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Pietragallo's White Collar Criminal Defense Group

In today's environment, the government has never more aggressively regulated, investigated, pursued and prosecuted white collar crime. If you or your company becomes embroiled in any type of federal or state government investigation, you need experienced trial lawyers who have gone toe-to-toe with prosecutors and government agents.

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    Tuesday
    Feb132018

    New DOJ Policy Changes Impact FCA Enforcement 

    What Happened?
    The Department of Justice kicked off the year with a shift in its policy affecting the False Claims Act and other civil fraud enforcement.  In two separate memoranda issued in January, DOJ addressed first its policy on FCA dismissals, and second, restricted the evidence on which it can rely to prove FCA and other fraud cases. 

    The Rundown
    The Granston Memo – Reconsidering FCA dismissals
    On January 10, 2018, DOJ issued a memorandum (dubbed the “Granston Memo”), that provided attorneys in the Fraud Section of the Commercial Litigation Branch, as well as all AUSAs handling FCA matters, with guidelines for dismissing FCA cases under 31 U.S.C. § 3730(c)(2)(A).  That section allows the government to dismiss a qui tam action notwithstanding the objections of the person initiating the action if the person has been notified by the government of the filing of the motion to dismiss and the court has provided the person with an opportunity for a hearing on the motion.  31 U.S.C. § 3730(c)(2)(A). 

    The government has used this provision sparingly in the past, often opting simply not to intervene rather than proactively move for dismissal.  But this memo recognizes that the government often expends substantial resources even in non-intervened cases, as it must monitor them and at times produce discovery.  And, because of the significant increase of FCA cases filed annually, the government’s expenditure of resources on what it sees as meritless FCA claims is increasing as well.  This is particularly true in light of the fact that while the number of FCA claims filed has grown, the number of FCA matters in which the government has intervened has remained stable.  The memo therefore directs attorneys to consider whether dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A) rather than simple declination would better serve the government’s interests in preserving limited resources and avoiding adverse precedent.

    The Brand Memo - Limiting Use of Agency Guidance Documents
    On January 25, 2018, the Office of the Associate Attorney General issued a new policy relating to its attorneys’ enforcement of affirmative civil cases, which includes the False Claims Act as well as all other civil lawsuits to recover money lost to fraud or other misconduct or to impose penalties for violations of Federal health, safety, civil rights or environmental laws.  The memorandum prohibits DOJ from using its enforcement authority to convert agency guidance documents into binding rules.

    Department attorneys are not to use noncompliance with agency guidance, defined as “any agency statement of general applicability and future effect…that is designed to advise parties outside the federal Executive Branch about legal rights and obligations,” as a basis for proving violations of applicable law.  While the Department may continue to use evidence that a party read an agency document that explained certain statutory provisions as a basis for proving requisite knowledge of the provision, the Department should not treat a party’s noncompliance with an agency document as establishing that the party violated the statute or regulation at issue.  The memorandum emphasizes that agency guidance documents cannot create additional legal obligations and that a party failed to comply with agency guidance expanding upon statutory or regulatory requirements does not mean that the party violated those underlying laws.

    The Takeaway
    In sum, the memorandum provides valuable insight to both private defense attorneys and the relators’ bar.  The Granston memo gives defense counsel talking points for meetings with DOJ attorneys who may not have had the opportunity to consider each of these factors, as well as a basis for advocating for dismissal in the case of government declination.  On the plaintiffs’ side, the memo offers critical insight into case weaknesses that previous administrations may have overlooked, yet may now face heightened scrutiny through motions for dismissal under § 3730(c)(2)(A).

    The Brand memo supplies guidance as well.  Attorneys defending DOJ affirmative civil enforcement matters should challenge any assertion of wrongdoing based on agency guidance rather than on a strict interpretation or analysis of the statutory or regulatory language itself.  Companies should also re-evaluate their policies to ensure that they are based on interpretation of the actual statutory provision instead of agency guidance that may ultimately be more restrictive.  While agency guidance may remain a valuable source of assistance and clarification, it should no longer be considered binding authority.  Overreliance on agency guidance that imposes stricter burdens than the statutory language may lead to policies that cut against a business’s best interests without any corresponding legal purpose.

    Monday
    Feb122018

    Health Care Compliance in 2018

    This past Friday, February 9, John Schwab presented on Health Care Compliance in 2018: Government Enforcement & Opioids to the Health Law Section of the Allegheny County Bar Association in Pittsburgh. The presentation covered federal and state enforcement actions in health care, including those regarding opioids. Mr. Schwab also discussed recent DOJ initiatives announced in January like the Joint Criminal Opioid Darknet Enforcement team (J-CODE) targeting internet drug sales and the DEA's "surge" of agents to analyze pharmacy and prescriber data to identify patterns and statistical outliers for developing "targeting packages" for future prosecutions.

    If you would like more information about this presentation, please contact John Schwab at JAS@Pietragallo.com.

    Thursday
    Feb082018

    Beginning of Year Check Up: Are You Title IX Compliant Given The Department Of Education’s Recent Guidance?

    What Happened?
    On September 22, 2017, Candace Jackson, Acting Assistant Secretary for Civil Rights of the United States Department of Education (“DOE”) issued a Dear Colleague Letter that withdrew the policy guidance reflected in the Dear Colleague Letter of April 4, 2011 and the Questions and Answers on Title IX and Sexual Violence dated April 29, 2014. In one swift stroke, the Department of Education's pronouncement overturned much of the guidance and regulations promulgated by the Obama administration since 2011. What does this mean for educational institutions, both Higher Education and Secondary Schools?

    The Rundown
    The following are the anticipated ramifications from the DOE's announcements:

    • There likely will be fewer civil rights investigations of educational institutions;
    • The investigations currently being conducted will continue, will likely take four to six years, and, outside of stark conduct, will likely end with little negative consequence;
    • Due Process to Respondents, which the Department of Education has already indicated was a perceived weakness of the Obama administration’s Title IX guidance and regulations, will be the likely subject of additional Department of Education Guidance in the year to come.  In the interim, the DOE’s September 2017 Q&A on Campus Sexual Misconduct (“2017 Q&A”) offers some guidance on what due process it expects to occur in Title IX investigations and processes;
    • Individual educational institutions will have more discretion concerning which burden of proof it will employ for Title IX hearings; and
    • Currently, a clear and convincing standard may be used for Title IX hearings.

    Does this mean that educational institutions have to be less invested in, or concerned about, their investigation and resolution of complaints under Title IX? Absolutely not.

    For the Record
    The DOE still places the burden on the educational institutions to investigate allegations of Title IX covered conduct. Further, students, faculty and parents have a heightened awareness of sexual harassment and sexual assaults, domestic violence, stalking and dating violence, and will employ significant energy to ensure that the school continues to address these issues with focus and zeal. Further, the repeal of the Obama administration’s rules and regulations does not obviate the school's obligation to continue to address Title IX concerns; it just needs to do them under the pre-2011 rules and regulations and in line with the DOE’s pronouncements in its 2017 Q&A.

    What Happens Next?
    Schools should be revisiting their policies to ensure that adequate due process is provided to the Respondents. This requires meaningful notice and an opportunity to be heard, the right to an adviser of choice at the Title IX investigation and hearing stages, and the opportunity to present a defense to Complainant’s allegations. Individual educational institutions will, at the moment, be given discretion, based on their institutional culture, to choose a burden of proof for Title IX matters that each institution considers most appropriate. However, institutions will have to remain mindful of the expectations of the community for safety, fairness, and the prompt addressing and resolution of these issues.

    While the DOE promulgations seem like a “game changer”, very little will likely change in how higher education institutions address Title IX covered conduct, with the exception of a potentially greater focus on due process for the Respondents. Those of us who have represented institutions over the years have identified due process as a concern, and our clients therefore have already addressed these concerns. Educational Institutions should revisit their procedures to satisfy themselves that the Respondents get appropriate due process, so as to avoid both review by the DOE and to prevent civil litigation by Respondents because of perceived unfairness in the Title IX process.

    Wednesday
    Feb072018

    2018 Brings New Opioid Enforcement Tools to the U.S. Department of Justice and Pennsylvania State Government

    What Happened?
    The first month of 2018 brought significant attention to the opioid crisis facing the United States.  Both the U.S. Department of Justice and Pennsylvania’s state government have recently made announcements that they are developing new tools to combat this multi-faceted problem.

    The Rundown
    Most prominent of the January 2018 enforcement opioid-related efforts are those brought to bear by the U.S. Department of Justice:

    • On January 29, 2018, Attorney General Jeff Sessions announced to a Pittsburgh audience the formation of the Joint Criminal Opioid Darknet Enforcement team (J-CODE), a new resource to target internet-based drug traffickers.  The J-CODE team will coordinate across the FBI’s offices worldwide and “target and disrupt the sale of synthetic opioids and other drugs on the darknet.”  General Sessions stated that this resource will allow the federal government to make more arrests of those selling drugs over the internet and shut down the marketplaces used by online drug dealers.  Additional details of this program are discussed in White-Collared’s January 30 post here.
    • On January 30, 2018, Attorney General Sessions announced a “surge” by the DEA focusing its efforts on pharmacies and prescribers dispensing an unusual or disproportionate amount of drugs.  Through the surge, the DEA’s special agents, diversion investigators, and intelligence research specialists will aggregate the 800 million transaction reports collected annually from manufacturers and distributors and identify trends and statistical outliers.  This data will then be used in – as General Sessions described it – “targeting packages” for the DEA’s investigative and prosecutorial efforts.

    Governor Tom Wolf has spent early-2018 announcing efforts to step up Pennsylvania’s response related to the opioid crisis:

    • On January 10, 2018, Governor Wolf signed a state-wide disaster emergency declaration to enhance the Commonwealth’s response to the opioid epidemic and increase access to treatment.  The Governor’s declaration recognized the opioid crisis as a public health emergency mandating new enforcement efforts at all levels of state government.
    • Also on January 10, 2018, Governor Wolf announced the creation of Pennsylvania’s Opioid Operational Command Center to gather and analyze data from the Department of Health’s Prescription Drug Monitoring Program.  This program collects data from hospital emergency departments across the state.  Of the 171 hospital emergency rooms in Pennsylvania, 152 are reporting as part of the system.
    For the Record
    “This data is critical to not only determining where resources are needed, but to identify localized prescribing trends.  We will be able to use this tool to improve education and resources and prescribers to insure that opioids are being prescribed judiciously to patients,” said Pennsylvania’s Acting Heath Secretary and Physician General Dr. Rachel Levine.

    Monday
    Feb052018

    Third Circuit Rejects Concert Promoter’s Challenge to Guilty Plea and Sentence

    What Happened?
    The Third Circuit has affirmed the conviction and 78 month prison sentence of concert promoter Mark Hubbard, who had been convicted after pleading guilty to wire fraud for his role in the fraudulent sale of investments in a concert promotion business – rejecting Hubbard’s claims that his plea guilty was not voluntary, and that the District Court had committed numerous errors in the conduct of his sentencing hearing.

    The Rundown
    Mark Hubbard was convicted in the U.S. District Court for the Eastern District of Pennsylvania on one count of conspiracy to commit wire fraud and several individual counts of wire fraud, and sentenced to 78 months in prison. The charges stemmed from Hubbard’s fraudulent sale of investments in his concert promotion business, including the use of fraudulent documents in making his sales pitch, where, among other things, he promised 25% - 30% returns and falsely assured investors that their investments were secured by a $10 million security bond.

    In his appeal, Hubbard claimed that the District Court should not have accepted his guilty plea because (1) it was entered with the faulty expectation that his sentencing guideline range would be 33-41 months; and (2) he pleaded guilty reluctantly. He argued further that his sentence of 78 months should be reversed because the District Court (1) erroneously considered his guilty plea for similar conduct in a case pending in the District Court of Hawaii; (2) failed to seal the courtroom, purportedly curtailing his presentation of information to mitigate his sentence; and (3) effectively denied him the right to allocute by repeatedly interrupting him.

    Applying a plain error standard, the Court found that Hubbard, who entered his plea without a plea agreement, had demonstrated that he was fully aware of his potential sentence, which included a maximum penalty of 160 years in prison. In disposing of Hubbard’s argument that he expected a lower sentence because the government led him to believe his sentencing guideline range could be as low as 33-41 months, the Court specifically rebuffed Hubbard’s reliance on the Second Circuit’s decision in U.S. v. Palladino, 347 F.3d 29 (2nd Cir. 2003). In Palladino, the Second Circuit found that the government’s pursuit of a 6 point enhancement at sentencing was inconsistent with the language and spirit of the parties’ plea agreement, and invalidated the plea. In contrast, Hubbard had agreed to plead guilty without an agreement. As a result, any representation by the government regarding what sentence it believed Hubbard would likely receive was irrelevant. The Court illustrated this point, noting the District Court’s unequivocal statement to Hubbard during sentencing that there were no guarantees as to sentence, and that the court could sentence him to the maximum.

    The Court also rejected Hubbard’s reluctant guilty plea argument, finding that the District Court sufficiently explored his claimed anxiety disorder. Again, the Court noted the record of the change of plea hearing, where Hubbard indicated that though he had been injured in an electrocution accident seven years prior to his guilty plea, the only condition from which he continued to suffer was anxiety. When questioned further by the District Court about his anxiety, Hubbard told the District Court that he was absolutely fine.

    Regarding Hubbard’s claims of sentencing error, the Court began by rejecting his claim that the Court erred in considering Hubbard’s plea of guilty to similar charges in the District Court in Hawaii just one week before his sentencing. The Court found that it was appropriate, and certainly not plain error, to consider that plea of guilty under the rubric of the 18 U.S.C. § 3553(a) factors, particularly in light of the fact that those charges also related to fraudulent concert promotion.

    The Court also found no basis for Hubbard’s claim that the District Court should have sealed the courtroom because of the presence of another individual who had been in some way involved in the scheme, and against whom Hubbard claims that he had cooperated. Although the record indicated that the government confirmed that Hubbard had participated in surveillance and communications with that individual, the District Court found that the individual was also a victim, with the right to be present and participate in the hearing. Nonetheless, the District Court did allow Hubbard’s counsel to present evidence regarding Mr. Hubbard’s cooperation at side bar, away from the hearing of any other individuals within the courtroom. Ultimately, Hubbard’s counsel at sentencing agreed that it would be worse for the defendant to seal the courtroom with the individual there.

    Finally, the Third Circuit rejected Hubbard’s claim that he was denied meaningful allocution at sentencing based on his allegation that the District Court interrupted and questioned him. The Third Circuit found that Hubbard’s reliance on the Second Circuit’s decision in U.S. v. Li, 115 F.3d 125 (2nd Cir. 1997), was unavailing – pointing out that in Li, the sentencing judge was dismissive of the defendant throughout his allocution, ultimately ending the allocution by stating that if the appeals court disagreed with his conduct, they could send it back to me and tell me how long I have to listen. In contrast to Li, the Court found that at Hubbard’s sentencing, the District Court’s interjection into his attempt at allocution demonstrated that the Court was seeking clarification of Hubbard’s explanations, and exploring the veracity of the justification of his conduct – all of which the Court found to be appropriate.

    For the Record
    Hubbard claims that his plea was neither knowing nor voluntary because the Government led him to believe that his sentencing guideline range could be as low as 33-41 months. “However, all that the law requires is that the defendant be informed of his/her exposure…[T]he law does not require that a defendant be given a reasonably accurate ‘best guess’ as to what his/her sentence will be; nor could it, given the vagaries and variables of each defendant’s circumstances and offending behavior.” U.S. v. Mark Hubbard, (3rd Cir. slip op., No. 16-397, January 29, 2018), quoting U.S. v. Dixon, 308 F.3d 229, 234 (3rd Cir. 2002).

    The Takeaway
    Appellate challenges to the voluntariness of a guilty plea will more than likely be summarily dismissed when the defendant proceeds without a written agreement, and fails to raise concerns regarding the decision to plead guilty at the time of the change of plea hearing. In addition, objections to the manner in which a district court is conducting a sentencing hearing, particularly at the time of allocution, must be raised and preserved at the time of sentencing. 

    A full copy of the Court’s non-precedential decision and opinion can be found here.

    Thursday
    Feb012018

    When Is a Kickback Not a Kickback? Third Circuit Says It Must Be Linked to Specific False Claim

    What Happened?
    In affirming the district court’s entry of summary judgment in favor of Accredo Health Group, Inc., and its co-defendants, the U.S. Court of Appeals for the Third Circuit held that a plaintiff alleging a False Claims Act (“FCA”) violation based on an anti-kickback theory must show that (1) a particular patient was exposed to a kickback-tainted referral, and (2) a provider submitted a claim for reimbursement pertaining to that patient. 

    The Rundown
    In United States ex rel. Greenfield v. Medco Health Solutions, Inc., et al., the relator sued Accredo Health Group, a specialty pharmacy that provides home health care for hemophilia patients, and its affiliates (collectively, “Accredo”). Accredo made donations to numerous hemophilia-related charities, two of which, according to the relator’s allegations, recommended Accredo as a provider for hemophilia patients. Relator Greenfield moved for summary judgment before the district court, arguing that Accredo’s donations-for-referrals scheme violated the Anti-Kickback Statute (“AKS)), 42 U.S.C. § 1320a-7b(b), and that the scheme ran afoul of the FCA, 31 U.S.C. § 3729 et seq., because (1) some of the referrals were directed towards Medicare patients, and (2) when submitting Medicare claims for payment, Accredo falsely certified that it had complied with the AKS. Accredo cross-moved for summary judgment on the ground that the record lacked evidence that any Medicare patient had purchased prescriptions because of Accredo’s donations to specific charities.

    Without reaching the question whether Greenfield had established a kickback scheme, the district court granted Accredo’s motion for summary judgment, while denying the relator’s motion for the same relief.  It held that an FCA claim based on an anti-kickback theory requires the plaintiff to show that, as a result of the AKS violation, the defendant received payment from the federal government in violation of the FCA. Greenfield could not do that, in the Court’s view, because there was no evidence that any Medicare patient chose Accredo due to its charitable donations.

    Greenfield appealed, and the U.S. Court of Appeals for the Third Circuit affirmed the district court’s grant of summary judgment in favor of Accredo. But it rejected the district court’s imposition of a “but-for” causation requirement. The Court analyzed the language of the AKS, amended in 2010 to provide that “a claim that includes items or services resulting from a violation of [the statute] constitutes a false of fraudulent claim for the purposes of [the FCA].”  According to the Court, the “resulting from” language was too broad to require proof that the Medicare patient would not have chosen the provider but for the kickback. Were the district court’s interpretation correct, the both AKS drafters’ intention to strengthen the government’s ability to punish fraudulent activities, and its revisers’ intention to bolster whistleblower actions based on medical care kickbacks would have been thwarted.

    However, the Court held that a plaintiff must still provide evidence of the actual submission of a false claim to prevail at trial.  Demonstrating that a kickback scheme exists is not enough; a plaintiff must establish that the underlying medical care is connected to the breach of the AKS.  Because Greenfield could point to no “record evidence that shows a link between the alleged kickbacks and the medical care received by at least one of Accredo’s . . . federally insured patients,” the district court correctly entered summary judgment for Accredo.   

    The Take Away
    The Court rejected both (1) Greenfield’s position that that taint of a kickback scheme is enough to infect all referrals to Medicare patients, and (2) Accredo’s argument – adopted by the district court – that a plaintiff must prove that federal beneficiaries would not have used the relevant services absent the kickback scheme. Its middle-ground position, requiring evidence that shows a “link” between kickbacks and care, is sure to spawn future litigation regarding how strong and of what character that connection must be. 

    Tuesday
    Jan302018

    DOJ Launches New Darknet Enforcement Team

    What Happened?
    Yesterday Attorney General Jeff Sessions announced the creation of the Joint Criminal Opioid Darknet Enforcement (J-CODE) team, another new tool to fight against the opioid crisis.

    The Rundown
    The J-CODE team, which includes dozens of Special Agents, Intelligence Analysts, and professional staff, will focus on disrupting illicit online sales of opioids.  The team more than doubles the FBI’s investment in thwarting online opioid sales.

    The team will build on DOJ’s already significant efforts against opioid sales on the darknet.  In July 2017 for example, DOJ announced its shutdown of AlphaBay, the largest darknet marketplace in history.  AlphaBay operated for over two years and was used to sell illegal drugs, fraudulent identification documents, counterfeit goods, malware and computer hacking tools, firearms, and toxic chemicals all over the world.  At the time of the takedown AlphaBay serviced over 200,000 users and 40,000 vendors, and had over 250,000 listings for illegal drugs and toxic chemicals.

    J-CODE is just one of multiple initiatives DOJ has announced recently to combat the opioid epidemic, including the Opioid Fraud and Abuse Detection Unit, a data analytics program focusing specifically on investigating health care fraud related to opioid prescriptions and abuse, and the assignment of a designated opioid coordinator in each of the 94 U.S. Attorney offices.

    For the Record
    In a press release yesterday, Attorney General Sessions remarked that “criminals think that they are safe on the dark net, but they are in for a rude awakening.”

     

    Wednesday
    Jan032018

    U.S. v. Byrd - Privacy Rights v. A Car Rental Agreement

    What (will) happen?
    Next week, the United States Supreme Court will hear argument in the matter of U.S. v. Byrd (No. 16-1371), which presents a showdown between privacy rights and a car rental agreement. More specifically, the Court will determine whether a driver has a reasonable expectation of privacy in a rental car when the driver has the renter’s permission to use the vehicle but is not listed as an authorized driver on the rental agreement. 

    The Rundown
    In the summer of 2014, Mr. Byrd was driving a rental car on the highway in Pennsylvania. His fiancée had rented the vehicle, and he was using it with her permission. Mr. Byrd, however, was not listed on the rental agreement as an authorized driver. A Pennsylvania State Trooper noticed Mr. Byrd and began to follow him.  Ultimately, Mr. Byrd was pulled over by the Trooper for failing to move into the right lane fast enough after passing a slow moving truck. During the course of the traffic stop, the Trooper learned that Mr. Byrd was not an authorized driver listed on the rental agreement. Because Mr. Byrd was not listed as an authorized driver, the Trooper advised him that he was free to search the vehicle without his consent. The search of the vehicle discovered body armor and 49 bricks of heroin in the trunk.  After the District Court refused to suppress the evidence, Mr. Byrd was convicted of federal drug charges and sentenced to ten years in prison. 

    Mr. Byrd appealed to the United States Court of Appeals for the Third Circuit. The Third Circuit upheld the District Court’s ruling. While acknowledging that a split of authority exists among the Circuit Courts as to whether the occupant of a rental vehicle has a Fourth Amendment expectation of privacy when the occupant is not named on the rental agreement, the Third Circuit found its position on the issue to be clear: No expectation of privacy exists for an occupant of a rental vehicle who is not named on the rental agreement. See U.S. v. Kennedy, 638 F.3d 159 (3d Cir. 2011). Accordingly, the Court held that Mr. Byrd had no expectation of privacy and, therefore, he had no standing to challenge the search of the vehicle. The Supreme Court granted certiorari on the issue on September 28, 2017.

    For the Record
    Mr. Byrd argued that “wide spread non-compliance with authorized-driver provision is an open secret” which is why rental agreements “often specify that the renter will carry a greater risk of loss when an unlisted driver operates the vehicle.” Attorneys for the United States argued that “It is common knowledge that car rental is a personal transaction that does not make the car available for general enjoyment, and straw man car rentals disserves society by frustrating law enforcement efforts to prevent smuggling and other crimes.”  In a brief supporting the federal government, 15 states argued that criminals often use cars rented by others to transport drugs, victims of human trafficking and unauthorized immigrants. The American Civil Liberties Union and National Association of Criminal Defense Lawyers filed a brief arguing that a decision is very likely to have a significant effect on the poor and people of color, as, according to the statistics, these groups are more likely to rent a car, be stopped by police, and to be searched during the stop.  

    What Happens Next?
    The oral argument before the United States Supreme Court is scheduled for January 9, 2018.

    Thursday
    Dec212017

    DOJ Announces New Tools to Fight the Opioid Epidemic and Opioid-Related Crimes

    What Happened?

    Attorney General Jeff Sessions recently announced additional efforts in DOJ’s fight against the opioid crisis.  Most notably, DOJ created a director-level position and is requiring all U.S. Attorney’s Offices to designate a coordinator to handle opioid-related investigations and prosecutions.

    The Rundown

    Since taking the helm in February 2017, General Sessions and his Department focused on various initiatives related to the opioid crisis.   On Wednesday, December 20, the Attorney General announced a new senior-level position at DOJ titled Director of Opioid Enforcement and Prevention Efforts.  The Director will assist DOJ and its leadership with developing and implementing opioid-related initiatives, policies, and programs, and coordinating these efforts with law enforcement.

    At the end of November, the Attorney General announced three new tools to combat the opioid epidemic and opioid-related crimes.  First is over $12 million in grants to state and local law enforcement agencies to get illegal drugs like heroin methamphetamines, cocaine, and other illicit drugs off the streets.  Second, the DEA will open a new field office in Louisville, Kentucky – the first new DEA office in almost 20 years.  The new office will cover West Virginia, Kentucky and Tennessee and have approximately 90 special agents and 130 task force officers.  Third, each U.S. Attorney’s Office – all 94 of them – will designate an opioid coordinator to “serve as a kind of quarterback of our anti-opioid efforts in their community.”  In his memo to the U.S. Attorneys, the Attorney General stated that the opioid coordinator will facilitate the “intake of cases involving prescription opioids, heroin, and fentanyl” and convene “a task force of federal, state, local, and tribal law enforcement to identify opioid cases for federal prosecution, facilitate interdiction efforts, and tailor [the] district’s response to the needs of the community it serves.”

    In August, General Sessions announced the creation of the Opioid Fraud and Abuse Detection Unit chartered to target 12 federal districts hardest hit by the opioid epidemic.  The 12 districts on which the opioid unit is focused include the Western District of Pennsylvania, Southern District of West Virginia, and Southern District of Ohio.  The unit uses data analytics to identify and investigate physicians and medical providers who are overprescribing opioids as well as pharmacists failing to properly distribute them.  

    Prescriptions – like those for opioids – are governed by 21 C.F.R. § 1306.04(a), which requires that they be given only for “a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”  Doctors disregarding this regulation have led federal agents and prosecutors to increasingly focus on alleged overprescribing, particularly those who exhibit “red flags” like cash only medical practices, lack of physical exams, prescribing without using opioid monitoring databases, prescribing dangerous combinations of drugs, prescribing to known addicts, and directing patients to use pharmacies known for lax dispensing practices.

    For the Record

    “With one American dying of a drug overdose every nine minutes, we need all hands on deck,” Attorney General Sessions said. “That’s why President Trump has made ending the drug epidemic a top priority.  This Department of Justice embraces that goal, and we have taken a number of steps this year to do our part.  We have indicted hundreds of defendants for drug related healthcare fraud, sent more prosecutors to where they’re needed most, and we’ve taken on the gangs and cartels.  Today we take the next step: creating a senior level official position at the Department to focus entirely on this issue. This Department will continue to follow the President’s lead, and I am confident that we can and will turn the tide of the drug crisis.”

    Friday
    Dec152017

    "Potentially Career-Ending Allegations" by Defense Rock Greebel Trial

    What Happened?
    In the fraud trial of Martin Shkreli co-defendant and former Katten Muchin Rosenman LLP attorney, Evan Greebel, the Court sent the jury home for the day after the defense made “potentially career-ending allegations” concerning an unnamed government official.

    The Rundown
    Greebel is charged for his role in Shkreli’s scheme of using sham consulting and settlement agreements for cash and shares of Retrophin, Inc., to pay off investors in one of Shkreli’s MSMB hedge funds. Trial commenced on October 20, 2017, and the defense began to present its case on December 6, 2017.

    On December 13, 2017, Steven Rosenfeld, an investor in Retrophin and one of Shkreli’s MSMB hedge funds, took the stand for the defense. He testified that, while he entered into a consulting agreement that provided him with $200,000 and stock in Retrophin, he actually performed consulting services for the company.

    But his testimony went off the rails when defense counsel inquired about his meetings with the government.  First, defense counsel asked about a 2015 encounter with the FBI, where agents came to his home. Rosenfeld began to testify that he had asked the agents if he could call his attorney, but the prosecution objected, and a sidebar ensued. Defense counsel then turned to Rosenfeld’s next meeting with the government. A question regarding whom Rosenfeld met with led to a second objection from the prosecution and another lengthy sidebar. After the sidebar, Judge Kiyo Matsumoto dismissed the jurors for the day. She ordered sealed briefing from the parties on what she described as “potentially career-ending allegations” made by the defense. The parties will brief the matter, addressing among other issues, whether any statements made by government officials outside the courtroom constitute party admissions.

    The Take-Home
    The Court will rule on the admissibility of the Rosenfeld’s testimony regarding his second meeting with government officials.  Whether the allegations raised at sidebar have a more significant impact on the trial, or on any officials’ careers, remains to be seen. 

    What Happens Next?
    The trial, which has lasted for more than two months, will proceed on December 14, 2017.