Megan Siddall Presents Oral Argument Before First Circuit on Behalf of Michael Gurry in Insys Appeal
Oral argument was held last week before the First Circuit Court of Appeals on the appeals of various Insys executives and managers, including the appeal by Michael Gurry, represented by Tracy Miner and Megan Siddall of Miner Siddall, an all-female boutique law firm in Boston, Massachusetts. Megan Siddall presented arguments on behalf of Mr. Gurry. Recordings of the oral arguments are available on the First Circuit Court of Appeals website.
Background
Prior to discussing the appeal, we will summarize the case history for those unfamiliar with the proceedings thus far. The prosecution of the Insys executives, including John Kapoor, Insys Founder, who was represented by Beth Wilkinson, was the first RICO prosecution of pharmaceutical executives. It was also one of the first times that opioid executives faced felony charges. The U.S. Attorney’s news release following the charges made it clear that this case represented a desire to criminalize the opioid epidemic, likening the individuals charged to street level drug dealers. The case garnered significant media attention given the pervasiveness of the opioid crisis and its lasting effects on many Americans’ lives. Insys’s drug at issue, Subsys, was a sublingual fentanyl spray approved by the FDA for use for opioid-tolerant cancer patients experiencing breakthrough pain.
The one count RICO Indictment against the Insys executives and managers proceeded to trial in early 2019. The Government’s case included the testimony of various cooperators, including the former CEO and Vice President of Sales. Megan explained that while the Government portrays the case as one conspiracy – in realty there were two conspiracies: the first focused on allegations involving the Controlled Substances Act and honest services fraud and the second insurance fraud. The honest services fraud conspiracy centered on allegations that payments to doctors, via speaker programs, were used to incentivize medically unnecessary prescriptions. The insurance fraud conspiracy was based on the activities of Subsys’s Insurance Reimbursement Center (“IRC”), which communicated directly with the insurance companies in efforts to obtain prior authorization for the Subsys prescriptions and the misrepresentations made by Insys employees during those communications.
At trial, emotional testimony by individuals suffering from the effects of Subsys was admitted related to the Controlled Substances Act and honest services fraud charges. During their closing rebuttal, the Government made various inappropriate statements to which the defense objected, comparing the bribery allegations to firing a gun into a crowd of people knowing “someone is going to get hit.” The jury returned their verdict, finding each of the defendants guilty, although Mr. Gurry was acquitted of the Controlled Substances and honest services predicates. In fact, after the jury’s verdict, the Court struck down those predicates for lack of evidence. The surviving predicates were ordinary mail and wire fraud.
Appeal
The appeal by the defendants that followed focused on the issues described in the preceding paragraph. The defendants argued that there was a spillover prejudice effect as a result of the emotional testimony admitted from individuals suffering from the effects of Subsys, which would not have been admitted at trial but for the stricken predicates. Further, the defendants contended that the Government’s statements during rebuttal were inappropriate, and that the Court’s response was insufficient to cure the harm caused. Mr. Gurry’s appeal also addressed the improper comments by the Government ascribing responsibility to Mr. Gurry for one of his supervisee’s actions because he “bears the responsibility” for the IRC, thereby improperly inserting inapplicable civil law concepts to argue criminal culpability. Megan stated, “The only evidence tying Mr. Gurry to the insurance fraud was the testimony of an uncorroborated cooperating witness who admitted she had no documents confirming her story and who was contradicted by other witnesses on a number of key issues.” The Government has also filed a cross-appeal that the Court erred in striking down the predicates, and that the predicates should be reinstated.
During Megan’s argument before the First Circuit, with respect to the improper comment by the Government at trial likening the executives to indiscriminate killers shooting a gun into a crowd, she stated: “Both of these arguments and the Government’s repeated references to the defendants just ‘sitting there’ could well have tipped the scales against Mr. Gurry and his co-defendants.” She explained that the Government’s point of the gun analogy was that the defendants knew or should have known that somebody was going to get hurt and that the defendants just didn’t care – a theme that the Government repeated throughout the trial. This comment was likely to impact the jury and sway the jury’s verdict, and the Court’s failure to grant a new trial or give the defendants’ requested stronger curative instruction was an abuse of discretion.
Together with the other issues presented in the appeal, this case demonstrates the dangers inherent in RICO prosecutions, one of which is the Government putting forth bad conduct that has no relationship to the client before the jury. Clearly this harms the ability of the client to have a fair trial in a fundamental way. By charging this under RICO, instead of as two distinct conspiracies, the Government was able to introduce emotionally compelling testimony that would not have been admissible in a trial on what the District Court described as a “garden variety insurance fraud.” Megan told us, “The Controlled Substances and honest services predicates became a Trojan horse, allowing the Government to introduce tragic patient testimony about their opioid addictions even though it did not prove that Mr. Gurry had anything to do with prescribers or their prescribing decisions.” This case is a prime example of the dangers associated with the Government utilizing the RICO statute to prosecute traditional white collar crimes, especially when it was never intended for that purpose.
Continued Government Focus
The focus on speaker programs has continued well beyond the Insys trial, as evidenced by the Special Fraud Alert published on November 16, 2020 by The Department of Health and Human Services Office of the Inspector General regarding Speaker Programs. “Th[e] Special Fraud Alert highlights the fraud and abuse risks associated with the offer, payment, solicitation, or receipt of remuneration relating to speaker programs by pharmaceutical and medical device companies.” The significance of the alert’s publication following the Insys executives' trial cannot be understated. The Government’s focus on criminalizing the opioid epidemic has expanded to speaker program practices throughout the pharmaceutical and medical device industry and now the Government is taking a more active role in seeking to regulate the industry. Megan indicated, “Many pharmaceutical companies will shy away from using them [speaker programs] going forward.” But she pointed out that these companies do need a way to educate doctors about their drugs. “Patients benefit when doctors are educated about cutting edge, best-in-class medications like Subsys.” The alert will undoubtedly result in pharmaceutical and medical device companies shifting their practices away from speaker programs and finding other ways to educate doctors about their products.
Before becoming the Managing Partner of Miner Siddall, Megan was previously associated with the litigation firm Williams & Connolly LLP in Washington DC and another boutique litigation firm in Boston. Ms. Siddall graduated cum laude from Harvard Law School, where she served as the Managing Editor of the Harvard Civil Rights-Civil Liberties Law Review. After law school, Ms. Siddall clerked for the Honorable John G. Koeltl of the United States District Court for the Southern District of New York. Megan also serves on the Young Lawyers Committee of the Women’s White Collar Defense Association.