Stumbling Blocks To DOJ’s Focus On Individuals: Jury Acquits Former Warner Chilcott Exec, Confirms AKS Cannot Be Used To Attack Efforts Merely To Build Relationships

In the wake of Warner Chilcott’s civil settlement and guilty plea last fall, DOJ made headlines with the indictment of former Warner Chilcott executive Carl Reichel for his alleged role in the company’s violations of the Anti-Kickback Statute (“AKS”) (as discussed here).  The indictment closely followed the announcement by Deputy Attorney General Sally Yates that the government was implementing a new commitment to prosecute individuals where appropriate (as discussed here).  Today the government’s highest-profile test case fell short, with a jury acquitting Reichel after less than one day of deliberations.

Reichel’s indictment charged him with one count of conspiracy to violate the Anti-Kickback Statute.  According to the indictment, Reichel communicated to sales representatives that they should use sham medical education dinners to “build relationships” with physicians and force them to make “commitments” to purchase Warner Chilcott products.  The jury instructions (available here) advised that, “A defendant cannot be convicted of the Anti-Kickback statute merely because he sought to cultivate a business relationship or create a reservoir of goodwill that might ultimately affect one or more unspecified purchase or order decisions.  If the remuneration is only for a purpose other than seeking to effect a quid pro quo transaction of payments of remuneration for order or purchase of drugs, it is not within the scope of the Anti-Kickback Statute.”

The jury’s speedy acquittal of Reichel—following guilty pleas by several other, less senior executives—reinforces that, despite the government’s much-publicized emphasis on holding individuals responsible for corporate misconduct, successfully convincing a jury of criminal guilt remains challenging.