Former Acclarent Execs Almost Beat the Rap

A federal jury in the U.S. has acquitted the executives of the most serious charges brought against them over off-label use, but still found them guilty of misdemeanor charges that carry a potential prison sentence. 

Chris Newmarker

Former Acclarent CEO William Facteau and former sales vice president Patrick Fabian each face up to a year in prison and hefty fines after a federal jury in Massachusetts found them each guilty of misdemeanor charges of introducing adulterated or misbranded medical devices into interstate commerce.

The jury, however, did find Facteau and Fabian not guilty of the more serious 14 felony fraud counts against them, according to the U.S. Attorney's Office in Massachusetts. 

With potential prison time a possibility for the two men, the jury verdict is a mixed bag for medical device industry executives, who have been increasingly facing not only fines but actual prison time over the thorny legal issue of so-called off-label promotion of medical devices. A U.S. Justice Department memo from 2015, in fact, called for prosecution of individuals in corporate misconduct cases.

Johnson & Johnson bought Acclarent for $785 million in 2010. Federal prosecutors had claimed that Facteau and Fabian were engaged in a host of fraudulent activities in anticipation of an eventual payday at the sinus balloon catheter company. 

The jury, according to federal prosecutors concluded that Facteau and Fabian were responsible for distributing the Relieva Stratus Microflow Spacer sinus balloon catheters for off-label use. The company had described the Stratus to FDA as a medical device intended to keep a patient's sinus open, but Facteau and Fabian actually intended the Stratus as a steroid delivery device when they launched it.

FDA had specifically refused Acclarent's request to clear the Stratus as a drug delivery device without further evidence, according to prosecutors. 

Defense lawyers for the two men, however, pointed out that the jury found that the Stratus's labeling was not false or misleading, and that it did not lack adequate directions for use. Evidence during the trial made clear that there were no injuries associated with the Stratus, which surgeons used widely on people suffering from chronic sinus problems, according to the lawyers. 

"I am grateful that the jury exonerated Mr. Facteau of all charges requiring criminal intent and affirmatively concluded that the case did not involve false or misleading statements," Facteau's lead lawyer Reid Weingarten, of Steptoe & Johnson LLP, said in a news release. 

Fabian's lead layer, Frank Libby of Libby Hoopes, noted that the jury "flatly rejected the government's core fraud and conspiracy theories." 

Facteau and Fabian's lawyers are filing motions to set aside the misdemeanor charges on multiple grounds. They're making First Amendment arguments that defense lawyers are increasingly turning to in such cases, saying that jury instructions allowed the two men to be convicted based on truthful, non-misleading statements by sales personnel.

"It is difficult to understand how someone in America could be convicted of even misdemeanor crimes without a finding of intentional wrongdoing.  We will fight vigorously to overturn these few remaining charges and will not rest until Mr. Facteau is completely vindicated," Weingarten said. 

Said Libby: "We're completely confident that, during the proceedings to come, the remaining 'no wrongful intent' misdemeanor counts of conviction will meet the same fate." 

Facteau is now president and CEO of EarLens Corp. in Menlo Park, CA.

The jury verdict in Massachusetts comes about five months after a federal jury in San Antonio, TX, acquitted Vascular Solutions CEO Howard Root in another case involving alleged off-label promotion of a medical device. 

"I wish these prosecutors would care more about government misconduct than they do about this ridiculous corporate witch hunt," Root said when asked what he thought about the jury verdict in Facteau and Fabian's case.  

"Even a misdemeanor conviction in this legally-twisted off-label promotion area is unjustified and should be reversed on appeal," Root said. "Everyone in our industry needs to take notice because you may be next and a misdemeanor conviction is not a hand-slap."

Federal prosecutors have been having trouble winning convictions in off-label cases, notes Stillwater, MN-based medical device industry lawyer Mark Gardner, who predicts that the Justice Department will focus more on kickbacks and false claims cases. "The government has to be reeling. ... Justice needs to stop prosecuting innocent executives based upon ginned up cases. Continuing to do so is disgraceful and a waste of taxpayer dollars."

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker

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