Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
(OI File No. 3-13-40247-9),
The Inspector General
Docket No. C-21-574
Decision No. CR5928
This case involves a company’s effort to have one of its drugs covered by the Medicaid program. To achieve this goal, a company executive deliberately submitted false information to MassHealth, the Massachusetts Medicaid agency. Under the Food, Drug, and Cosmetics Act, Petitioner, as the company’s chief executive officer, was held criminally accountable for the offense. Following his conviction, the Inspector General (IG) excluded him, for ten years, from participating in all federal healthcare programs, pursuant to section 1128(a)(1) of the Social Security Act (Act).
Petitioner appeals the exclusion.
For the reasons discussed below, I find that the IG properly excluded Petitioner and that the ten-year exclusion falls within a reasonable range.
Petitioner, Shaun Thaxter, was the chief executive officer of Indivior PLC (previously, Reckitt Benckiser), a pharmaceutical company that manufactured, marketed, promoted, and sold drugs containing buprenorphine, an opioid medication used to treat opioid
addiction. In order to persuade MassHealth to add one of the company’s drugs, Suboxone Film, to the program’s drug formulary – and thus be eligible for Medicaid coverage – a company executive manipulated data to make it appear that, of the competing drugs, Suboxone presented the lowest risk of accidentally poisoning children. As the company official well knew, the data she submitted was false. See underlying facts, discussed below.
And the deception worked. MassHealth announced that it would cover Suboxone Film for households with children under six years of age. IG Ex. 2 at 9 (Information ¶ 30); IG Ex. 5 at 38, 55. Eventually, however, the government investigated. In December 2015, about two years after that investigation commenced, Indivior finally sent a correction letter to MassHealth. IG Ex. 2 at 9 (Information ¶ 31).
In Federal District Court for the Western District of Virginia, Petitioner Thaxter was charged with one count of introducing misbranded drugs into interstate commerce, in violation of the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. §§ 331(a), 333(a)(1), and 352(a). IG Ex. 2. He pleaded guilty. IG Ex. 3. On October 23, 2020, the court accepted his plea, sentenced him to six months in jail, and ordered him to forfeit $500,000 and pay an additional $100,000 fine. IG Ex. 4.
In a letter dated December 31, 2020, the IG notified Petitioner that he was excluded from participating in Medicare, Medicaid, and all federal health care programs for a period of ten years because he had been convicted of a “criminal offense related to the delivery of an item or service under Medicare or a state healthcare program.” The letter explained that section 1128(a)(1) of the Act authorizes the exclusion. IG Ex. 1.
Petitioner timely requested review.
Discovery. Petitioner sought discovery, asking that the IG produce a wide range of documents relating primarily to the IG’s decision-making processes in excluding Petitioner and others convicted of similar offenses, and requiring the IG to name all of her employees and others involved in the IG’s decision-making processes. The IG opposed. In a ruling, dated June 10, 2021, I denied Petitioner’s motion to compel and granted the IG’s motion for a protective order.
Petitioner has subsequently moved for a subpoena directing the IG to provide a witness for testimony at a live hearing. Petitioner asserts that the IG “has made unsupported factual assertions” regarding program losses, as well as the aggravating and mitigating circumstances that justify the period of exclusion. P. Motion for Subpoena at 1. I am frankly puzzled by Petitioner’s strategy. If, in fact, the IG’s assertions are unsupported, they must fail. Why give her an additional opportunity to support them?
Whatever the strategic merits of his request, Petitioner is not entitled to a subpoena. I may issue a subpoena only if a party shows that the appearance and testimony of an individual are “reasonably necessary for the presentation of a party’s case.” 42 C.F.R. § 1005.9(a). Petitioner has not made that showing because the testimony he seeks is irrelevant. He asks for the subpoena in order to challenge the IG’s deliberative process. He wants to question an IG official about 1) “the basis for its representation that it did not apply any specific weights to the aggravating and mitigating factors when determining the length of Mr. Thaxter’s exclusion”; and 2) the basis for the IG’s conclusion that Petitioner’s criminal conduct led to $500,000 in program losses. P. Motion at 4-5.
As I explained when I denied Petitioner’s motion to compel discovery, the IG’s decision-making processes are not relevant. I will determine whether the IG justifiably excluded Petitioner for a reasonable period based on the evidence presented in the record before me, without regard to how the IG reached her conclusions. Discovery Ruling at 3; see Bailey v. Azar, No. 6:20-cv-00166, at 16-17 (E.D. Ky Aug. 6, 2021); Fady Fayad, M.D., DAB No. 2266 (2009), aff’d, Fayed v. Sebelius, 803 F. Supp. 2d 699 (E.D. Mich. 2011).
I therefore deny Petitioner’s request for a subpoena.
Exhibits. The IG has submitted a written brief (IG Br.) with six exhibits (IG Exs. 1-6). Petitioner responded with his own brief (P. Br.) and 16 exhibits (P. Exs. 1-16). The IG filed a reply (IG Reply).
The IG objects to seven of Petitioner’s proposed exhibits:
- P. Ex. 9 is a December 2012 “Dear Prescriber” letter from MassHealth, explaining why it approved Suboxone Film for individuals living in households with children under six. The letter cites data on “unintentional child exposure rates” (i.e., accidental poisonings), data that differs and is (in Petitioner’s words) “admittedly [more] accurate” than the doctored numbers provided by the Indivior executive. P. Br. at 5 n.1.1
The IG objects to P. Ex. 9 “to the extent Petitioner offers it to collaterally attack the facts of his conviction.” The IG points out that the regulations forbid such collateral attacks and argues that the letter is therefore irrelevant. IG Reply at 10. I agree that Petitioner cannot collaterally attack his conviction. 42 C.F.R. § 1001.2007(d) (“When the exclusion is based on the existence of a criminal conviction . . . by a Federal, State, or local court . . . where the facts were
- adjudicated and a final decision was made, the basis for the underlying conviction . . . is not reviewable and the individual or entity may not collaterally attack it, either on substantive or procedural grounds, in this appeal.”); Marvin L. Gibbs, Jr., M.D., DAB No. 2279 at 8-10 (2009); Roy Cosby Stark, DAB No. 1746 (2000). Evidence submitted solely for that purpose would be irrelevant and therefore inadmissible. 42 C.F.R. § 1001.17(c).
However, I find that the document is somewhat relevant because it shows that the question of “unintentional child exposure rates” was critical to the Medicaid agency’s decision-making and underscores the significance of the false data the company submitted in its efforts to deceive the agency. See IG Ex. 5 at 38. I note also that the criminal information alludes to a December 2012 press release that included a similar announcement. IG Ex. 2 at 9 (Information ¶ 30).
- P. Ex. 11 is the written declaration of Jody Green, Ph.D., with attachments. She discusses the merits of Suboxone Film packaging, an issue that is totally irrelevant to this case. P. Ex. 11 at 2-5 (Green Decl. ¶¶ 10-22). In somewhat confusing and technical testimony, she also attacks the underlying premise of the criminal case against Indivior, suggesting that the “false data” the Indivior executive provided to MassHealth was not so false. P. Ex. 11 at 5-7 (Green Decl. ¶¶ 24-32).
The IG objects to my admitting this declaration and its attachments because they collaterally attack Petitioner’s conviction and are therefore irrelevant. I agree that the purpose of admitting these documents is to raise questions about Petitioner’s and Indivior’s criminal convictions. Because Petitioner cannot collaterally attack his conviction, the documents are irrelevant and inadmissible. 42 C.F.R. §§ 1001.2007(d), 1001.17(c).
- I also agree with the IG that P. Exs. 12 and 13 – articles addressing the safety of medication packaging – are irrelevant and therefore inadmissible. 42 C.F.R. § 1001.17(c).
- P. Ex. 14 is a written declaration from Genie Bailey, M.D., director of medication for a drug treatment agency. She extolls the benefits of buprenorphine, including Suboxone, and its packaging. She also discusses the illegal diversion of opioids, an issue that has nothing to do with this case. This case does not involve the company’s efforts to divert and encourage the abuse of opioids; it has to do with the company’s efforts to deceive the Medicaid program into paying for its drugs. Dr. Bailey’s testimony is therefore irrelevant and inadmissible. 42 C.F.R. § 1001.17(c).
- I also decline to admit P. Exs. 15 and 16. These are the written declarations of James Anderson, M.D., and Leslie Carson, a former investigator for the Drug
- Enforcement Administration. Like Dr. Bailey’s, their declarations address an issue that has nothing to do with this case. They talk about using buprenorphine drugs in treating opioid addiction, as if anyone has found fault with that. But no one has suggested here that buprenorphine drugs are not appropriately used to treat opioid addiction. Rather, this case involves a company’s submitting false information to a state Medicaid agency in order to gain an advantage over competing buprenorphine drugs. The declarations are therefore irrelevant and will not be admitted. 42 C.F.R. § 1001.17(c).
I recognize that, during sentencing, prosecutors presented evidence of the company’s (and Petitioner’s) far-more-sinister activities regarding the marketing and sales of its buprenorphine products. See 18 U.S.C. § 3553(a) (directing the court to consider “the nature and circumstances of the offense and the history and characteristics of the defendant.”). The prosecutors argued that the court should consider that evidence in deciding whether to impose jail-time. IG Ex. 5 at 63-78, 86. Although the prosecutor’s arguments are included in this record, arguments are not evidence, and the evidence he alluded to is not part of this record. Moreover, the court gave no indication that it considered those arguments when it imposed its sentence. The testimony Petitioner submits to counter those (non) accusations are therefore irrelevant.2
In the absence of any objections, I admit into evidence IG Exs. 1-6.
I also admit P. Exs. 1-10. I decline to admit P. Exs. 11-16.
Decision on the written record. I instructed the parties to indicate, in their briefs, whether an in-person (video) hearing would be necessary and, if so, to explain why, identify any proposed witness, and submit, “in the form of an affidavit or sworn declaration,” the witness’s complete written direct testimony. Order and Schedule for Filing Briefs and Documentary Evidence at 3 (¶ 7) (Mar. 30, 2021); see (blank copy) Informal Brief of Petitioner at 4 (DAB E-file Dkt. C-21-574, Doc. No. 6a). The IG indicates that an in-person hearing is not necessary and has listed no witnesses. IG Br. at 17.
Petitioner, however, requests a live hearing so that he may “present expert testimony that contextualizes his strict liability misdemeanor and further establish that the conduct underlying his conviction did not pose risk to patients or harm to government programs, and thus lacked the nexus required for mandatory exclusion.” P. Br. at 36. But the facts
underlying Petitioner’s conviction are set forth in the record of his conviction and cannot be challenged. 42 C.F.R. § 1001.2007(d); Marvin L. Gibb, Jr., M.D., DAB No. 2279 at 8-10 (2009). Indeed, in pleading guilty, Petitioner explicitly agreed that “all of the facts set forth in the information (IG Ex. 2) are true and correct.” IG Ex. 3 at 2 (¶ 1). As discussed in more detail below, his company submitted false data to a state agency so that Medicaid would cover its potentially most profitable drug. As the company’s chief executive officer, Petitioner should not have allowed that to happen, and yet he did. The witnesses Petitioner proffers cannot change any of these underlying and dispositive facts. Their testimony is simply irrelevant, and their declarations have not been admitted.
As a result, there are no witnesses to be examined or cross-examined, and an in-person hearing would serve no purpose. This case may therefore be decided based on the written record. Bailey v. Azar, No. 6:20-cv-00166, at 17-18 (E.D. Ky Aug. 6, 2021).
- Petitioner must be excluded from program participation for a minimum of five years because he was convicted of a criminal offense related to the delivery of an item under a state health care program. Act § 1128(a)(1).3
Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must exclude an individual or entity that has been convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. See also 42 C.F.R. § 1001.101(a).
The plea agreement. As a threshold matter, during the criminal proceeding, Petitioner conceded that he is subject to a mandatory exclusion under section 1128(a)(1). In his plea agreement, he agreed and acknowledged that, pursuant to section 1128(a)(1), he could be excluded from participation in Medicare, Medicaid, and all other Federal health care programs.4 He also acknowledged that violating the conditions of his exclusion could subject him to criminal prosecution, civil money penalties and assessments, and an additional period of exclusion. IG Ex. 3 at 6 (¶ D6); P. Ex. 5 at 7.
Petitioner also told the court that he accepted responsibility for his conduct and stipulated that, if he failed to comply with any provision of his plea agreement (which presumably includes agreeing that he is subject to exclusion under section 1128(a)), he should not receive credit for accepting responsibility for his crime. IG Ex. 3 at 3 (¶ B2); P. Ex. 5
at 3; see IG Ex. 3 at 8 (¶ D10); P. Ex. 5 at 9 (agreeing that he would not “fail to comply” with any provision of the plea agreement).
The parties have not explained why Petitioner should not be bound by his plea agreement.
The underlying facts. In any event, without regard to the plea agreement, Petitioner’s conviction subjects him to an exclusion under section 1128(a)(1). In an effort to persuade Massachusetts Medicaid officials to cover the cost of Suboxone Film, Petitioner’s company made false statements to the Massachusetts Medicaid program. It was Petitioner’s job to prevent this from happening. He did not do so. His crime is thus directly related to the delivery of an item (a drug) under a state health care program (MassHealth).
The facts underlying Petitioner’s conviction are set forth in the criminal information, to which Petitioner pleaded guilty. Notwithstanding his current assertions, in pleading guilty, he agreed that all of those facts are true and correct. IG Ex. 3 at 2 (¶ 1).
Petitioner was the chief executive officer of Indivior, PLC, a pharmaceutical business. IG Ex. 2 at 1, 2 (Information ¶¶ 3, 5). His company manufactured drugs containing buprenorphine, an opioid product used to treat opioid addiction. IG Ex. 2 at 2, 3 (Information ¶¶ 5, 9).
Indivior developed a new form of buprenorphine – Suboxone Film – and, in August 2010, the Food and Drug Administration granted the company the exclusive right to manufacture and market that drug. IG Ex. 2 at 4 (Information ¶ 15). Thereafter, the company effectively disregarded its other products (whose periods of exclusivity had expired) and actively promoted Suboxone Film. Indeed, Petitioner (and other Indivior executives) rewarded only (through bonuses and sales incentives) sales of Suboxone Film. IG Ex. 2 at 5 (Information ¶ 19).
Like many drugs, Indivior’s products posed the risk that children would ingest them by accident, referred to as “unintended pediatric exposure.” IG Ex. 2 at 4-5 (Information ¶ 17). Indivior executives, including Petitioner Thaxter, received data from poison control centers on the unintended pediatric exposure for all buprenorphine drugs. Beginning in 2012, Indivior contracted with a company, Researched Abuse, Diversion, and Addiction-Related Surveillance System (RADARS), to analyze the data for unintended-pediatric-exposure rates and trends. IG Ex. 2 at 5 (Information ¶ 18). In marketing Suboxone Film, Indivior used the RADARS analyses. IG Ex. 2 at 5 (Information ¶ 19).
MassHealth “was the largest Medicaid program in the country by volume of addiction-treatment-drug business.” Because Suboxone Film was not listed as one of its preferred
drugs, the Medicaid program restricted Medicaid reimbursement for it. IG Ex. 2 at 5 (Information ¶ 20); see IG Ex. 5 at 12-15 for more details regarding MassHealth’s decision not to adopt Suboxone Film.5
Petitioner Thaxter “placed high importance on persuading MassHealth to expand coverage of Suboxone Film.” IG Ex. 2 at 5 (Information ¶ 20).6
On or about January 11, 2011, an Indivior senior manager emailed Petitioner Thaxter, warning him that MassHealth was considering expanding coverage of a different, non-opioid drug for use in treating opioid addiction/dependence. In response, Petitioner emailed Indivior’s top state government affairs employee, copying the company vice president for sales and marketing, asking for a “strategy to counter” the non-opioid drug. The government affairs employee responded with an email that “laid out a multi-pronged plan that included using ‘a Strategic Communications approach to bring forward . . . the poison control data that demonstrates the number of unintended exposures and how [Suboxone Film] holds promise to address’ the risk of unintended pediatric exposure.” IG Ex. 2 at 5-6 (Information ¶ 21).
Dr. Paul Jeffrey, the Director of Pharmacy for MassHealth, decided which drugs the agency approved. IG Ex. 5 at 10-13. Petitioner tried, but failed, to secure a meeting with Dr. Jeffrey. See IG Ex. 5 at 30-31 (explaining why Dr. Jeffrey was unwilling to meet with Petitioner). On or about May 16, 2012, Indivior’s managed care director wrote Petitioner: “Thanks for the efforts . . . . We know how important MassHealth is[,] and it is #1 ranked Medicaid [for us] by volume in the U.S. . . . My suggestion (in confidence not to be shared): 1) We build our pediatric poison campaign with the largest poison control centers in Mass.[,] and we demonstrate the public health impact” to MassHealth. IG Ex. 2 at 6 (Information ¶ 22).
On or about October 2, 2012, Dr. Jane Ruby, Indivior’s medical affairs manager, advised Petitioner and other executives that a MassHealth official had reached out, requesting a meeting. Dr. Ruby wrote, “I am very excited at this opportunity to share the pediatric data.” She asked to attend the meeting alone as “the situation is very delicate.” She assured the executives that the meeting would be successful and “things will change in Massachusetts.” Petitioner agreed that “we commercial people should not attend this
meeting,” but asked that both Indivior’s global medical director and vice president for clinical affairs attend. IG Ex. 2 at 6 (Information ¶ 23); see IG Ex. 5 at 32 (identifying Dr. Ruby as the medical affairs manager).7
On or about October 9, 2012, Dr. Ruby met with Dr. Jeffrey, providing the RADARS analysis of unintended pediatric exposure. After the meeting, the manager emailed a report to Petitioner and others. She wrote that the MassHealth official was “very responsive to the pediatric data” and that she’d asked RADARS to analyze the rates of unintended pediatric exposure to buprenorphine tablets in Massachusetts, anticipating that the state results would be comparable to the nationwide results. IG Ex. 2 at 6-7 (Information ¶ 24); see IG Ex. 5 at 36 (explaining why Dr. Jeffrey considered the localized data so important).
On or about October 10, 2012, RADARS gave Dr. Ruby the Massachusetts-specific analysis, but the results were not what she had expected or hoped for. They showed that, among the three categories of drugs (Suboxone Film, Suboxone Tablet, and buprenorphine-only tablets, like Subutex Tablet), the buprenorphine-only tablets had the lowest rate of unintended pediatric exposure. (1.8 exposures per 10, 000 units versus 2.7 exposures for Suboxone Film and 3.3 exposures for Suboxone Tablet). IG Ex. 2 at 7 (Information ¶ 25).8
Dr. Ruby did not give Dr. Jeffrey an accurate version of the RADARS analysis. Instead, she manipulated the data by adding the two tablet rates together in order to show that Suboxone Film had the lowest rate of unintentional pediatric exposure in Massachusetts, when, in fact, it did not. On or about October 16, 2012, she emailed the false data to MassHealth, claiming, also falsely, that she had received the calculations from RADARS. She forwarded a copy of her email to Indivior’s global medical director. IG Ex. 2 at 7-8 (Information ¶ 27).
On or about November 19, 2012, Dr. Ruby responded to a follow-up question from Dr. Jeffrey by sending an email that contained a chart with information from an Indivior promotional brochure. The chart she sent compared Suboxone Film with Suboxone Tablet, showing that Suboxone Film had a substantially lower rate of pediatric exposure. But Dr. Ruby eliminated from the chart a third line of data, which showed Subutex’s rate
of pediatric exposure. In light of her prior misleading email, “the chart without the third line of data failed to reveal facts material to MassHealth prior to its updated formulary decision.” By not including the Subutex data, Dr. Ruby “reinforced her false and misleading claim that Massachusetts-specific data showed Suboxone Film as having the lowest rate of unintended pediatric exposure in the state.” IG Ex. 2 at 8-9 (Information ¶ 28); see IG Ex. 5 at 40-41 (Dr. Jeffrey explaining why eliminating the third line mattered).
Dr. Ruby subsequently received additional data on unintended pediatric exposures; it showed that Suboxone Film did not have the lowest rate of unintended pediatric exposure in Massachusetts. She did not provide that data to MassHealth, telling other Indivior employees (although not Petitioner) that her rationale for withholding the additional data was “don’t ask, don’t tell.” IG Ex. 2 at 9 (Information ¶ 29).9
Dr. Jeffrey characterized his receiving this (false) data as the “pivot point” upon which the agency decided to change its policy on Suboxone film. IG Ex. 5 at 38; see IG Ex. 5 at 55 (indicating that the data Dr. Ruby provided mattered).
In or about December 2012, MassHealth issued a press release, citing Indivior’s nation-wide pediatric exposure-rate data and announcing that it would “provide access” to the film formulation to members who were prescribed Suboxone and lived in households with children under the age of six. IG Ex. 2 at 9 (Information ¶ 30).
Indivior did not correct the false and misleading statements it made to MassHealth until December 2015, approximately two years after the government began an investigation. The record does not indicate when Petitioner himself learned about the false statements, but, some time after he learned, he approved sending a correction letter to MassHealth. IG Ex. 2 at 9 (Information ¶ 31); see IG Ex. 5 at 70 (“In 2015, in the midst of the government’s investigation and knowing full well that the government was going to get access to the false data, the company disclosed the information to MassHealth.”).
Although he was a responsible Indivior executive, and had, himself, actively encouraged his staff to gain MassHealth approval for Suboxone Film, Petitioner Thaxter failed to prevent or promptly correct the distribution of false and misleading data to the state Medicaid agency. IG Ex. 2 at 9 (Information ¶ 32). He therefore “caused the introduction and delivery for introduction into interstate commerce of Suboxone Film, a drug that was misbranded in that the drug’s labeling was false and misleading,” in violation of 21 U.S.C. §§ 331(a), 333(a)(1), and 352(a). IG Ex. 2 at 10 (Information ¶ 33); see IG Ex. 5 at 83 (“None of the criminal activity . . . would have occurred if
Shaun Thaxter had created an atmosphere that demanded compliance with the law. He didn’t, and he profited immensely.”).
Indivior’s felony conviction. At about the same time Petitioner entered his plea, his company pleaded guilty to felony charges of providing false statements relating to health care matters. The company paid $289 million in criminal fines, forfeiture, and restitution. See IG Br. at 6-7. This amount included $244,165,000.00, which represented, “in aggregate[,] the amount of the proceeds of the offense of conviction, whether obtained directly or indirectly as a result of said violations or is traceable to such property.” P. Ex. 8 at 2.
The crime’s relationship to the delivery of an item under a state health care program. This is not a close case. Petitioner’s crime is directly related to a state health care program. Based on the facts that cannot be disputed, Petitioner did not prevent his company from presenting false and misleading information to MassHealth in order to persuade the Medicaid agency to expand its coverage of Suboxone Film. Presenting false information to a state Medicaid agency so that it pays for the drugs your company manufactures and sells is plainly “related to” the delivery of an item under a state health care program and falls squarely within the ambit of section 1128(a)(1). The IG is therefore required to exclude Petitioner from program participation for a minimum of five years.
Petitioner points to other cases involving those convicted of misbranding offenses, in which the IG imposed permissive, rather than mandatory, exclusions (Paul D. Goldenheim, M.D., DAB No. 2268 (2009)), suggesting that her decision to impose a mandatory exclusion here represents a “substantial departure.” P. Br. at 12. Putting aside the questionable relevance of the IG’s actions in other cases, I note that those cases did not involve an entity’s direct misrepresentations to a state Medicaid program, so that the program would pay for its drugs.
Petitioner also suggests that, because he was convicted as a “responsible corporate officer,” his involvement was so peripheral that he should not be considered a threat to program integrity. I disagree. This is not an executive who was unaware of the rats in the storage bins (see United States v. Dotterweich, 320 U.S. 277 (1943)); this is an executive who involved himself in the Medicaid approval process up to the point at which the crime was committed. The underlying crime was extremely serious, and Petitioner’s lack of oversight is inexcusable. Consider:
- Petitioner’s company did not sell that many products, and Suboxone Film was the one he cared most about. Gaining MassHealth approval was his top priority. IG Ex. 2 at 5 (Information ¶ 19).
- He was involved in the initial strategy to use pediatric poisoning data to persuade MassHealth to approve Suboxone Film. IG Ex. 2 at 6 (Information ¶ 22).
- He received data from poison control centers on unintended pediatric exposure. IG Ex. 2 at 5 (Information ¶18).
- He knew that Dr. Ruby planned to share pediatric data with MassHealth officials and specifically asked that two other executives, whom he named, attend the meeting. IG Ex. 2 at 6 (Information ¶ 23).
- Finally, he knew that Dr. Ruby planned to share state-specific data with MassHealth. IG Ex. 2 at 6-7 (Information ¶ 24).
Yet, as involved as he was in this entire process, Petitioner opted not to know exactly what data Dr. Ruby shared with the MassHealth officials. It was his job to know that.
The parties also argue about Petitioner’s gratuitous assertion that the IG “has disavowed any attempt to exclude Mr. Thaxter as a matter of its discretion under section 1128(b).” The IG vehemently disagrees. P. Br. at 2; IG Reply at 1-2. I see no indication that the IG has disavowed any additional actions, but, in any event, what the IG has not done is simply irrelevant. My review is limited to whether the IG had the authority to do what she actually did.
- Based on the aggravating factors and no mitigating factor, a ten-year exclusion falls within a reasonable range.
An exclusion brought under section 1128(a)(1) must be for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). I now consider whether the length of the exclusion, beyond five years, falls within a reasonable range. See Edwin L. Fuentes, DAB No. 2988 at 8-9 (2020); Hussein Awada, DAB No. 2788 at 5-6 (2017).
Among the factors that may serve as a basis for lengthening the period of exclusion are the two that the IG relies on in this case: 1) the acts that resulted in the conviction, or similar acts, caused a government program or another entity financial losses of $50,000 or more; and 2) the sentence imposed by the court included incarceration. 42 C.F.R. § 1001.102(b). “Simply meeting the threshold for an aggravating factor is a clear indication of untrustworthiness.” Hussein Awada, DAB No. 2788 at 10. The presence of an aggravating factor or factors, not offset by any mitigating factor or factors, justifies lengthening the mandatory period of exclusion.
Financial loss (42 C.F.R. § 1001.102(b)(1)). As noted above, in Massachusetts, Medicaid drug coverage is limited to “the least costly alternative likely to achieve the outcome for which it is intended.” IG Ex. 5 at 14. As the above discussion shows,
Suboxone Film was not the least costly alternative and, despite the company’s aggressive lobbying, MassHealth officials did not approve it for Medicaid coverage until they were misled by Indivior’s falsified data.10
In his plea agreement, Petitioner agreed that the “quantities of drugs introduced into interstate commerce in violation of the Food, Drug, and Cosmetics Act totaled $500,000.” IG Ex. 2 at 10. The sentencing court ordered him to pay a $500,000 money judgment, which the court found represented the “value of the misbranded drugs introduced into interstate commerce” as a result of the company’s false and misleading statements. IG Ex. 4 at 8.11 The IG may rely on such forfeiture amounts in determining a program’s financial losses. See Farzana Begum, DAB No. 2726 at 16 n.8 (2016), aff’d, Begum v. Hargan, 2017 WL 5624388 (N.D. Ill. Nov. 21, 2017).
In Petitioner’s view, Indivior’s was essentially a victimless crime; MassHealth suffered no losses. This is not so. Petitioner cannot get around the fact that MassHealth paid for drugs that it should not have paid for. The company received money from the Medicaid program to which it was not entitled. The court ordered Petitioner to return that money (or at least some of it), and he agreed to do so. That amount must be considered a program loss.
Financial losses of even one dollar over $50,000 justify extending the length of the period of exclusion. Edwin L. Fuentes, DAB No. 2988 at 13 (2020). Here, the amount was ten times the threshold amount. The Departmental Appeals Board has characterized amounts substantially greater than the statutory standard as an “exceptionally aggravating factor” that is entitled to significant weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, PhD., DAB No. 1865 (2003). I agree and consider the Medicaid program’s substantial financial loss here a significant aggravating factor that compels a period of exclusion much longer than the five-year minimum.
Incarceration (42 C.F.R. § 1001.102(b)(5)). In what the criminal court recognized was a highly unusual move, it sentenced Petitioner to six months incarceration. The court
acknowledged that Petitioner is recognized as a “good person” by those who know him. IG Ex. 5 at 114; but see Donna Rogers, DAB No. 2381 at 6 (2011) (holding that the ALJ may not review the IG’s decision to impose an exclusion under section 1128 “on the ground that the excluded person is a good person or well-thought of in the profession or suffering from the loss of his/her vocation.”). Nevertheless, the court considered it more significant that Petitioner was the chief executive officer of “an important entity operating at the center of one of our national health crises, the opioid addiction [crisis].” IG Ex. 5 at 114. On Petitioner’s watch, “a serious and intentional misrepresentation occurred in the marketing of his company’s premier product.” The court found it “vitally important” that general deterrence be a “dominant theme.” IG Ex. 5 at 115 (emphasis added).
The court opined that executives may be willing to engage in unlawful, but lucrative, activities if the risk is having to pay a fine, even a substantial one. They are less likely to engage in such activities if the risk includes incarceration. Similarly, the threat of a program exclusion seems to deter corporate executives from such wrongdoing and, thus protects program integrity. Indeed, in enacting section 1128(a), Congress expressed that exclusion should “provide a clear and strong deterrent against the commission of criminal acts.” Joann Fletcher Cash, DAB No. 1725 (2000).
Any period of incarceration justifies increasing the period of exclusion. And a six-month sentence is not insignificant. See Stacy Ann Battle, DDS., DAB No. 1843 (2002) (finding that four months in a halfway house, followed by four months’ home confinement justifies lengthening the period of exclusion); Brenda Mills, M.D., DAB CR1461, aff’d, DAB No. 2061 (2007) (finding that six months’ home confinement justifies an increase in length of exclusion).
No mitigating factors. The regulations consider mitigating just three factors: 1) a petitioner was convicted of three or fewer misdemeanor offenses and the resulting financial loss to the program was less than $5,000; 2) the record in the criminal proceedings demonstrates that a petitioner had a mental, physical, or emotional condition that reduced his culpability; and 3) a petitioner’s cooperation with federal or state officials resulted in others being convicted or excluded, or additional cases being investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). Characterizing the mitigating factor as “in the nature of an affirmative defense,” the Board has ruled that Petitioner has the burden of proving any mitigating factor by a preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).
Petitioner does not claim to have cooperated with law enforcement, and, in fact, he did not cooperate with law enforcement. Nor does he claim that a mental, physical, or emotional condition reduced his culpability. Petitioner argues that his misdemeanor conviction caused essentially no program losses. The evidence, however, establishes
program losses ten times greater than the $50,000 threshold. Thus, no mitigating factor offsets the aggravating factors present in this case.
Based on the aggravating factors and the absence of mitigating factors, then, I must determine whether the exclusion period imposed by the IG falls within a reasonable range. So long as that period falls within a reasonable range, my role is not to second-guess the IG’s judgment. Jeremy Robinson, DAB No. 1905 at 5 (ALJ review must reflect the deference accorded to the IG by the Secretary). A “‘reasonable range’ refers to a range of exclusion periods that is more limited than the full range authorized by the statute [i.e. from a minimum of five years to a maximum of permanent] and that is tied to the circumstances of the individual case.” Joseph M. Rukse, Jr. R. Ph., DAB No. 1851 at 11 (2002) (citing Gary Alan Katz, R.Ph., DAB No.1842 at 8 n.4 (2002)).
The goals of exclusion include protecting beneficiaries, maintaining program integrity, and “fostering public confidence in the program.” Joann Fletcher Cash, DAB No. 1725 (2000) (citing Greene v. Sullivan, 731 F. Supp. 838, 840 (E.D. Tenn. 1990)). Deliberately providing false data to a state Medicaid program is a serious crime that jeopardizes the integrity of the program and undermines public confidence. Companies cannot be allowed to do that with impunity, and, to protect the integrity of the program and public confidence, the responsible corporate officers, who allow it to happen, must be held accountable. In light of the serious threat Petitioner’s (and Indivior’s) actions (or inactions) posed to program integrity, I find that ten years is a reasonable period of exclusion.
Finally, I have no authority to review Petitioner’s Constitutional claims.
Petitioner’s company presented false and misleading information to MassHealth so that the Medicaid agency would expand its coverage of the company’s most profitable drug. Petitioner was charged with preventing such illegal activity, but he did not. As a result, he was convicted of a crime that is directly “related to” the delivery of an item under a state health care program and must be excluded from program participation under section 1128(a)(1). His crime caused substantial program losses and the criminal court sentenced him to time in jail. Based on these circumstances, I find that a ten-year exclusion falls within a reasonable range.
Carolyn Cozad Hughes Administrative Law Judge
1. It appears that MassHealth was citing Indivior’s nationwide pediatric exposure-rate data, rather than the inaccurate Massachusetts-specific data that the Indivior executive had provided. See IG Ex. 2 at 9 (Information ¶ 30) and discussion, below.
- back to note 1 2. It seems also that convictions involving schemes to increase drug sales by encouraging (even indirectly) the abuse of opioids currently result in much longer periods of exclusion. See, e.g., Sunrise Lee, DAB CR5906 (2021) (affirming a 28-year exclusion based on Petitioner’s racketeering conviction, related to a scheme to increase the sale of opioids).
- back to note 2 3. My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision.
- back to note 3 4. Indeed, during sentencing, Petitioner pointed to his potential administrative exclusion in arguing that he had “been punished” enough. IG Ex. 5 at 80.
- back to note 4 5. Massachusetts regulations require Medicaid-covered services be “the least costly alternative likely to achieve the outcome for which it is intended.” IG Ex. 5 at 14.
- back to note 5 6. At Petitioner’s sentencing hearing, Dr. Paul Jeffrey, MassHealth’s Director of Pharmacy, testified that Indivior’s efforts to influence MassHealth officials were far more aggressive and insidious than suggested by the allegations of the information. They included coordinated attacks on the character and motivations of the state decision-makers who opposed its approval. See, e.g., IG Ex. 5 at 17 et seq.; IG Ex. 5 at 86-89.
- back to note 6 7. Notwithstanding these communications with Petitioner and other executives, Dr. Ruby assured Dr. Jeffrey that the company maintained “a firewall between science and promotion.” Dr. Jeffrey agreed to the meeting, in part, because he believed her. IG Ex. 5 at 34-35.
- back to note 7 8. Both Suboxone Film and Suboxone Tablet contained a combination of buprenorphine and another substance, naloxone. IG Ex. 2 at 4 (Information ¶ 14).
- back to note 8 9. See IG Ex. 5 at 42-44 for the cynical explanation of the “don’t ask, don’t tell” remark.
- back to note 9 10. Although MassHealth currently covers Suboxone Film, its approval is based on a competitive contract bid that Indivior won, offering the state the best value for treatment of opioid use disorder using a buprenorphine-naloxone product. IG Ex. 5 at 46, 48 (Jeffrey testimony).
- back to note 10 11. In light of the amounts Indivior was ordered to pay, the costs to MassHealth may have been higher than $500,000. As noted above, Indivior paid a money judgment of $244,165,000.00; however, that amount was based on wrongdoing that went beyond the crime for which Petitioner was convicted. For purposes of determining whether the exclusion period here falls within a reasonable range, I consider that the program costs were $500,000.
- back to note 11