A district court judge dismissed the indictment against former GlaxoSmithkline PLC attorney Lauren Stevens after finding prosecutors erred in their instructions to the grand jury. While the government may reindict, the ruling shows how tough it is for the government to go after executives in health care fraud cases.

Stevens, former VP and associate general counsel at GSK, was charged with obstructing an FDA investigation of off-label promotion of the antidepressant Wellbutrin SR (bupropion), falsifying and concealing documents and making false statement to FDA (Also see "DoJ Case Against GSK Lawyer Flags What Individual Behavior Government May Target" - Pink Sheet, 9 November, 2010.).

Her primary defense is that she relied on the advice of outside counsel from King & Spaulding in responding to FDA's inquiry, which negated a finding that she intended to obstruct the investigation or make false statements.

In a March 23 order Judge Roger Titus, of the U.S. District Court for the District of Maryland, ruled that prosecutors incorrectly told the grand jury that Stevens' advice of counsel defense was irrelevant to their decision of whether there was probable cause to indict her. A juror had asked if it was relevant that Stevens was getting direction from someone else about how to handle the investigation.

"The grand juror's question was not just any question, but rather akin to asking about an elephant in the room," Titus stated.

"The question went to the heart of the intent required to indict. The incorrect answer either substantially influenced the decision to indict, or, at the very least, creates grave doubt to that decision," he stated. "Accordingly, dismissal of the indictment is appropriate and required in the interests of justice."

Government May Convene A Different Grand Jury

The judge said the government has the right to seek indictment before a different grand jury. A Department of Justice spokesperson said the government had no comment. A hearing is to be held March 25 at which the government is expected to announce whether or not it will reindict. A jury trial had been scheduled to begin April 5.

In response to a juror's question, a prosecutor told the grand jury that the advice of counsel defense can be raised once the defendant has been charged. A second prosecutor said that while the defense can be relevant at trial, if the jurors found Stevens "reasonably knew that she was making false statements" they could find probable cause.

"A proper instruction would have informed the grand jurors that if Stevens relied in good faith on the advice of counsel, after fully disclosing to counsel all relevant facts, then she would lack the wrongful intent to violate the law and could not be indicted for the crimes charged in the proposed indictment," the judge stated.

Judge Titus also denied the government's motion to preclude the advice of counsel defense. So if the government decides to reindict it may have to take a different approach.

Former federal prosecutor Virginia Gibson said no case that gets put forth a second time is ever presented exactly the same way. "The government is educated by the judge's ruling and by defense motions," she said. "It may introduce additional evidence to the grand jury or may decide it doesn't have the evidence for the issue raised by defense."

Gibson served as executive assistant U.S. attorney in the Eastern District of Pennsylvania before joining Hogan Lovells as a partner in November.

The government alleges that Stevens withheld slide sets used by speakers at GSK promotional events that promoted off-label use, withheld information on compensation given to attendees at promotional events and sent six letters to FDA containing false statements on the promotion of Wellbutrin for unapproved uses.

The indictment of Stevens sent tremors through the industry, leaving executives fearful that they could face jail as a result of health care fraud investigations. At an American Bar Association meeting in November, Dechert partner Kathleen O'Connor commented that it had created a different dynamic in litigation and that corporate officials may start to take the Fifth Amendment (Also see "Ingredients For Product Liability Litigation: From FDA Actions To Foreign Labels" - Pink Sheet, 29 November, 2010.).

Few pharma execs have been held liable in health care fraud cases. Former KV Pharmaceutical Company Chairman and CEO Marc Hermelin was apparently the first to be sentenced to jail. He got 30 days after pleading guilty to the production and distribution of oversized morphine sulfate tablets ([A#1410310009]).

- Brenda Sandburg (b.sandburg@elsevier.com)

Dismissal Of Indictment Against Former GSK Attorney May Bode Well For Pharma

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