Lessons from Barry Cadden Verdict?

1 Apr 2017
Mark Josephs
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The jury returned a verdict several days ago in the trial of Barry Cadden, the former head pharmacist and president of New England Compounding Center (NECC) in Framingham, Massachusetts.  In 2012, contaminated steroids released from NECC caused 64 deaths and several hundred injuries, some severe and ongoing.  The disease caused by the steroids, fungal meningitis, was so rare that the Centers of Disease Control required new testing procedures because the agency never previously had reason to test for such a rare disease.

In December 2014, the Department of Justice charged 14 defendants with a wide range of crimes relating to NECC.  The indictment included Racketeering charges against six defendants, and these charges included among the predicate acts 24 counts of second degree murder.  The murder charges applied only to Barry Cadden and Glenn Chin, a supervisory pharmacist at NECC.  As far as this former health care fraud prosecutor is aware, this was the first time that Racketeering and murder charges resulted from a company’s release of contaminated drug products.

At the conclusion of a nine-week trial, the jury returned guilty verdicts against Cadden on the primary Racketeering charge, most of the mail fraud predicate acts that were part of the Racketeering charge, individual mail fraud counts, and certain of the misbranding charges under the Food, Drug and Cosmetic Act (FDCA).  The jury returned not guilty verdicts on all of the murder charges, a charge of conspiracy to defraud the federal government, and adulteration charges and certain of the misbranding charges under the FDCA.  Sentencing is scheduled for June 21.

After the indictment was returned, the local defense bar was critical of the prosecution, contending, among other things, that the case was overcharged.  I agreed.  The murder charges were virtually unprecedented in a case like this one, and Racketeering charges had rarely, if ever, been brought in a health care case similar to this one.  Of course, unusual facts lead to unusual prosecutorial decisions, and the circumstances of the NECC matter were terribly tragic.  A tainted drug product causing one death is very rare – one type of product causing 64 deaths thankfully is unprecedented in recent years.

Without the Racketeering and murder charges, the government could have focused more than they did on the FDCA charges, which are the ones most directly applicable to this situation.  Convictions on those charges and mail fraud would have led to just as significant a sentence as Cadden is likely to receive in June.

Even in the tragically unusual circumstances of this case, in which contamination could be seen by the naked eye in test tubes containing the steroid product, proving the extreme wanton disregard for human life to sustain 2nd degree murder charges against the putative head of the company was always going to be extremely difficult.  On the Racketeering charges, however, the jury having to convict on only two of the tens of predicate acts that were charged made a conviction perhaps inevitable, and the Racketeering statute provides broad forfeiture authority.

The First Circuit is sure to address this case, as I understand the defense believes there are strong appellate issues on, at the very least, the mail fraud convictions.  Glenn Chin is scheduled to be tried next, and Judge Stearns has already begun determining ways to shorten that trial based on the Cadden trial.  I suspect that a jury is likely to return similar verdicts as to Chin.

It will be interesting to see whether any health care fraud prosecutors will attempt to at least partially copy the charging pattern here in future cases.  More likely, this is a case of unusually tragic circumstances leading to broad and aggressive charges unprecedented in health care fraud.

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