wanted the executives charged with a felony and imprisoned.
The appeals court will hear oral arguments on December 6.
See also: “Ex-Purdue Pharma GC Argues Against Oxycontin Debarment,” CorpCounsel, October 2011.
