the honorable the united states court of appeals for the st circuit is now in session all persons having any business before this honorable court make good their attendance and they shall be heard god save the united states of america and this honorable court court is in session he spent many areas of excellent service to this country and kidd this court he would want us to proceed with business as misunderstood the theory of this prosecution and overlooked or misinterpreted critical pieces of the historic historical record and the trial testimony the defendants were convicted because they participated in an agreement to lie to a about a core feature of any cc's business operations a feature that at staff members at all levels of any c c well knew because f d a had well explained it lay at the center of how f d a would exercise its enforcement authority over compound years f d a had repeatedly explained in the two compliance policy guides and in direct communications with any c c that f d a would continue to defer to states to regulate traditional compound hers that dispense drugs pursuant to valid patient specific prescriptions but that as to those entities that operated more like manufacturers by shipping vast quantities of jobs around the country without accompanying patient specific prescriptions f d a would be likely to authority over compound to drugs in that language in the statute the definition of groups i do think it's important or on or i guess the point i would make is i know the defendants i think dispute the notion that that compound of drugs fit within the statutes definition new drugs we think that's wrong but but even putting that to the side compounded drugs are still manifestly drugs under the f t c in as a supreme court explained in western states the  empowers the if the f d a to to regulate the distribution and manufacture of all it's not simply new drugs but so that's one reason why i think that the fact that it's the fact that it's the case that f d a has authority over compound of drugs is i think sufficient i guess i would say it's not necessary because of the point about all drugs but even putting that to the side and this is respectfully to the district court one piece of the prosecution i think perhaps the court misunderstood i think it's better to think of this case as involving f d a is authority over manufacturers and not over compound years because the whole point of the law here was to tell f d a we are traditional compound or so you should be hands off consistent with as i understand that the government is not disputing that there was f d a regulatory guidance that one could provide as they come hounding pharmacy some  new drugs without a prescription to a customer in a quantity that was small enough and consistent with historical practice that that would not attract regulatory attention from the f d a is that  f so suppose are facts because this is just for understand the government's theory suppose there was an internal memo from any c c saying we want to do exactly what that two thousand and two compliance document says but i'm a little worried as to whether f d a is going to stick by that so let's tell them everything we're sending out is to a specific patient with a specific prescription so we're going to conspire to lie to the f d a to cover up activity that plainly falls within the safe harbor set forth in the f d a compliance document wouldn't that be a conspiracy to commit fraud or would that be legally impossible so i think our case but i just want to stand your theory no i understand and i appreciate the question but i think i didn't follow if they were if they were if the law i was let's tell f d a that were we're shipping with prescriptions when in fact they were not shipping with prescriptions that would place them outside the scope but there is a memo that says what we're actually doing is sending it to a client in advance of what we expect to be the prescriptions that will come in from them consistent with our historical practice of meeting only the limited orders that they do so it's based not advance stock or office stock production which i understand doesn't have to be done with a prescription when the file goes out so so this is a technical point and i know it's not at the heart of your question i think there's anything thank you i think there's a difference between in this context between anticipatory compound which is compound ing in advance of a prescription and office stock which is just providing doctors offices with a supply of drugs that they can keep on their shelf to use when they need it ok so there both are permitted under the guidance correct no office stock was something that ever it never recognized anticipate shortly impossible because if f d a for example were to think that everything is done on a purpose scription basis then they would be likely under that two thousand and two compliance all c g i to defer to the states to regulate if what the entity is doing is doing some amount doing well that's something that it is at least reasonable to assume under the compliance also guide that f d a would have a very least want to take a closer look at to make sure that the scope and amount of that and just between compound is not such that it brings a compound or sort of over the line to a manufacturer ok so tell me how we could decide this case on a basis that would not commit us to agreeing to your position with respect to my hypothetical what is different about this case than my hypothetical because in this case they were not in your hypothetical as i understand it they are in fact operating within the confines of the two thousand and two complex policy by this case they were operating outside the contours of that policy by shipping massive amounts of drugs around the country without without valid civics prescriptions and i don't think anybody has purposes of that question whether they were as you say acting outside the harbor is that a factual question for the jury for which all there needs to be a sufficient evidence to make that conclusion or is that a legal judgment as to whether they were within the safe harbor or not i think that would be a factual determination in this evidence was put before the jury and i think this is surely the kind of evidence that a jury would be able to to evaluate against the standard here i do want to make a couple of other points relevant i think directly to your honor's questions here and overlooked not only was that conspiracy possible it was actually successful and just as a matter of logic a person cannot succeed at anything that is not possible and there is in particular two pieces of evidence i w so this two pieces of evidence show i think beyond any measure and i guess the that one went one point that i was confused by in the brief if i understood it the jury instructions suggested that the jury was supposed to find that the f d a would have taken a ction in your briefing you point say that but at other points you say the f d a would seriously have considered acting what is it and between those two and how do i square the nd theory with the jury instructions which don't seem to have sufficiency review and i think the supreme court's decision in misaki a couple of years ago makes this very clear that you just measure sufficiency against the actual elements of the offense and if there's any problem or any difference between the jury instructions and the elements sufficiency is measured against the elements of the offense and what i think the most salient point here and i've got to move on over time so and i'll make this my last thought unless there are further questions is the conspiracy was successful and by definition if it was successful it had to have been legally possible i'm happy to field more questions but otherwise i'll just wait for about either thank you right here from your op client the only charge brought against him which was that he conspired to defraud the f d a concerning a governmental function and at the heart of the legal possibility decision issued by judge stearn testimony showed that the whole concept of them in your faction or any compound in pharmacy that the distinction was not black and white and trying to figure that out in the words of a doctor him or it was trying to put a square a round hole and so there may not be another case that could be cited too for that concept of the ministry of agency as the stocks were applied to the law here the object of the conspiracy was surely legally taken action so that as a factual matter creek loued still theory you are adopting how can we ignore it the fact that the jury accepted that to judge whether those two little tiny pieces of evidence against the backdrop of the sea of other evidence was credible or not i hate that not try and insufficient evidence he found legal  you have switched the grounds of your argument respectfully i'm not you and i want to make sure this is clear mike my argument is not sufficiency of factual evidence my argument is that as judge stern's articulated his well thought out  that the object of the conspiracy was surely legally impossible and not because the f d a had stopped trying to draw the distinction of the manufacturer and eight and a compound and despite that testimony two were two thousand and two compliance guidance from f d a had said it is too difficult for us to figure out the difference between a compound there and a manufacture and so we are not going to go after things your case can obviously be much stronger but in fact in ninety two dollars twenty cents compliance don't say that they say there's a series of safe harbors that compound in pharmacies can fall within that it will protect them against being regulated as manufacturers so the difficulty i have is well what if the evidence here would permit a jury to conclude that any c c was engaged in conduct that didn't fit within those  time there wouldn't have been a lack of notice and he see that if you're outside the safe harbor you risk of being regulated well st of all your honor this is strictly legal argument that i would suggest was left up to the court and not the jury  not the question of what activity they would get your right about the structure of the argument it's a legal question whether or not f d a had by giving this notice precluded themselves from turning around and switching but since the notice they gave them nominated non exclusive safe harbors i don't see how you could read the ninety two or two thousand and two regulatory guidance to preclude f d a from ever going after anybody who has named a compound or as a manufacturer so that seems to me the factual question becomes could a jury have found that what f what the any c c thought it was covering up was activity that fell outside the safe harbor because if some know what would preclude the f isn't right you also have to consider the years and years of inaction that occurred after those compliance guys were published and that's extremely relevant to the testimony of sammy and nasser that there was a morator our our clinics and we don't show them as a manufacturer do you the f d a waits a year to write that and when they do they say you should contact massachusetts and the government says and they're in their response oh that's proof that even this what is the relevance to the legal and possible it's theory for elements of the acute awareness of your client that they operate within the safe harbor of those policies in the i guess late teen to thout the two thousand and two and the earlier policy and i mean by that is they they don't have stood that it was critical it they were able to document that the drugs that they were supplying were in response to specific prescriptions they seemed to be fully aware of the proposition that if they could not document that they were responding to specific prescriptions they ran the risk of being treated as has it manufactured so that ringback their own conduct suggests a heightened sensitivity to to the very distinction pino was about to pick up the ball but the answer your question your honor is is that the evidence was that any c c shipped to many states that allowed offices to obtain the medication before patients came in and in many times they did that without patient his and there were lots of there were lots of centers that that it was the it was the customer who wanted to use the fake patient names it wasn't any c c putting in fake patients names it was the customers who said we're going to use these fake patient names and it's not it's not a great fact that any c c except of those names what the evidence was of that any c c was the was the entity that was putting in the think patient names it was the customer that was supplying those and there wasn't evidence that any c c was saying hey use fake patient names that wasn't the evidence in the case and so enmeshed in the question is a design to to drill down on that issue but that was not the case any since he did not think that they needed patient names when they were shipping to a business that was in a state that a lot of office use and let's not also forget that there were one hundred and forty four contracts that came into evidence where any she see had papered the relationship with hospitals all across the country that they were in a shared services arrangement and that said that they didn't have names before you sit down and hear how it was going to present to us but our use denying that any c c we can put aside for a nd with your particular client can be associated with this but are you denying that the any c c made false statements about their practices regarding the means of their dispensing legal possibility argument is just as is your answer to judge them as i thought it was a premise of the legal possibility argument that there were false statements made to the f d a and so the only question is given that they were covering up something what was it that they were covering up when i would answer that respectfully your honor with with the following point the whole point of the legal possibility argument of the whole point of the legal possibility of finding was that if the object of the conspiracy is legally possible then it doesn't matter what the last were but just the peasants pressed into you is they seem to think it was important to cover up that they were sending them without prescriptions would suggest they understood them to be a potential regulatory risk in consequence of doing what they were doing now either you're saying they were mistaken because that risk was no risk at all or yours saying they didn't think there was any risk and so what they were saying wasn't false i just don't those two are very different propositions well i am i again i hope that you give my co counsel a little extra time because i don't want to take up his his time and  know didn't want to answer my last question or not well i want to say that again the risk there is no evidence that any she see thought that there was a risk that the f d a would do anything about it perhaps there was a risk morning your honour's my name is michael pino and i represent sharon carter i would like to compare it slightly and focus on due process and my jumping off point is going to be the following proposition which is that claiming that you have authority is not the same as actually performing a function and that's thinks in matters for two reasons both rooted in two process the st is the government a concept of interfering with a proper government function now we decided to end his cards brief the supreme court's holding in cases like skilling and mcdonnell where the supreme court addressed similarly indeterminate statutes and suggested that to satisfy due process principles the government must at minimum base charges on things that are clear and specific violations here  the nd issue is that the government's decision to nd due process issue is that the government's decision to rely on a regulatory framework that the f d a itself knew was unclear but that it failed with congress to take action to clarify and for that i think it's important to look to this circuit's decision in u s and the law where the court reversed on due process grounds convictions for allegedly committing currency transaction reporting violations that were based on a prosecutor's legal argument regarding a regulation that the treasury department had known was unclear and it failed to clarify that the agency's understanding of its authority is clear and i'm sure those extra single signals i'm referring to the compliance guys that go to therapy for it to really are i mean those those compliance gods seem not to perform the function and so what that means is that the policy guidance that the f d a issued frankly the testimony that was cited earlier that was given a trial those amounts to protestations that we had yes it's a claim to have or it's not the actual performance of the function intel because of their internal uncertainty which they later to acknowledge quite quite explicit you made the decision to stand down and you can see that playing out in the acknowledgement on their aren't they declared a four year moratorium that precluded their staff from going out and conducting oversight inspections of qom outing pharmacies the reason yes i'm sorry that doesn't that make the fraud all the words i would say no your honor if you would but just on that point that the thought would be that they were they what they decided was rely on the representations that the representations are false that makes it is quite problematic just to test the proposition about your position suppose an internal out ten thousand miles a week of medications with no prescription and no prospect of a prescription could the f d a have regulated the any c c in response to that information i  is there a way for you to win on the legal impossibility argument as to fraud in which the answer to the that the f d a would be able to regulate in that circumstance or you really just saying they had disclaimed all ability of due process was forecloses the f d a for regulating anybody who i guess what represents that their compound or suggest they might be a compound or because all manufacturers should go change their names if compound years had come into existence they knew and they knew exactly the nature of the work that they performed and yet they stood down and made an intentional conscious decision not to perform the function of exercising on our side it was us compound y manufacturing on a broad scale in clear violation of the policy guidance from the f d a in ninety two in two thousand and two is there any way you could help me so that you could win and there were ground in that because that position is asking quite a lot i same compound or and like many outsourcing compound years they learned a lot they were not a mom and pop on the corner of the me on main street they were not sourcing compound or so i gap created largely by hospitals decisions that as a matter of law the function that the government is going to try and claims there was a conspiracy to impede has to be clear and specific and it was not here and i'd like to take that question  i and then goes on to explain what we what we must prove that there was an agreement that the defendant joined it and that there was an overt act the idea here that that we were required to prove that it would have actually done something comes from the rule twenty nine dollars order and not from the from the  conspiracy to defraud f d a actually existed that the defendant was unknowing and willful participant and that any misleading misstatements were mysterious were material in the sense that they had the capacity and cause the f d a at different as was the instructed at any point that they had to find that the f d a would have acted i do not believe so no the district made a reference that in its rule twenty nine order but as i'm looking at the  six and post outbreak by exercising the same pre outbreak authorities to investigate armor seized by exercising that over roughly sixty pharmacies in the period shortly after f d a learned of the outbreak that's consistent with dr hamburg control over compounds that got so i correct i don't believe that there was there was certainly a public recognition of the hold after the fact in that in the congressional testimony after the outbreak i don't recall the evidence being that there was a contemporaneous announcement from f d a saying we're going to put all these inspections on pause but i do but i also want to make the point that the temporary hold here was much narrower than what the defendant suggests it was a temporary halt on routine inspections of true compound years it did not apply to for cause inspections of compound errors that simple mental joint appendix page six hundred and eighty three it was not a decision to stop regulating compounds and pharmacies all together that entirely your my point is only the defendants would have this temporary hold be the equivalent of actually making a public pronouncement as long as you say you're a compound or we can't touch you and i think the reality of the record shows that that is actually a much narrow operating as manufacturers are now in our i thought that the theory that you were pressing was that the what they were covering up was that they were acting as manufacturers is the answer you were just giving to judge the pez way of saying that they were impeded in their ability to go after them as manufacturers no no no f d a was never never thought no absolutely not always thought correctly that it had plenary authority to go after manufacture but i'm sorry i know that but in your answer to judge the pez the thing you identified that they could do despite the moratorium was to go after them if there was an adverse event in doing that would they be treating the person as a manufacture that the adverse event piece is independent from whether the issue of whether they're manufactured in th to the conspiracy authority over manufacturers it is true that when you replied to judge the pez you used the for cause but isn't your stronger there was never an a hole of the as to manufacturers that's very young at the but but i thought just so i get this one the narrower argument that mr b you know just presented to  was that there was a category of compound that did not involve direct prescription based individual dispenser and that there was a hold with respect to just fence pursuant to patient specific prescriptions or if you shipped without those prescriptions you were a manufacturer there were two pockets the idea of an outsourcing compound or something that came through the two thousand and thirteen legislation that statutor created a rd kind of entity but at the relevant time you are either a compound or bore you are a manufacturer and i guess the only point i want to make with respect to the whole then and i think it's the most relevant point is whatever in going after an outsourcing come down and i know you say that we shouldn't think that but i'm just saying if one were to agree with that proposition is there evidence in the record in which the jury could have found they would not even have clearly qualified as an outsourcing compound there and was the jury instructed in a way that would have permitted them to make that finding and think that that was a relevant finding for purposes of the conspiracy charge and you know i don't i don't i don't recall there being an instruction that point and i and i think your question is hard to answer because i don't know that we have that there is a settled definition of what even it means to be an outsourcing compound or in this case but even if even taking it on its premise that there was such a thing as being an outsourcing compound at the time and further that that's what any c c was doing maybe those things would be relevant if this case was about f d a trying to enforce a substantive regulation on any c c but that's not this case this case is only about one thing thank thank you your honor i'll do so briefly miss carter far from being someone who only works in order processing down in a lot had her hands in every aspect of the business she trained employees she interviewed job applicants viewed she was the lead pharmacy tech she was the operations manager she was viewed by multiple people at the c c as holding a position of supervisory authority and control the nd point is that she had a very close working relationship with barry catt in the mastermind of the whole conspiracy and one piece of evidence that i think is highly relevant to showing this carter's involvement conspiracy is the e mail from from barry kent to miss carter in which he says among other things all of our patient names must quote resemble real names no obviously fake names not he's not saying we have to have real names he's saying the names have to resemble real names and miss carter far from faint from showing surprise or pushing back point is that this is a sophisticated highly regulated business in a highly regulated industry and drawing on this court's opinion and southern union case it is fairly presumed by a jury that senior officials in a company like this know the regulatory rules of the road and i think the evidence is overwhelming in this case that that miss carter did the other the other point i want to make on sufficiency is it's not like this non patient specific practice was a small piece of their business this was the said become any cc's business model or stop all up and down the hierarchical chain any c c knew that they were shipping without patients specific prescriptions and that that would lead them to be treated a manufacturer had f d a known the truth and so you put all of this together and you ask the question could any reasonable jury have concluded on this evidence that miss carden knowingly join the conspiracy  which is a much more of a traditional sufficiency question i think that a rational jury could readily have concluded concluded that and so i don't over time i'm happy to rest the rest of that argument on our briefs or answer any further questions of the through false or misleading statements about that you need to have any cds business in order to obstruct the f d a in carrying out the regularly regulatory oversight it otherwise would have exercised over and e c c so that's the part that was concerning me that's not that it seriously would have considered exercise and instead it says in the instruction would have exercised over and he's so i read yes i read that instruction to be saying that the conspiracy is if successful would have in impeding f d a not that the government would have had to prove that the conspiracy did in fact impede f d a and i think that's the only right ray to read it because if if the court reads that instruction to say that in a conspiracy case the counsel thank you your honor so i'll take it that concludes the argument in this case attorney's goldman pino in ravenna vets you should disconnect from the hearing at this time