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                              Dr. Tim Baxter, DAB CR6081 (2022)
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Dr. Tim Baxter, DAB CR6081 (2022)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Dr. Tim Baxter,
(OI File No. 3-13-40247-9),
Petitioner,

v.

Inspector General.
Docket No. C-22-118Decision No. CR6081May 20, 2022

        
              
    

      DECISION

The Inspector General (IG) of the U.S. Department of Health and Human Services excluded Petitioner, Dr. Tim Baxter, from participation in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)).  Petitioner challenges the exclusion.  For the reasons stated below, it is concluded that the IG had a basis for excluding Petitioner from program participation and that the five-year mandatory exclusion period must be imposed.  The IG's exclusion determination is affirmed.

I.  Background and Procedural History

On August 31, 2020, a Criminal Information was filed in the United States District Court for the Western District of Virginia (District Court) charging Petitioner with one count of "Introduction of Misbranded Drugs in Interstate Commerce" pursuant to 21 U.S.C. §§ 331(a), 333(a)(1), and 352(a).  IG Ex. 2.  On August 31, 2020, Petitioner entered a plea agreement, pleading guilty to Count 1 of the Information.  IG Ex. 3.  Count 1 charges Petitioner, as a Responsible Corporate Officer (RCO), with the "misdemeanor offense of causing the introduction or delivery for introduction into interstate commerce

Page 2

of a drug that is misbranded, in violation of 21 U.S.C. §§ 331(a) and 333(a)(1)."  IG Ex. 3 at 1.  Further, Petitioner agreed "that all of the facts set forth in the Information are true and correct and provide the Court with a sufficient factual basis to support [his] plea."  IG Ex. 3 at 2.  The judgment of conviction was filed in the District Court on December 17, 2020.  IG Ex. 4.

By letter dated March 31, 2021, the IG notified Petitioner that he was being excluded from Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(a)(1) of the Act based on his guilty plea.  IG Ex. 8.  In response, Petitioner requested a temporary restraining order and preliminary injunction in the United States District Court for the Eastern District of Virginia.  IG Br. at 6; P. Br. at 8.  The parties settled and stipulated to the dismissal of that initial action.  IG Br. at 6; P. Br. at 8; *Baxter v. Becerra*, No. 1:21-cv-451 (E.D. Va. May 7, 2021), ECF No. 25 (stipulation of dismissal).  By letter dated May 11, 2021, the IG notified Petitioner that the exclusion was withdrawn.  IG Ex. 9.

On May 27, 2021, the IG notified Petitioner of the intent to exclude Petitioner from Medicare, Medicaid, and all federal health care programs for five years under section 1128(a)(1) of the Act.  IG Ex. 10.  Petitioner filed a response on August 30, 2021.  P. Ex. 7.  After considering Petitioner's response, the IG issued a notice of exclusion on September 30, 2021, notifying Petitioner that, effective 20 days later, he would be excluded from Medicare, Medicaid, and all federal health care programs for five years pursuant to section 1128(a)(1).  IG Ex. 1.

On November 23, 2021, Petitioner filed a request for a hearing before an Administrative Law Judge (ALJ) pursuant to 42 C.F.R. §§ 1001.2007 and 1005.2.  A prehearing conference was held on December 14, 2021, and an Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions (Prehearing Order) was issued the same day.  The IG filed a brief (IG Br.) and 10 exhibits (IG Exs. 1-10) on February 4, 2022.  On March 4, 2022, Petitioner filed a brief (P. Br.), 11 exhibits (P. Exs. 1-11), and Objections to the IG's Proposed Exhibits (P. Objs.).  On March 17, 2022, the IG filed a reply brief (IG Reply Br.), as well as evidentiary objections and responses to Petitioner's objections (IG Objs.).  On March 28, 2022, Petitioner filed a reply to the IG's evidentiary objections (P. Reply Br.).

Neither party proposed any witnesses and both parties indicated that a hearing was not necessary to resolve this matter.  IG Br. at 19; P. Br. at 24.  As such, this matter will be decided on the written record.

Page 3

II.  Admission of Exhibits

***A.  Petitioner's objections to the IG's Exhibits are overruled.***

Petitioner objects to IG Ex. 5, the transcript from Petitioner's sentencing hearing.  Petitioner argues that IG Ex. 5 presents one-sided attorney arguments not relevant to this case and creates unfair prejudice.  P. Objs. at 1-5.  In support of the argument, Petitioner identifies two specific statements made by the prosecution during Petitioner's sentencing hearing that the IG utilizes in their brief – one regarding the importance that the pharmaceutical company, Indivior, placed on MassHealth (the Massachusetts Medicaid program) as a customer of Suboxone Film, and one regarding Petitioner's knowledge of a graph that included complete information for all three types of treatment.  P. Objs. at 1.  However, both of these statements are supported by the Information and Petitioner's own statements.  IG Ex. 2 at 5 (stating that "MassHealth was the largest Medicaid program in the country by volume of addiction-treatment-drug business" and that "Indivior placed high importance on persuading MassHealth to expand coverage of Suboxone Film"); IG Ex. 2 at 8-9 (discussing the differences between the charts with and without buprenorphine-only tablet data, and Petitioner responding to a question about using the chart without buprenorphine-only data by saying, "That chart is now published so nock [sic] yourself out!").

I find that the transcript of Petitioner's sentencing hearing provides relevant information, and the relevance is not substantially outweighed by unfair prejudice.  42 C.F.R. § 1005.17(d).  The transcript, like all admitted exhibits, will be given the proper weight and consideration.  Therefore, Petitioner's objection to IG Ex. 5 is overruled.

Petitioner also objects to IG Ex. 6, the prosecution's sentencing memorandum, arguing that the exhibit presents one-sided attorney arguments not relevant to this case and creates unfair prejudice.  Petitioner raises concern with the attorney arguments contained in the prosecution's sentencing memorandum.  Petitioner provided one example of an objectionable statement involving Petitioner's direct subordinate, the Medical Affairs Manager, informing Petitioner that MassHealth requested a meeting.  P. Objs. at 3-4.  However, the statement is fully supported by the Information as well.  IG Ex. 2 at 6 (noting that in September 2012, the Medical Affairs Manager sent an email to Petitioner and others stating that a MassHealth official requested a meeting).  In *Maria Larkin*, DAB CR5409 (2019), a sentencing memorandum was admitted, with the ALJ noting that "sentencing memoranda have regularly been admitted and considered by ALJs."  *Larkin*, DAB CR5409 at 4 (citing *Doantrang Thi Nguyen a/k/a Trang Doan Nguyen a/k/a Tracy Nguyen & AQ Pharm., Inc.*, DAB CR2191 at 2-3 (2010) (an ALJ stating, when admitting a sentencing memorandum, that "[t]he document is an official court record, relevant to this inquiry, and thus admissible," but noting that any portions with questionable reliability will be given little, if any, weight)).  To the extent the sentencing memorandum in this case provides context to the underlying facts and circumstances of Petitioner's

Page 4

conviction, it is relevant.  Petitioner's sole example of the IG's reliance on this document was fully supported by the Information, and attorney arguments will not be considered as evidence.  As such, there is no unfair prejudice to Petitioner in admitting this document, and the objection is overruled.

Lastly, Petitioner objects to IG Ex. 7, which is the sentencing transcript from Shaun Thaxter's hearing.1
  Shaun Thaxter was excluded pursuant to the same subsection of section 1128 and based on the same underlying facts.  *Thaxter*, DAB CR5928.  The sentencing transcript from Thaxter's criminal case included testimony from Dr. Paul Jeffrey, MassHealth's Pharmacy Director, who was the point of contact for Indivior's Medical Affairs Manager.  IG Ex. 7 at 9-55.  Petitioner objects because the testimony is from a separate case, and one where Petitioner was not able to cross-examine the witness.  However, Petitioner's argument is without merit.  At Petitioner's own sentencing hearing, Petitioner's counsel stated, "And we understand the desire to put in Dr. Jeffrey and not recall him.  And we actually – we agree you're allowed to consider Dr. Jeffrey's testimony, there's no question about that."  IG Ex. 5 at 8.  While Petitioner asserts that he did not have the opportunity to cross-examine Dr. Jeffrey, Petitioner actually waived that opportunity and agreed to admit Dr. Jeffrey's testimony into Petitioner's own sentencing hearing.  IG Ex. 5 at 8, 10.  Therefore, Petitioner's objection is overruled.

All exhibits submitted by the IG will be admitted into evidence, with IG Exs. 5-7 being admitted over Petitioner's objections.

***B.  The IG's objections are sustained in part and overruled in part.***

The IG has objected to P. Exs. 1, 3, 4, 5, 8, 9, 10, and 11.  The IG objects to all of the aforementioned exhibits on the grounds that they amount to collateral attacks on Petitioner's underlying conviction, which is impermissible under 42 C.F.R. § 1001.2007(d).  IG Objs. at 1-7.  The IG also argues that P. Exs 1, 4, 5, 8, 9, 10, and 11 are irrelevant and immaterial to the issues in this case.  IG Objs. at 1-7.  The IG also raised an objection to "documentary evidence that Petitioner fails to properly introduce as exhibits," citing references in Petitioner's brief to documents not provided in this appeal.  IG Objs. at 7.  Each objection is addressed below.  While some of these exhibits could be used for the purpose of collaterally attacking Petitioner's conviction or arguing for mitigating factors, I find that several of the exhibits provide factual background information relevant to this case.

Page 5

Petitioner's Ex. 1 is Researched Abuse, Diversion, and Addition-Related Surveillance System (RADARS) provided Massachusetts-specific data showing buprenorphine-only tablets had the lowest unintentional pediatric exposure rate of the three categories.  On October 14, 2012, the Medical Affairs Manager asked to combine the two tablet exposure rates with the goal of showing Massachusetts a tablet exposure problem.  P. Ex. 1 at 2.  At the end of this email thread on October 16, 2012, RADARS had not provided such figures.  P. Ex. 1 at 1.  This exhibit provides relevant information that is supported by the complaint.  As such, the IG's objection is overruled, and Petitioner's Ex. 1 will be admitted into evidence.

Petitioner's Ex. 3 is MassHealth's December 2012 prescriber letter announcing expanded coverage of Suboxone Film, citing to a published abstract which included the incomplete chart that omitted buprenorphine-only tablets – the same chart directly provided to MassHealth by the Medical Affairs Manager which Petitioner subsequently encouraged others to use – which was a material factor in the expanded coverage decision.  IG Ex. 2 at 9-10 ("the chart . . . failed to reveal facts material to MassHealth prior to its updated formulary decision"); IG Ex. 7 at 40-41 (Dr. Jeffrey's testimony that it would have mattered if the chart contained a third line for buprenorphine-only tablets).  This exhibit will be admitted over the IG's objection and will be given the proper weight and consideration.

Petitioner's Ex. 4 is an email in which the Medical Affairs Manager received the Massachusetts exposure rates for all three categories of treatment medicine, and she then asked whether they could "just add [the two tablet rates] to see the difference from film."  P. Ex. 4 at 1.  As noted by the IG, there appears to be a gap in the email chain.  P. Ex. 4 at 2.  However, the later email repeats the Medical Affairs Manager's desire to combine the tablet exposure rates because they were "trying to show the state . . . that they have a problem with all tablets."  P. Ex. 4 at 2.  This exhibit will be admitted over the IG's objection and will be given the proper weight and consideration.

Petitioner's Ex. 8 shows that Suboxone Film was available through MassHealth prior to December 2012 with restrictions on approval for reimbursement.  IG Ex. 2 at 5.  The exhibit is only relevant for background context.  However, Petitioner's argument that it disproves a relation between Petitioner's offense and delivery of a health care item or service is misplaced.  This exhibit will be admitted over the IG's objection and will be given the proper weight and consideration.

Contrary to the above, P. Exs. 5 and 9 do not provide facts relevant to the issues present in this appeal.  MassHealth's decision in January 2016 to notify prescribers of Suboxone Film's preferred status and MassHealth's current inclusion of Suboxone Film as a preferred drug do not impact whether there is a legal basis to exclude Petitioner based on his conviction which related to criminal misbranding that occurred years prior.  Therefore, the IG's objections to P. Exs. 5 and 9 are sustained.

Page 6

Likewise, P. Exs. 10 and 11 do not provide facts relevant to the issues present in this appeal.  Petitioner states, "These exhibits are email chains between [Petitioner] and his colleagues at Indivior showing that [Petitioner] was scrupulous in making sure that the company's representation of medical information was accurate."  P. Reply Br. at 11.  This evidence has no impact on the issue of whether the IG had a legal basis to exclude Petitioner from federal health care programs.  Regardless of whether Petitioner was scrupulous in those efforts, Petitioner pleaded guilty to the crime, and these emails would only serve as a collateral attack on that conviction. The IG's objections to P. Exs. 10 and 11 are sustained.

The IG also objects to references that Petitioner makes to documents not introduced as exhibits in these proceedings.  IG Objs. at 7.  However, without determining whether Petitioner's decision not to introduce these documents as exhibits was proper, the arguments contained in these references will be given the proper weight and consideration, as many of the arguments are duplicated in other exhibits.  Therefore, it is unnecessary to strike these statements from Petitioner's brief.

Petitioner's Exs. 2, 6, and 7 are admitted into evidence without objection.  Petitioner's Exs. 1, 3, 4, and 8 are admitted over the IG's objections.  The IG's objections to P. Exs. 5 and 9-11 are sustained, and those exhibits will not be admitted into evidence.

III.  Issue

The issue to be decided is whether the IG has a basis for excluding Petitioner from participating in Medicare, Medicaid, and all other federal health care programs pursuant to section 1128(a)(1) of the Act.2
  42 U.S.C. § 1370a-7(a)(1).

IV.  Jurisdiction

Jurisdiction is proper under 42 C.F.R. §§ 1001.2007(a)(1)-(2), 1005.2(a).  *See also* 42 U.S.C. § 1320a-7(f)(1).

Page 7

V.  Findings of Fact

At all times relevant to this case up to December 23, 2014, Petitioner served as the Global Medical Director of Reckitt Benckiser Pharmaceuticals (RBP).  IG Ex. 2 at 1.  As the Global Medical Director, Petitioner provided medical advice in support of the company's research and development efforts.  P. Br. at 4.  On December 23, 2014, RBP demerged from their parent company and was renamed Indivior Inc.  IG Ex. 2 at 1.  Indivior Inc. became a subsidiary of Indivior PLC.  IG Ex. 2 at 1.  Petitioner was the Chief Medical Officer of Indivior PLC until he left the company in May 2016.  IG Ex. 2 at 1.  Consistent with other filings in this case, RBP, Indivior Inc., and Indivior PLC will be referred to collectively as "Indivior."

Indivior was in the pharmaceutical business throughout the United States, including "marketing, promotion, field sales, managed-care sales, and field-medical functions for drugs containing buprenorphine, an opioid, under brand names including Suboxone and Subutex."  IG Ex. 2 at 2.  On October 8, 2022, Indivior received FDA approval and orphan-drug exclusivity (preventing the FDA from approving competitors for seven years) for Suboxone Tablets and Subutex Tablets, the first buprenorphine-containing drugs3
 for use in treatment of opioid addiction/dependence.  IG Ex. 2 at 3.  These drugs were typically dispensed in bottles with child-resistant caps.  IG Ex. 2 at 4.

In 2007, as the seven-year exclusivity period for Suboxone and Subutex Tablets neared its end, Indivior began developing Suboxone Film.  IG Ex. 2 at 4.  Similar to the Suboxone Tablet, the Suboxone Film was a combination of buprenorphine and naloxone for use in treating opioid addiction/dependence, but the Film was in thin form and was packaged in individual child-resistant pouches.  IG Ex. 2 at 4.  In August 2010, Indivior received FDA approval for Suboxone Film.  IG Ex. 2 at 4.

At all relevant times, Indivior was generating substantially all of their revenue from sales of Suboxone Tablet, Subutex Tablet, and Suboxone Film.  IG Ex. 2 at 5.  Following FDA approval of Suboxone Film in August 2010, Indivior began actively promoting only that product.  IG Ex. 2 at 5.  Prior to December 2012, MassHealth, "the largest Medicaid program in the country by volume of addiction-treatment-drug business," placed restrictions on reimbursement for Suboxone Film.  IG Ex. 2 at 5; P. Ex. 8.  During Indivior's development of marketing materials for Suboxone Film, including materials to persuade the highly important MassHealth, Petitioner attended a meeting with Indivior personnel and others, a meeting with Indivior personnel and FDA personnel, and a working session with Indivior personnel, all of which discussed highlighting Indivior's belief that Suboxone Film provided increased protection against unintended pediatric exposure due to its packaging, despite no studies to that effect having taken place.  IG Ex.

Page 8

2 at 5-6.  Petitioner also emailed Indivior personnel to report that the FDA appeared to have denied Indivior's ability to make a promotional claim of increased safety due, in part, to the absence of studies on the issue.  IG Ex. 2 at 6.

During 2012 and thereafter, Indivior worked with RADARS to analyze rates of unintended pediatric exposure for their products.  IG Ex. 2 at 5.  Indivior's primary point of contact with RADARS was the Medical Affairs Manager, who reported directly to Petitioner.  IG Ex. 2 at 5.  Indivior used the RADARS analyses of unintended pediatric exposure in the marketing of Suboxone Film.  IG Ex. 2 at 5.  On September 28, 2012, the Medical Affairs Manager sent an email to Petitioner and other Indivior employees reporting that MassHealth requested a meeting.  IG Ex. 2 at 6.  On October 9, 2012, the Medical Affairs Manager met with MassHealth alone and presented a RADARS analysis of nationwide unintended pediatric exposure data.  IG Ex. 2 at 6.  The Medical Affairs Manager also stated in this email that they would be following up with RADARS to request unintended pediatric exposure data specific to Massachusetts to provide to MassHealth, which was later requested and obtained.  IG Ex. 2 at 7.

The Massachusetts-specific data showed unintended pediatric exposure rates as follows:  3.3 exposures per 10,000 unique recipients for Suboxone Tablets; 2.7 exposures per 10,000 unique recipients for Suboxone Film; and 1.8 exposures per 10,000 unique recipients for buprenorphine-only tablets (such as Subutex).  IG Ex. 2 at 7.  Buprenorphine-only tablets showed the lowest rate of unintended pediatric exposure in Massachusetts despite being packaged in bottles with child-resistant caps, as opposed to Suboxone Film's individual packaging.  IG Ex. 2 at 7.

After receiving this data, the Medical Affairs Manager emailed RADARS, with Petitioner copied, asking if they could "just add the [two] tablets to see the difference from [Suboxone] Film?"  IG Ex. 2 at 7; P. Ex. 4 at 2.  The Medical Affairs Manager sent another request to combine the two tablet exposure rates a few days later, expressing the goal of showing Massachusetts that they had a tablet exposure problem.  P. Ex. 1 at 3.  Petitioner emailed the Medical Affairs Manager individually noting that the RADARS data "actually appear[ed] to make [buprenorphine-only] tablets look best or am I mi[s]reading?"  IG Ex. 2 at 7-8.  RADARS responded to the Medical Affairs Manager and Petitioner indicating it would request the additional calculations and data.  IG Ex. 2 at 8; P. Ex. 4 at 2.

On October 16, 2012, the Medical Affairs Manager sent MassHealth an email containing a calculation of the Massachusetts-specific unintended pediatric exposure data that added the tablet rates together, which does not provide an accurate calculation.  IG Ex. 2 at 8; P. Ex. 2 at 2-3.  The Medical Affairs Manager also indicated to MassHealth that she received the calculations from RADARS, despite having made the calculations herself.  IG Ex. 2 at 8; P. Ex. 2 at 2.  The Medical Affairs Manager represented, with the presented calculations and explanation, that Suboxone Film had the lowest unintentional pediatric

Page 9

exposure rate in Massachusetts according to RADARS.  IG Ex. 2 at 8; P. Ex. 2 at 2-3.  The Medical Affairs Manager then forwarded the email to Petitioner indicating she sent it to MassHealth to "get some movement in Mass."  IG Ex. 2 at 8.

On November 19, 2012, responding to a follow-up question in response to the inaccurate Massachusetts-specific data, the Medical Affairs Manager sent MassHealth an email with a chart from an Indivior promotional brochure.  IG Ex. 2 at 8; P Ex. 2 at 1-2.  The chart compared national unintended pediatric exposure data for Suboxone Film and Suboxone Tablet, omitting a line for buprenorphine-only tablets like Subutex Tablet, despite such data being known to the Medical Affairs Manager.  IG Ex. 2 at 8-9.  The chart showed that Suboxone Film had a much lower rate of unintended pediatric exposure nationally than Suboxone Tablet.  IG Ex. 2 at 8-9.  However, including the buprenorphine-only data line would have shown that those were also lower than Suboxone Tablet and had less of a difference from Suboxone Film.  IG Ex. 2 at 8-9.  The Medical Affairs Manager did not copy Petitioner when emailing this information to MassHealth, but a separate Indivior employee emailed Petitioner about the chart that was included and stated, "I couldn't help but notice that the chart did not show the [buprenorphine-only tablets] line.  Does that mean we can also show the graph without [that] line?  That would make such a huge difference!"  IG Ex. 2 at 9.  Petitioner replied, "That chart is now published so nock [sic] yourself out!"  IG Ex. 2 at 9.

Following these communications, the Medical Affairs Manager received additional unintended pediatric exposure data that showed Suboxone Film not having the lowest rate in Massachusetts for one quarter of 2012, but she did not provide this data to MassHealth.  IG Ex. 2 at 9.  When asked by another Indivior employee why she did not share the additional data with MassHealth, the Medical Affairs Manager stated that her rationale was "don't ask, don't tell."  IG Ex. 2 at 9.

In December 2012, MassHealth announced it would cover Suboxone Film for individuals who live in households with children less than six years of age, citing to Indivior's nationwide unintended pediatric exposure rate data that compared tablets to film with no distinction between Suboxone Tablet and buprenorphine-only tablets.  IG Ex. 2 at 9-10.  Indivior did not correct the inaccurate statements made to MassHealth regarding Massachusetts exposure rates until December 2015, approximately two years after the government's investigation began, at which time Petitioner approved a correction letter.  IG Ex. 2 at 10.  Based on all of the above, Petitioner was charged "as a responsible Indivior executive, [because Petitioner] failed to prevent and promptly correct the distribution of the false and misleading unintended pediatric exposure data and marketing claims to MassHealth."  IG Ex. 2 at 10.

As a part of Petitioner's plea agreement, he agreed that all of the facts in Count 1 of the Information were true and correct.  I.G. Ex. 2 at 2.  Petitioner agreed and acknowledged

Page 10

that he may be excluded from participation in Medicare, Medicaid, and all other Federal health care programs as a result of his conviction.  IG Ex. 3 at 5.

The District Court accepted Petitioner's plea on December 17, 2020.  IG Ex. 4.  Petitioner was sentenced to one year of probation, six months of home detention, and ordered to pay $100,025 in fines and assessments.  IG Ex. 4 at 2, 4-5.

VI.  Legal Authorities

The Secretary of the U.S. Department of Health and Human Services shall exclude an individual from participation in Medicare, Medicaid, and all other federally funded health care programs if that individual has been convicted of a criminal offense related to the delivery of an item or service under Title XVIII of the Act or any State health care program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).  The Act requires a minimum exclusion period of five years when the exclusion is mandated under 42 U.S.C. § 1320a-7(a).  42 U.S.C. § 1320a‐7(c)(3)(B); 42 C.F.R. § 1001.102(a).

In exclusion cases, the IG has the burden of proving the basis for the exclusion and the existence of any aggravating factors.  42 C.F.R. §§ 1001.102(b), 1005.15(b)(2).  The standard of proof is a preponderance of the evidence, which means a fact is proven if the evidence shows that it is more likely true than not true.  42 C.F.R. §§ 1001.2007(c), 1005.15(d).  In this case, the IG must prove that Petitioner was convicted of an offense related to the delivery of a health care item or service under the Medicare or a state healthcare program.

An excluded individual may request a hearing before an ALJ to determine whether the IG had a legal basis for imposing the exclusion and whether an exclusion, longer than the required minimum period, is unreasonable in light of any applicable aggravating and mitigating factors.  42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a).

VII.  Analysis and Conclusions of Law

***A. It is undisputed that Petitioner was convicted of a criminal offense.***

In order to prevail, the IG must prove, by a preponderance of the evidence, that Petitioner was convicted of a criminal offense related to the delivery of a health care item or service under Medicare or any federally funded health care program.  An individual is considered convicted of a criminal offense "when a plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal, State, or local court."  Act § 1128(i)(3) (42 U.S.C. § 1320a-7(i)(3)); *see also* 42 C.F.R. § 1001.2 (subparagraph (c) under the definition of "*Convicted*").  It is undisputed that on August 28, 2020, Petitioner entered into a plea agreement and plead guilty to a misdemeanor under the RCO doctrine for causing the introduction or delivery for introduction into interstate commerce of a drug

Page 11

that is misbranded, in violation of 21 U.S.C. §§ 331(a) and 333(a)(1).  IG Ex. 3 at 1.  On December 17, 2020, the District Court accepted Petitioner's guilty plea and sentenced him to one year of probation and six months of home detention and ordered him to pay $100,025 in fines and assessments.  IG Ex. 4 at 2, 4-5.

***B. Petitioner's conviction was related to the delivery of a health care item or service under the Medicaid program, which subjects him to a mandatory exclusion from all federal health care programs for a minimum of five years*****.**

Petitioner disputes that the conviction is related to the delivery of an item or service under the Medicare program.  P. Br. at 1, 10-18.  Petitioner also disputes that his conviction subjects him to a mandatory exclusion.  P. Br. at 1, 18-23.  Petitioner argues that he is not subject to an exclusion because the IG has not proven that his conviction for misbranding is related to the delivery of a health care item or service.  P. Br. at 2.  Specifically, Petitioner claims that the conviction is not related to Medicare or a state health care program, and also argues that there are no "allegations that any deliveries of the misbranded drug under MassHealth were related to the 2012 expansion decision."  P. Br. at 1, 10-18.

To prove that Petitioner's conviction was related to the delivery of a health care item or service, the IG must show that there is a nexus between the offense and the delivery of a health care item or service.  The Departmental Appeals Board (Board) "has repeatedly held that the phrase ‘related to' within the context of section 1128(a)(1) requires only that a common‐sense nexus exists between the offense and the delivery of a health care item or service under the state healthcare program."  *Summit S. Shah, M.D*., DAB No. 2836 at 6 (2017) (citing cases).  In determining whether a nexus exists, an ALJ may consider "evidence as to the nature of an offense," such as "facts upon which the conviction was predicated."  *Shah*, DAB No. 2836 at 7 (internal quotation marks and citations omitted); *see also Lyle Kai, R.Ph.*, DAB No. 1979 at 5 (2005) ("[I]t is not the labeling of the offense . . . which determines whether the offense is program-related.") (internal quotation marks and citations omitted), *aff'd*, *Kai v. Leavitt*, No. 05-00514 (D. Haw. July 17, 2006).

In the plea agreement, Petitioner admitted to causing the introduction or delivery for introduction of a misbranded drug into interstate commerce.  IG Ex. 3 at 1.  The evidence shows that the Medical Affairs Manager, who was Petitioner's subordinate, made false and misleading statements about the safety of Suboxone Film to MassHealth, a state Medicaid program.  IG Br. at 8.  In reviewing Massachusetts‐specific data from RADARS, the exposure rates were shown for three categories of drugs (Suboxone Film, Suboxone Tablet, and buprenorphine-only tablets), but Petitioner chose to submit the data in a way to make Suboxone film look more effective.  IG Ex. 2 at 7.  Petitioner admitted that because the incomplete chart was "shared in light of the Medical Affairs Manager's

Page 12

prior false and misleading email" on Massachusetts‐specific data, "the chart without the third line of data failed to reveal facts material to MassHealth prior to its updated formulary decision."  IG Ex. 2 at 9.  Further, "[b]y not including the data related to buprenorphine-only tablets, the Medical Affairs Manager showed Suboxone Film as having the lowest rate of unintended pediatric exposure in the state."  IG Ex. 2 at 9.  Despite having seen the initial data that showed the correct exposure rates and acknowledging that the buprenorphine-only tablets had the highest safety rate, Petitioner failed to stop his subordinate from manipulating the data and introducing that data to MassHealth.  IG Ex. 2 at 7.

Even after a chart was published with the inaccurate data, Petitioner gave another employee permission to use the chart.  IG Ex. 2 at 9.  The purpose of submitting the inaccurate data was to persuade MassHealth, a Medicaid program, to expand the coverage of Suboxone Film.  IG Ex. 2 at 5.  At the time of the complaint, MassHealth was the largest Medicaid program in the country by volume of addiction treatment drug business.  IG Ex. 2 at 5.  Dr. Jeffrey, the Deputy Director for the Office of Clinical Affairs and the Director of Pharmacy for MassHealth, who communicated with Petitioner's subordinate, testified that it would have mattered if the chart had the third line for buprenorphine-only tablet exposure rates.  Dr. Jeffrey stated that "it would have signaled that [he] needed to look at the data that was presented to [him] differently in the email" that presented the Medical Affairs Manager's inaccurate combination of tablet exposure rates in Massachusetts.  IG Ex. 7 at 40-41.  Dr. Jeffrey also testified that the email communicating the Massachusetts-specific data was "the pivot point upon which" MassHealth decided to change their policy around Suboxone Film, and it "[a]bsolutely" would have mattered if he had received the accurate Massachusetts-specific data for all three categories.  IG Ex. 7 at 36-39.  Additionally, MassHealth's December 2012 prescriber letter announcing the coverage expansion referenced the incomplete chart that "failed to reveal facts material to MassHealth" prior to the expansion.  P. Ex. 3; P. Ex. 2 at 28-29; IG Ex. 2 at 8-9.

Despite Dr. Jeffrey's testimony, Petitioner asserts that MassHealth's decision to expand access to Suboxone Film was based on accurate RADARS data (P. Ex. 3) and did not cite the chart or any other misstatements or data shared by Petitioner's subordinates.  P. Br. at 12-14.  Petitioner also contends that prior to the 2012 expansion decision, MassHealth beneficiaries could already obtain Suboxone Film without prior authorization.  P. Br. at 15 (citing IG Ex. 2 at 5; P. Ex. 8).

Petitioner cites *Catherine L. Dodd, R.N.*, DAB No. 1345 (1992) in support of his argument that the IG has not established a nexus between Petitioner's offense and the delivery of a health care item.  P. Br. at 15.  *Dodd* involved a petitioner who falsified certain patient records in order to convert medications for personal use, but the IG failed to establish which patients' records were falsified or whether those individuals were receiving items or services under Medicare or Medicaid.  *Dodd*, DAB No. 1345 at 5.

Page 13

Due to the IG's failure to identify Medicare and Medicaid recipients in that case, the Board held that the IG had not proven the requisite nexus.  However, the Board also stated, "It is not always necessary in a section 1128(a)(1) exclusion to link a Petitioner's offense to specific named patients."  *Dodd*, DAB No. 1345 at 6.  It is well established that actual delivery is not necessary to establish a relation between the offense and delivery under a state health care program.  *See e.g., Thaxter*, DAB No. 3053; *W. Scott Harkonen, M.D.*, DAB No. 2485 (2012), *aff'd, Harkonen v. Sebelius*, 2013 WL 5734918 (N.D. Cal. 2013) (affirming that a drug manufacturer's issuance of a press release that was designed to encourage sales of the drug can be considered fraud in the delivery of that drug); *James O. Boothe*, DAB No. 2530 (2013) (company executive's misrepresentation to the administrator of a Medicaid program permitted the company to continue participating in the Medicaid program, thereby helping to ensure that the company "continued delivering items and services to Medicaid beneficiaries and receiving payment from Medicaid for those items and services").

Petitioner's offense, as admitted in the plea agreement, is based upon Indivior's false and misleading statements to MassHealth about Suboxone Film that led MassHealth to expand coverage of the misbranded drug to its members.  Suboxone Film is a health care item used in the treatment of opioid addiction and is paid for by Federal and State health care programs, including MassHealth. I.G. Ex. 2 at 4; P. Br. at 8. The evidence shows that a Medicare or a state health care program was directly impacted by the actions of Petitioner and Indivior.  Therefore, a specific delivery or recipient is not necessary to establish the nexus.  *Kai*, DAB No. 1979 at 6 ("We know of no authority . . . that would require the IG to identify the particular packages of recycled pharmaceuticals billed to Medicaid or establish that Petitioner's participation related to those particular packages in order to establish the program relatedness of his offense . . . .  Requiring the IG to identify which particular recycled pharmaceuticals were billed to Medicaid would impose an impossible burden on the IG and one that we find at odds with Congress's intent . . . .").

Based on the foregoing, the IG has established that Petitioner was convicted of an offense related to the delivery of an item or service under Medicare or a state health care program.  Thus, the IG has met its burden and shown a legal basis for excluding Petitioner pursuant to section 1128(a)(1) of the Act.

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***C. Because Petitioner's conviction is related to the delivery of a health care item or service, a mandatory exclusion must be imposed.***

Petitioner argues that the IG should have excluded Petitioner under a permissive exclusion instead of a mandatory exclusion.4
  Petitioner also argues that the IG was required "to articulate a principled distinction between misdemeanor misbranding subject to mandatory exclusion and misdemeanor misbranding subject to permissive exclusion," adding that precedent establishes misdemeanor misbranding as subject to permissive exclusion.  P. Br. at 2, 18-23.  Petitioner relies on *Friedman v. Sebelius*, 686 F.3d 813 (D.C. Cir. 2012), to support his argument.

Despite Petitioner's emphasis on the *Friedman* decision, "*Friedman* did not address whether misdemeanor misbranding was subject to mandatory exclusion when HHS determined that it was a ‘program-related crime' under 42 U.S.C. § 1320a-7(b)(1)."  *Parrino v. Price*, 869 F.3d 392, 400 (6th Cir. 2017).  While *Friedman* affirms a permissive exclusion for misdemeanor misbranding, it does not foreclose the possibility of such an offense meeting the requirements of a mandatory exclusion under section 1128(a)(1).  Indeed, *Friedman* supports a fact-specific approach in determining whether an offense is related to delivery of a health care item or service, rather than making a "categorical approach" determination based upon "the statutory definition of the prior offense."  *Friedman* 686 F.3d at 819.

In this case, I have determined that Petitioner's conviction is related to the delivery of an item or service under Medicare or a state healthcare program.  Therefore, the IG is required to impose a mandatory exclusion.  When an offense satisfies the requirements of a mandatory exclusion, "courts have repeatedly held that the IG is then required to impose a mandatory exclusion even if an individual's conduct also falls within the scope of a permissive exclusion provision."  *Timothy Wayne Hensley*, DAB No. 2044 at 15 (2006) (citing *Dan Anderson*, DAB CR855 (2002)), *aff'd, Anderson v. Thompson*, 311 F. Supp. 2d 1121 (D. Kan. 2004)); *Travers v. Sullivan*, 791 F. Supp. 1471 (E.D. Wash. 1992); *Greene v. Sullivan*, 731 F. Supp. 835 (E.D. Tenn. 1990).  In *Tamara Brown*, DAB No. 2195 (2008), the Board noted that a permissive exclusion provision did "not apply where . . . the misdemeanor involves ‘program-related crimes' such as those ‘related to the delivery of an item or service' in the Medicare or Medicaid programs" listed in section 1128(a)(1).  *Brown*, DAB No. 2195 at 7.  These cases support the conclusion that the IG must use a "‘circumstance-specific' approach that analyzes ‘the particular conduct giving rise to the conviction' before determining whether mandatory or permissive exclusion is appropriate."  P. Br. at 8 (citing *Friedman*, 686 F.3d at 819).  This approach is consistent with Board case law permitting ALJs to consider "evidence as to the nature

Page 15

of an offense, including the facts upon which the conviction was predicated," in order to determine whether an offense is related to the delivery of a health care item or service.  *Thaxter*, DAB No. 3053 at 11 (citing *Shah*, DAB No. 2836 at 7) (internal quotations omitted).  If the IG conducts this analysis and determines there is a relation between the offense and the delivery of an item or service under Medicare or a state health care program, the IG must exclude a petitioner under the mandatory provision.  The full analysis is not required on the notice of intent or notice of exclusion, and its absence does not establish a "categorical approach" to determining program-related offenses for exclusion under mandatory provisions.  *Jeffrey Knute Connell*, DAB CR1271 at 1-2 (2005) (where the IG utilized substantially the same notice language as the instant case for an exclusion under section 1128(a)(1), the ALJ found the notice gave "ample explanation of the exclusion," and that lacking a statement "in detail [of] the elements of Petitioner's crime" was "hardly a basis for concluding that the notice [was] defective.").

Petitioner cites to several cases where permissive exclusions were implemented in misbranding cases.  However, Petitioner's arguments are unpersuasive.  As discussed, the Secretary and IG utilize a "circumstance-specific" approach to determine whether an offense like Petitioner's conviction relates to the delivery of an item or service under Medicare or a state health program.  Additionally, the IG's enforcement actions against other individuals "ha[ve] no bearing on whether the IG had a valid basis to exclude Petitioner under" section 1128(a)(1) in this case.  *Benny R. Bailey*, DAB No. 2935 at 10 (2019).  The review in this case is "limited to the exclusion before [this ALJ], not to determining the IG's reasons for not applying mandatory authority in a different case."  *Bailey*, DAB No. 2935 at 10.  In line with this reasoning, an "ALJ does not have the authority to find invalid or refuse to follow Federal statutes or regulations or secretarial delegations of authority."  42 C.F.R. § 1005.4(c)(1); *Jewish Home of Eastern Pa.*, DAB No. 2254 at 14 (2009) ("[A]llegations by a party against which an action has been taken that the treatment accorded to it is harsher than that accorded to others similarly situated do not prohibit an agency of this Department from exercising its responsibility to enforce statutory requirements.") (internal quotations omitted)), *aff'd*, *Jewish Home of Eastern Pa. v. Ctrs. for Medicare & Medicaid Servs.*, 693 F.3d 359 (3d Cir. 2012).

Petitioner argues that the IG's imposition of a mandatory exclusion under section 1128(a)(1) is "arbitrary and capricious."  P. Br. at 20-23.  However, the arbitrary and capricious standard of review is not the standard of review applicable to administrative appeals of IG exclusions.  *Bailey* DAB No. 2935 at 10.  Petitioner also attempts to distinguish cases in which a mandatory exclusion was applied after a conviction for misdemeanor misbranding on the basis that those cases involve a restitution payment by the excluded individual or an admission of program loss.  P. Br. at 22 n.20.5
  Petitioner

Page 16

also attempts to distinguish *Thaxter*, DAB No. 3053, which rejects applying the arbitrary and capricious standard when the petitioner challenged a 10-year exclusion period under section 1128(a)(1), on the basis that the petitioner in that case was ordered to pay what was effectively restitution.  P. Br. at 22.  However, Section 1128(a)(1) does not require any showing of restitution or program losses.  Whether restitution or program losses are present is irrelevant in the analysis of whether the IG had a legal basis for excluding Petitioner under section 1128(a)(1).  Therefore, the IG has no discretion to decrease the period of exclusion below the mandatory minimum.  42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.102(a).  Petitioner identified multiple cases where a mandatory minimum, or higher, exclusion was imposed under section 1128(a)(1) stemming from a conviction for misdemeanor misbranding, supporting a conclusion that the instant decision would not be arbitrary and capricious if such a standard of review applied here.  Notably, *Parrino* characterizes the language of the statute as "clear and unambiguous" while rejecting an "arbitrary and capricious" argument.  *Parrino*, 869 F.3d at 400.

Lastly, to the extent Petitioner challenges the constitutionality of section 1128 through claims of ambiguity, ALJs have no authority to disregard federal statutes or regulations, even on constitutional grounds.  *Urology Group of NJ, LLC*, DAB No. 2860 at 14 (2018) ("The Board may not declare unambiguous statutes or regulations unconstitutional and decline to follow them on that basis.").

VIII.  Conclusion

The IG has proven by a preponderance of the evidence that Petitioner was convicted of a criminal offense, and that the offense related to the delivery of an item or service under Medicare or a state health care program.  Therefore, Petitioner shall be excluded from

Page 17

participating in Medicare, Medicaid, and all other federal health care programs for the mandatory five-year period.  The five-year exclusion imposed by the IG is AFFIRMED.


          /s/
        Tannisha D. Bell

                      Administrative Law Judge
      1. Shaun Thaxter was the CEO of Indivior during the times relevant to the facts of this case.  Similar to Petitioner, Thaxter was also excluded from federal health care programs pursuant to Section 1128(a)(1) based on a conviction under the Responsible Corporate Officer doctrine.  Shaun Thaxter, DAB CR5928 (2021), aff'd, Shaun Thaxter, DAB No. 3053 (2021). back to note 1
                      2. ALJs are restricted in these cases to considering two issues:  (1) whether there is a basis for exclusion, as described above, and (2) whether the period of exclusion is reasonable.  42 C.F.R. § 1001.2007(a)(1).  However, where the IG imposes the mandatory minimum exclusion of five years, "the exclusion's length is reasonable as a matter of law, and the excluded individual may request a hearing only on the issue" of whether there is a basis for exclusion.  Diane Marie Krupka A/K/A Diane Marie Salak, DAB No. 3020 at 2 (2020); 42 C.F.R. § 1001.2007(a)(2). back to note 2
                      3. Suboxone Tablets contained a combination of buprenorphine and naloxone, whereas Subutex Tablets did not contain naloxone.  IG Ex. 2 at 4. back to note 3
                      4. Although Petitioner provides other bases for this argument, to the extent this or any other arguments are meant to request equitable relief, ALJs have no authority to disregard regulations to grant such relief.  Harkonen, DAB No. 2485 at 22. back to note 4
                      5. Three of five cases with restitution orders cited by Petitioner involve periods of exclusion beyond the mandatory minimum due to the restitution, which supported aggravating factors while analyzing the duration of exclusion.  Eduardo Miranda, M.D., DAB No. 2755 at 4-6 (2016); Mohammad Basel Aswad, M.D., DAB CR4637 at 4 (2016), aff'd, Aswad, DAB No. 2741 (2016); Christopher Keegan, DAB CR3242 at 3 (2014).  The other two cases with restitution orders involve the mandatory minimum period of exclusion and were determined to be lawful.  Parrino, 869 F.3d at 400; Vincent Koh, DAB CR5262 (2019).  Finally, the last case cited by Petitioner imposed a mandatory minimum five-year exclusion and does not involve any restitution, but only states that "Petitioner does not dispute that some of the recycled pharmaceuticals were billed to Medicaid."  Kai, DAB 1979 at 6.  This merely supports a relation between the offense and delivery of an item under Medicaid, which provides a legal basis for the imposed exclusion. back to note 5 Back to top
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