By John R. Fleder –
We have extensively written about the “Park Doctrine” (see, e.g., here and here) In United States v. Park, 421 U.S. 658 (1975), the Supreme Court authorized the government to criminally prosecute individuals for violations of the FDCA even if a corporate official is unaware of the violation, if the individual was in a position of authority to prevent or correct the violation and did not do so.
The Park Doctrine is also referred to as the Responsible Corporate Officer Doctrine. It has resulted in hundreds of criminal misdemeanor prosecutions of corporate officers, without allegations by the government that the defendant intended to violate the FDCA or even knew about the alleged violations. However, these prosecutions largely disappeared many years ago when the Justice Department focused its resources on prosecuting individuals under the felony provision of the FDCA, which requires that the government prove that the defendant violated the FDCA with the intent to defraud or mislead. Beginning in early 2010, FDA and DOJ made public statements indicating that the government intended to resurrect the Park Doctrine.
There have been some criminal prosecutions in recent years in which the government charged individuals with misdemeanor violations of the FDCA. It seemed clear from the public record in those cases that the government believed that the companies which employed the individuals had engaged in felony conduct. In contrast, we saw very few, if any, misdemeanor cases where the public record did not reflect that the government believed that at least one person at a company had engaged in felonious conduct. However, a 2012 prosecution that has largely flown under the public radar screen suggests that the government may have indeed prosecuted someone even though there was no evidence that anyone involved in the case had committed a felony.
On February 10, 2012, the United States Attorney for the Northern District of Texas filed a two count criminal Information against Gary D. Osborn and his company, Apothécure, Inc. United States v. Osborn, No. 3:12-cr-00047. Apothécure was a compounding pharmacy and Mr. Osborn was its owner, president, pharmacist-in-charge, and sole director. The Information alleged that Mr. Osborn was the person responsible for the business activities of Apothécure, including the oversight of employee training and the quality control of the drugs that were compounded.
The Information alleged that Apothécure sold vials of injectable colchicine to a medical center in Portland, Oregon, which provided the product to three patients who died in March 2007, after being administered the drug. The government alleged that drugs from the shipment to Portland were in some instances super-potent and in other instances were sub-potent.
The Information alleged that Mr. Osborn by reason of his position at the company, had the responsibility to prevent the FDCA violations. It also alleged that Mr. Osborn instructed employees as to how to perform their duties, including ensuring that pharmacists and pharmacy technicians were properly trained and supervised. However, the Information contained no allegation that Mr. Osborn played any direct role in the shipments that the government alleged were illegal. Nor did the Information contain any suggestion that FDA had ever provided a prior warning to either Apothécure or Mr. Osborn that they were violating the FDCA.
On April 24, 2012, the government filed a Factual Resume and a Plea Agreement. The government alleged that Mr. Osborn was a responsible corporate officer of Apothécure. It also alleged that he had the responsibility and authority to prevent the FDCA violations. Yet again, the government did not allege that Mr. Osborn was directly involved in the FDCA violations or the death of the patients, or that he even knew about the violations before they occurred. The parties agreed that the proper offense level under the U.S. Sentencing Guidelines was 4. An offense level of 4 normally results in probation for a defendant with no prior convictions but the sentencing judge is authorized to impose a term of incarceration. On October 3, 2012, the Court imposed a $100,000 fine on Mr. Osborn and placed him on probation. He was not sentenced to serve any jail time.
The public record does not reflect all the pleadings and papers that the parties submitted to the court. For example, the record does not include the presentence report applicable to Mr. Osborn. Nor does it include the government’s actual sentencing recommendation. These documents presumably would provide a more complete factual picture than one can glean from the public record.
It is impossible to determine from the public record if the government investigated Mr. Osborn for possible felony violations of the FDCA. There is no indication that the government had any evidence that Mr. Osborn engaged in felonious conduct. Nor is there any indication that Apothécure or anyone affiliated with the company engaged in felonious conduct or had ever received any prior warning from FDA before the shipment that allegedly caused the death of patients.
This public record suggests that Mr. Osborn was prosecuted under the Park Doctrine in the manner that the government brought criminal cases twenty to thirty years ago, but not often after that time. The government believed that Mr. Osborn was “responsible” for patient deaths, although there is no indication that he personally had any involvement in those deaths. Although most old school Park cases involved situations where FDA had previously warned individuals about violative conditions, there were a number of old cases where individuals were prosecuted where FDA believed that the defendant had caused deaths or serious injury even without a prior FDA warning.
The Osborn case certainly demonstrates the discretion that is afforded to the government in deciding the people to be prosecuted under the Park Doctrine. For that reason, company executives in industries regulated by FDA are presented every day with decisions and actions that could result in the government choosing to criminally prosecute a person based on wholly undefined standards. One can only hope that the government will exercise that discretion wisely and carefully to avoid situations where some individuals are prosecuted for doing the very same things as others who are not prosecuted.