Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.
July 20 — A federal jury in Boston acquitted two former executives of Johnson & Johnson's Acclarent Inc. unit of all felony counts related to distributing adulterated medical devices ( United States v. Facteau,, D. Mass., No. 1:15-cr-10076, verdict 7/20/16 ).
However, the jury did convict the two on several misdemeanor charges in a July 20 verdict.
William Facteau, former CEO of Acclarent, and Patrick Fabian, former vice president of sales, had faced 14 felony counts of fraud for the unlawful distribution of the Relieva Stratus Microflow Spacer, a device designed to keep a patient's sinus open.
The jury instead convicted Facteau and Fabian of 10 misdemeanor counts for the same conduct. They face no more than a year in prison for violating the Federal Food, Drug and Cosmetic Act, one year of supervised release and a fine of $100,000 or twice the gross amount that they gained.
Acclarent had sought approval from the Food and Drug Administration for the product to be used to deliver steroids, but the FDA denied the request.
The crime began when Facteau and Fabian went ahead anyway and orchestrated the marketing of the Stratus as a device for delivering steroids, the U.S. Attorney's Office for the District of Massachusetts said.
The pair engaged in the crime as a scheme to drive up the price of Acclarent stock, the U.S. Attorney's Office said.
“The evidence at trial demonstrated that Facteau and Fabian sought to quickly develop and market products, including the Stratus as a drug delivery device, to create a projected revenue stream that would make Acclarent an attractive business for either an initial public offering or acquisition,” the U.S. Attorney's Office said.
Facteau and Fabian will ask the court to set aside the convictions on the misdemeanor counts, Frank Libby, principal with LibbyHoopes PC, who represents Patrick Fabian, told Bloomberg BNA in an interview July 20.
“The government was casting it as a felony, with fraud, lying and cheating and deceiving the FDA and others and the jury simply wasn't buying it and rejected it across the board,” Libby said.
The misdemeanor counts are a “concern of everyone in the medical device industry,” Libby said, because they don't require a showing of criminal intent for conviction.
“The government can get a misdemeanor count against anyone without showing that the defendant had any criminal intent whatsoever,” Libby said.
A federal grand jury indicted Facteau and Fabian on April 10, 2015, on the medical device fraud charges and also conspiracy, wire fraud and securities fraud charges.
The charges related to securities fraud have been dismissed, Libby said.
To contact the reporter on this story: Adrianne Appel in Boston at mailto:email@example.com
To contact the editor responsible for this story: Brian Broderick at firstname.lastname@example.org
Information on the case is at http://src.bna.com/gYr.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)