United States v. Lauren C. Stevens: Corporate Counsel In DOJ’s Crosshairs
by Bill Mateja
In the wake of the Justice Department’s recent indictment of Lauren Stevens, the former in-house counsel for a “major” pharmaceutical company, corporate counsel need to be extremely careful in responding to even the simplest of requests from regulators and governmental agencies and otherwise cooperating with such bodies. In a nutshell, the Stevens indictment alleges that Ms. Stevens withheld documents pertinent to the FDA’s informal investigation into the alleged off-label promotion of Wellbutrin, an anti-depression drug.
Notably, Stevens intends to defend based on her belief that she was following outside counsel’s advice. This case ups the ante for corporate counsel in responding to government inquiries, potentially criminalizes what many would consider to be good lawyering, and places in doubt whether reliance on outside counsel’s advice will insulate a client from government misconduct claims.
The Stevens Indictment
Ms. Stevens was the attorney in charge of responding to the FDA’s inquiry, and “led a team of lawyers and paralegals” gathering documents and information in response. The indictment alleges that Stevens caused the company to withhold relevant and allegedly incriminating documents gathered as a result of the internal review.
The documents included 40 sets of slides used at continuing medical education or other programs sponsored by the company. According to the indictment, many of the slides improperly discussed off-label uses of Wellbutrin. The internal review also identified two physicians who each had spoken at roughly 500 such events. Stevens also allegedly represented, in a letter to the FDA, that the company had completed the production of the requested documents, although it allegedly had not produced any of the slide sets, including those from the two doctors.
Notably, the indictment alleges that Stevens specifically asked for a memo from other lawyers on her team summarizing the “pros and cons” of producing these slide sets to the FDA. Among the “cons” was: “Provides incriminating evidence about potential off-label promotion of [the drug] that may be used against [the pharmaceutical company] in this or in a future investigation.”
Nonetheless, Stevens allegedly sent a “final letter” that “falsely” stated the company had completed its production of information and documents in response to the inquiry.
Several months after this final letter, Stevens supposedly learned that a sales representative had turned “whistleblower” by providing the FDA several of the withheld slide sets. In response, Stevens allegedly sent a letter to the FDA claiming there were only “isolated deficiencies” in the company’s promotional programs, and that the company had not encouraged an off-label use of the drug . Moreover, Stevens selectively enclosed with this letter only the few slide sets she knew the FDA had received from the whistleblower.
Ms. Stevens was charged with obstructing an official proceeding, concealing and falsifying documents to influence a federal agency, and making false statements to the FDA. The Boston U.S. Attorney stated: “There is a difference between legal advocacy based on the facts and distorting the facts to cover up the truth.” Stevens’ lawyers shot back stating: “Everything she did in this case was consistent with ethical lawyering and the advice provided her by a nationally prominent law firm retained by her employer specifically because of its experience in working with the FDA.”
1) Consider allowing outside counsel to respond directly to the government. Cost pressures have dictated that corporate counsel take certain functions in-house. This case illustrates that those benefits might be far outweighed by the risk of liability. While it is not certain, one cannot help but think that outside counsel dealing directly with the FDA would have changed things. Should this function remain in-house, however, consider designating another to be the formal custodian so the lines between custodian and advocate are not blurred.
2) Lawyering can be the subject of criminal review. No doubt, Stevens will defend on the ground that she, as a lawyer, exercised her legal judgment in determining that the withheld information was either not subject to production or not called for by the FDA–the “meat and potatoes” of lawyering in this realm. Know that one’s legal judgment might potentially be called into question nonetheless. Know also that the government believes there is a clear enough line between advocacy and misconduct.
3) Carefully respond to even simple government inquiries. Stevens was merely responding to an informal request, not a subpoena, civil investigative demand, or other formal request. No request should be taken lightly.
4) The cover up is always worse than the crime. We need only look at the long list starting with Martha Stewart, Watergate and Iran-Contra to know this truism. Remember, it’s nearly always easier for the government to prove obstruction than it is to prove the alleged, underlying crime.
5) Whistleblowers, whistleblowers, whistleblowers! Let’s face it; ours has become a tattletale society. Whether it is the False Claims Act or securities violations under Dodd-Frank, whistleblowers are the tool du jour for law enforcement. Assume that anything you do could be the subject of a whistleblower action. Harkening back to Hill Street Blues: “Be careful out there.”
Bill Mateja is a former federal prosecutor and current principal at Fish & Richardson where he specializes in white collar defense and government investigations. He can be reached at firstname.lastname@example.org.