The Champion
July 1997

Defending Against Food & Drug Prosecutions
By John W. Lundquist & Sandra L. Conroy

John W. Lundquist is a partner in the Minneapolis, MN firm of Thompson, Lundquist & Sicoli, Ltd. that specializes in white-collar criminal investigations, trials and appeals in state and federal courts. In practice since 1978, he has substantial experience in all areas of criminal law and procedure including the representation of dozens of physicians, attorneys, politicians and professionals in regulatory, fraud and sexual abuse cases as well as defense of business organizations in fraud and regulatory matters. His practice also encompasses parallel civil proceedings involving administrative, fraud, RICO, forfeiture and U.S. Tax Court litigation.

Sandra L. Conroy worked for the firm of Thompson, Lundquist & Sicoli, Ltd. as a law clerk while attending law school. She is now a law clerk for the Hennepin County District Court, MN.

The Food and Drug Administration (FDA) does not often refer cases for criminal prosecution, but when it does, it can be a formidable adversary. Among the weapons at its disposal are a statutory scheme imposing strict liability on offenders and a doctrine of corporate responsibility that allows the FDA to target virtually any high-ranking corporate official simply by virtue of the position he or she occupies, even though the defendant performed no acts in furtherance of the alleged criminal violation. This article will explore the authority of the FDA, the procedures used for referring cases for criminal prosecution and a discussion of typical cases prosecuted and available defenses.

Overview of FDA Powers
The FDA is one of the constituent agencies of the U.S. Department of Health & Human Services (HHS). Congress delegated the power to regulate certain food and drug aspects of interstate and foreign commerce to the Secretary of HHS.1 This authority, in turn, has been passed down to an Assistant Secretary and then to the FDA Commissioner, who is subject to Senate confirmation but serves at the pleasure of the HHS Secretary and, therefore, the President.

The Federal Food Drug and Cosmetic Act (FDCA)2 prescribes criminal penalties for the introduction into interstate commerce of adulterated or misbranded foods, drugs, cosmetics, or medical devices. Enacted in 1938, the potential consequences of an FDCA violation range from a warning to a fine to imprisonment. Moreover, the FDA can and will respond to violations through the use of civil sanctions such as seizure and injunctive remedies as well. The Eighth Circuit has held that the standards provided in Section 355(i) of the Food, Drug and Cosmetic Act are sufficiently defined to allow the FDA to enact regulations which carry criminal consequences.3

21 U.S.C. 331, "Prohibited Acts," provides in pertinent part:

The following acts and the causing thereof are prohibited:

(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded.

(b) The adulteration or misbranding of any food, drug, device, or cosmetic in interstate commerce.

(c) The receipt in interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.

(d) The introduction or delivery for introduction into interstate commerce of any article in violation of Section 344 or 355 of this title.

(e) The failure to establish or maintain any record or make any report, required under [relevant provisions of the FDCA].

The Prohibited Acts Section is broad enough to criminalize virtually any part of the FDCA as well as the multitude of FDA regulations appearing in Volume 21 of the Code of Federal Regulations. 21 U.S.C. 333 provides misdemeanor penalities for any violation of Section 331 (imprisonment for not more than one year or a fine of not more than $1000 or both). If any such violation, however, constitutes a second conviction or is found to have been committed "with the intent to defraud or mislead," the violation becomes a felony carrying a three-year maximum period of imprisonment and a fine of not more than $10,000 or both.4

Unique Features of FDA: Inspections and Searches
The policy and practice of the FDA is that of close contact and frequent communication with the industry. The FDA encourages meetings, noting that such should include "free, full and open communication about any scientific or medical question that may arise during the clinical investigation."5

Contacts with the FDA may arise in the form of both formal and informal letters or telephone communications. However, the more formal and perhaps the more consistent of FDA contacts is the inspection. In fact, the majority of FDCA violations which are criminally prosecuted were discovered consequent to an FDA inspection. The FDCA allows FDA personnel to enter and inspect premises related to the regulated activity; that is, premises where food, drugs, devices, or cosmetics are manufactured, processed, packaged, held or transported for introduction into interstate commerce.6 The inspector typically presents his or her credentials, provides written notice of inspection to the company and proceeds with the inspection. It is not necessary that the notice of inspection be based on any particular reason. The FDA is allowed to take samples and photograph the site and to inspect all records and files related to the facility.

The scope of a FDA inspection is quite broad, limited solely by a "reasonableness" standard. One should not, however, be fooled by the term "reasonableness." Although the Fourth Amendment applies to FDA inspections, the reasonableness standard requires only that the time of the inspection be reasonable. Moreover, Fourth Amendment probable cause is satisfied so long as the search is based on a general administrative plan for the enforcement of a regulation based on neutral criteria. Finally, because the food and drug business is a pervasively regulated industry, the FDA has the power to conduct inspections without obtaining a search warrant.7

In the event that the inspector is refused entry, the FDA may request that a criminal prosecution be brought against the responsible officials refusing admission under 21 U.S.C. 331(f). The FDA may also seek a judicial order directing the establishment to permit access.

Thus, because of the nature of the business and the relaxed standards for administrative warrants, rarely if ever will there be any viable Fourth Amendment issues presented, unless it is the defendant's car or home which is subject to the search, i.e., a venue other than where the regulated activity takes place.

FDCA Criminal Prosecution Procedures
Given the close nature of the relationship between the regulated and the FDA, under what circumstances will the FDA choose to pursue criminal prosecution? As a policy objective, the FDA encourages corrective action. Generally, if a violation is suspected the FDA will provide the alleged offender with the opportunity to correct the violative conduct before taking further action.8

The HHS Secretary has the discretion to immediately report a suspected violation to the Department of Justice (DOJ) or, alternatively, to give the alleged violator warning of the allegations.9 If the HHS Secretary chooses to proceed via the latter route, the violator is given notice that criminal prosecution is being considered and afforded a "Section 305" hearing. The Section 305 hearing is simply an opportunity for the suspected violator to respond to the allegations and attempt to dissuade the FDA from making the DOJ referral. Following a Section 305 hearing, a compliance officer generates a report and makes an initial recommendation regarding prosecution. This report then proceeds through several FDA channels and ultimately the final decision of whether to pursue prosecution is reached.

While the prevailing practice of the FDA is to afford a Section 305 hearing to an alleged violator, the Supreme Court has held that a hearing is not required as a precursor to prosecution.10 Instead, the decision of whether to use the criminal provisions of the FDCA lies entirely within the discretion of the HHS Secretary or his/her designee.

Despite the fact that the decision to pursue criminal prosecution is one of pure discretion, the presence of certain factors are predictive of prosecution. Prosecution is more likely if the offender was previously notified of suspected violations and thereafter refused to correct the offending conduct.11 In addition, if the violation was intentional, easily detectable, preventable, fraudulent, or life threatening, prosecution will be more likely.12 Violations which cause economic injury are viewed no differently than violations which cause injury to the public health.13

In 1993, the FDA established the Office of Criminal Investigations, which has primary responsibility for investigating potential criminal violations of the FDCA.

Upon determining that prosecution is the appropriate course of action, the FDA makes its recommendation to the DOJ. The DOJ is charged with the authority to prosecute those individuals and corporations suspected of violating the FDCA. Thereafter, the DOJ and a United States attorney review the recommendations of the FDA and, if warranted, institute criminal proceedings against the alleged violator. While the DOJ has the discretion to dismiss or prosecute alleged FDCA violations on its own initiative, "[i]n almost every instance resulting in an enforcement action in federal court, the FDA has conducted an investigation in the field and ultimately recommended prosecution."14 Thus, whenever possible, the DOJ will adhere to the recommendations of the FDA. Indeed, as a matter of course, attorneys from the DOJ "act, as closely as possible, in partnership with attorneys from the FDA."15 This policy is equally applicable in the context of plea bargaining.16

The FDA has a variety of administrative and civil enforcement options as well. It may impose a "clinical hold" on the drug or device, seek injunctive relief against violators, seize products and materials, debar or suspend organizations and individuals from operating in the regulated field, and impose civil monetary penalties.17

Since approximately 1991, the FDA has exhibited a stronger enforcement attitude.18 This development roughly coincides with the appointment of former FDA Commissioner David Kessler, who holds both law and medical degrees and who resigned his post in November 1996. For example, there were only 58 arrests and 10 convictions during the FDA's fiscal year 1993 (the first year in which the Office of Criminal Investigations was in operation) and 146 arrests and 106 convictions during fiscal year 1995 (the most recent period for which such statistical information is available).

Park Doctrine
In 1943, the Supreme Court held that the FDCA "dispenses with the conventional requirement for criminal conduct -- awareness of some wrongdoing."19 The Dotterweich Court explained that in the interest of the greater good, the burden of compliance with FDCA provisions should rest upon those who, although otherwise innocent, stand in responsible relation to a public danger. The accused, though lacking specific intent to harm, "usually is in a position to prevent it with no more care than society might reasonably expect."20

The Dotterweich decision was upheld and reappraised in United States v. Park,21 wherein the Supreme Court held that in providing sanctions which reach corporate agents, the FDCA imposes upon persons exercising authority or supervisory authority not only a positive duty to remedy FDCA violations as they occur, but also a duty to implement policies and practices designed to insure against future violations. The accused may defend against the imposition of criminal liability under Park by showing that he or she was "powerless to correct or prevent the violation."22 The charge in Park was interstate shipment of adulterated food, to which the corporate defendant pleaded guilty based upon evidence of rodent contamination found in one of the corporation's warehouses. In defending against the charges, the chief executive officer (CEO) asserted that he had assigned this area of responsibility to subordinates. This defense failed in light of a jury instruction that the CEO need not have participated directly in the situation but must only have had a "responsible relationship" to the violation. The Supreme Court affirmed the conviction and further held that the government need only establish a prima facie case showing that the defendant failed to act on authority which could have prevented or corrected the violation.

The Park doctrine is applicable only if the statute is devoid of language requiring proof of specific intent. This would include, arguably, all misdemeanor violations of the FDCA and felony violations which have that status only as a result of being subsequent convictions under 21 U.S.C. 333(b). The Park doctrine should not create criminal liability for intentional FDCA felonies. But, in United States v. Cattle King Packing Co., Inc.,23 the Tenth Circuit affirmed a felony conviction under the Federal Meat Inspection Act, which the court held was, like the FDCA, a public welfare offense. The Cattle King conviction was upheld on the basis of a completed misdemeanor under the responsible relation test plus an intent to defraud, which was not connected to the acts constituting the violation. This decision is of questionable vitality.

Illustrative Prosecutions
When does the FDA recommend prosecution? The following sampling of cases is broken down into those areas in which the FDA has been most active in prosecuting FDCA violations: adulteration, misbranding, medical devices and clinical investigations.

There are a number of defenses which can be effectively raised to combat allegations of FDCA violations. One such defense is criminal estoppel, often referred to as "entrapment by estoppel." Due to the close contact between the FDA and the industries which it regulates, criminal estoppel seems particularly befitting as a defense against violations arising under the FDCA. Simply put, criminal estoppel is based on the notion that when those responsible for enforcing the law are aware of the allegedly violative behavior, yet explicitly or implicitly condone or ignore it, justice would dictate that those same officials not be allowed to later punish that behavior. The defense of criminal estoppel "applies when an official tells the defendant that certain conduct is legal and the defendant believes the official."39

Additionally, the defendant must show that he relied on the misinformation and that the reliance was reasonable. The doctrine overlaps the issues of vagueness and fair warning. The Supreme Court has held that where regulations deprive a defendant of fair warning as to what conduct the government is criminalizing, traditional notions of fairness prevent the government from proceeding with the prosecution, particularly in as much as the regulations appear to authorize the very conduct which is later the subject of the criminal prosecution.40

In the context of food and drug law, where regulations arguably justify the defendant's conduct, the defendant is entitled to an instruction on criminal estoppel. In United States v. Hiland, such an instruction was granted but the jury rejected the defense and the convictions were subsequently affirmed by the Eighth Circuit.41

Substantive defenses, of course, may be asserted in prosecutions under the FDCA. Some of these defenses may center on such issues as whether the food was, indeed, adulterated, whether the drug was mislabeled, or whether false statements were actually made. These are fact issues similar to those in all criminal trials.

In felony-level charges, unless the offense is a second offense, the government must establish criminal intent. The felony intent requirement is that the individual act "with the intent to defraud or mislead."42 The defrauded party can be the buyer, the ultimate customer, identifiable government agency, or unknown third parties.43 This is a specific intent requirement. Not only must the violation be conscious or willful, but the intent to defraud or mislead must be linked to the prohibited act.44

This link was not established in Mitcheltree. The defendant was convicted under Section 333(a)(2) of a felony count for misbranding the drug MDMA. The conviction, based in part on misleading a government agency, was reversed due to insufficient evidence of specific intent to mislead or defraud a government agency. The government argued on appeal that defendants mislabeled the drug in an effort to mislead the local police, who were investigating the distribution of MDMA. However, the fact that the misbranding was contemporaneous with the police investigation was held insufficient to satisfy the specific intent requirement.

Impossibility was recognized as a defense to FDCA violations in United States v. Park,45 wherein the United States Supreme Court noted that "[t]he Act in its criminal aspect, does not require that which is objectively impossible."46 To establish a defense of impossibility, the defendant must:

Introduce evidence that he exercised extraordinary care, but was nevertheless unable to prevent violations of the act. The defense is raised when defendant introduces sufficient evidence of the exercise of extraordinary care to justify placing an additional burden on the government -- that of proving beyond a reasonable doubt that had defendant indeed exercised such extraordinary care, he could have prevented or corrected these violations.47

The defendant is entitled to a jury instruction on the objective impossibility defense only if the claim is supported by sufficient evidence placed on the record by the defendant. The judge determines whether the defendant has met the threshold test; the jury then determines whether the defendant has shown impossibility in fact. While lower courts have limited the availability of the defense solely to individual defendants as opposed to corporations, the Supreme Court has not yet spoken to this issue.

The nature of FDA regulatory powers dictates a close working relationship between the regulator and the regulated. Although this relationship can serve to foster productive and safe research practices, it can cause unique and complex issues in FDCA prosecutions. Fighting these prosecutions can provide the criminal lawyer with many opportunities for innovative defense work.

1. 21 U.S.C. 321(d).

2. 21 U.S.C. 301 et. seq.

3. United States v. Garfinkel, 29 F.3d 451 (8th Cir. 1994) (Section 355(i) not in violation of nondelegation doctrine).

4. 18 U.S.C. 3571 overrides the maximum FDCA fines and establishes limits of $100,000 for most misdemeanors and $250,000 for most felonies in the case of individual defendants.

5. 21 C.F.R. 312.47

6. 21 U.S.C. 374(a)(1)

7. Carol Benjamin & Betsy J. Floman, Federal Food and Drug Act Violations, 31 Am. Crim. L. Rev. 629, 635 (1994); see, also, Argent Chemical Laboratories, Inc. v. U.S., 93. F.3d 572 (9th Cir. 1996) cert. denied. ___U.S.___(1997) (in rem arrest warrant issued by clerk of court constitutionally adequate).

8. Benjamin & Floman, supra note 7, at 641.

9. Jonathan S. Kahan, Criminal Liability Under the Federal Food, Drug, and Cosmetic Act -- the Large Corporation Perspective, Food Drug Cosmetic L. J. 314, 316 (1981).

10. United States v. Dotterweich, 320 U.S. 277 (1943).

11. Kahan, supra note 9, at 321.

12. Id.

13. Id.

14. Charles R. McConachie, The Role of the Department of Justice in Enforcing the Federal Food, Drug and Cosmetic Act, 33 Food Drug Cosmetic L.J. 333, 334 (1976).

15. McConachie, supra note 14, at 335.

16. Id.

17. 21 C.F.R. 312.42 (Clinical Hold); 21 U.S.C. 332(a) (Injunctions); 21 U.S.C. 334 (Seizure); 21 U.S.C. 335(a) (Debarment and Suspension); 21 U.S.C. 333(f), 335(b) and 21 C.F.R. Part 17 (Civil Monetary Penalties).

18. Benjamin & Floman, supra note 7, at 641 (In 1991, the FDA "embarked on a highly publicized policy of enhanced enforcement of the FDCA in an effort to restore the credibility and integrity of the FDA.")(internal quotations omitted).

19. Dotterweich, 320 U.S. at 281.

20. Morissette v. United States, 342 U.S. 246, 256 (1952).

21. 421 U.S. 658 (1975).

22. Id. at 673.

23. United States v. Cattle King Packing, 793 F.2d 232 (10th Cir. 1986).

24. 21 U.S.C. 331(b).

25. 421 U.S. 658 (1975).

26. Id. at 672.

27. Id.

28. United States v. Roggy, 76 F.3d 189 (8th Cir.), cert. denied, ___ U.S. ___ (1996).

29. 320 U.S. 277 (1943).

30. Id. at 281 (internal citations omitted).

31. United States v. Beech-Nut Nutrition Corp., 87l F.2d 1181 (2nd Cir. 1989).

32. 909 F.2d 1114 (8th Cir. 1990).

33. Id. at 1124.

34. See 21 C.F.R. 312.64, 312.68.

35. 29 F.2d 451 (8th Cir. 1994).

36. Garfinkel was convicted on other charges brought under 18 U.S.C. 1001 (false statement to government agency) as a result of his certifying that he personally saw certain patients when they were allegedly seen only by an assistant. United States v. Garfinkel, 29 F.3d 1253 (8th Cir. 1994).

37. United States v. Najarian, 915 F.Supp. 1460 (D. Minn. 1996) (ruling on pretrial motions). For a discussion of the trial see J. Lundquist, United States v. Najarian: A Postmortem On Regulatory Misdirection, 131 Archives of Surgery 911 (1996).

38. United States v. C. R. Bard, Inc., 848 F.Supp. 287 (D. Mass. 1994).

39. United States v. Brebner, 951 F.2d 1017 (9th Cir. 1991); United States v. Austin, 915 F.2d 363 (8th Cir. 1990), cert. denied, 499 U.S. 977 (1991).

40. United States v. Pennsylvania Industrial Chemical Corp., 411 U.S. 655 (1973).

41. United States v. Hiland, 909 F.2d 1114 (8th Cir. 1990).

42. 21 U.S.C. 333(a)(2).

43. United States v. Mitcheltree, 940 F.2d 1329, 1346 (10th Cir. 1991).

44. Id. at 1349-51.

45. 421 U.S. 658 (1975).

46. Id. at 673.

47. United States v. Gel Spice Co., 601 F.Supp. 1205, 1213 (E.D.N.Y. 1984).

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