Dr. Timothy Baxter, DAB No. 3074 (2022)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Dr. Timothy Baxter (Petitioner) appealed a decision of an Administrative Law Judge (ALJ) upholding the determination of the Inspector General (I.G.) to exclude Petitioner from participating in all federal health care programs for a mandatory minimum period of five years under section 1128(a)(1) of the Social Security Act (Act).¹  Dr. Tim Baxter, DAB CR6081 (2022) (ALJ Decision).  The ALJ concluded that the I.G. had a lawful basis to exclude Petitioner based on his conviction of a criminal offense related to the delivery of an item or service under a state health care program.  Specifically, the ALJ found Petitioner, a pharmaceutical executive, was convicted of a misdemeanor drug mislabeling offense based on his failure to prevent and promptly correct the distribution of false and misleading data and marketing claims about the safety of Suboxone Film to the Massachusetts Medicaid program.  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

Legal Background

Section 1128(a)(1) of the Act requires the Secretary of the Department of Health and Human Services (Secretary) to exclude from participation in all federal health care programs any individual who has been “convicted of a criminal offense related to the delivery of an item or service under [Medicare] or under any State health care program.”  Act § 1128(a)(1); see also 42 C.F.R. § 1001.101(a).²  “State health care program” is defined by section 1128(h) of the Act to include “a State plan approved under title XIX,”

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that is, a state’s federally approved Medicaid program.  An exclusion imposed under section 1128(a)(1) must be for a minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

An individual is “convicted” within the meaning of section 1128(a)(1) when, among other things, “a judgment of conviction has been entered against the individual . . . by a Federal, State, or local court” or “when a plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local court.”  Act § 1128(i)(1), (3).  “It is the fact of the conviction which causes the exclusion.”  Peter J. Edmonson, DAB No. 1330, at 4 (1992) (underlining replaced by italics).  The general purpose of section 1128 is to provide “protection for federally funded programs and their beneficiaries and recipients” by excluding “potentially untrustworthy individuals or entities based on criminal convictions.”  Id.

An excluded individual may request a hearing before an ALJ, but only on the issues of (i) whether the “basis for” exclusion exists, and (ii) whether “[t]he length of exclusion is unreasonable.”  42 C.F.R. §§ 1001.2007(a), 1005.2(a).  When, as here, the exclusion is mandatory and is imposed for the minimum five-year period, the excluded individual may request a hearing only on the issue of whether the I.G. had a basis for the exclusion.  Id. § 1001.2007(a)(1)-(2); Robert C. Hartnett, DAB No. 2740, at 2 (2016).  The underlying conviction is not reviewable or subject to collateral attack on substantive or procedural grounds.  42 C.F.R. § 1001.2007(d).  An ALJ has the authority to schedule a hearing; examine witnesses; and receive, rule on, and exclude or limit evidence.  Id. § 1005.4(b).  The ALJ issues an initial decision based on the record developed before the ALJ.  Id. § 1005.20(a).

A party dissatisfied with the ALJ’s initial decision may appeal that decision to the Board.  Id. § 1005.21(a).  The Board “will not consider any issue not raised in the parties’ briefs, nor any issue in the briefs that could have been raised before the ALJ but was not.”  Id. § 1005.21(e).  Board review of an ALJ decision is, in general, based on the evidentiary record developed before the ALJ.  See id. § 1005.21(f); Gracia L. Mayard, M.D., DAB No. 2767, at 6-8 (2017).

Case Background³

At all times relevant to this appeal up to December 23, 2014, Petitioner served as the Global Medical Director of Reckitt Benckiser Pharmaceuticals Inc. (“RBP”) and reported to RBP’s top executive.  I.G. Ex. 2 (Information), at 1 (¶ 2); Request for Review (RR)

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at 3.⁴  On or about December 23, 2014, RBP demerged from its parent company, was subsequently renamed Indivior Inc., and became a subsidiary of Indivior PLC.  I.G. Ex. 2, at 1 (¶ 3); RR at 3 n.1.  Concurrent with or shortly after the demerger, Petitioner’s title changed from Global Medical Director to Chief Medical Officer.  I.G. Ex. 2, at 1 (¶ 3); RR at 3 n.1.  Consistent with the ALJ Decision and other filings related to this appeal, RBP, Indivior Inc., and Indivior PLC will be referred to collectively as “Indivior.”

Indivior is a pharmaceutical company engaged in the business of marketing, promoting, and selling drugs containing buprenorphine, an opioid product used to treat opioid addiction.  I.G. Ex. 2, at 2-3 (¶¶ 5, 9-10).  In October 2002, the Food and Drug Administration (FDA) approved and granted orphan drug status to Indivior’s two buprenorphine tablets—Suboxone Tablet and Subutex Tablet—which provided seven years of market exclusivity (meaning the FDA would not approve a competing buprenorphine drug for the same indication for seven years).  I.G. Ex. 2, at 3 (¶ 10).  Suboxone Tablet, which contained both buprenorphine and naloxone, would dissolve under the tongue and was dispensed in bottles with child-resistant caps.  Id. at 3 (¶ 11).  Subutex Tablet, which consisted only of buprenorphine, was similar to Suboxone Tablet and also was dispensed in bottles with child-resistant caps.  Id. at 4 (¶ 12).  In 2007, when the market exclusivity periods for Suboxone and Subutex Tablets were nearing their end, Indivior began developing a new buprenorphine product called Suboxone Film.  Id. at 4 (¶ 13).

Suboxone Film, like Suboxone Tablet, also had buprenorphine and naloxone; however, it differed from Suboxone Tablet in that it took the form of a thin strip, sticks to the tongue or mouth, dissolves more rapidly, is formulated to taste better, and was packaged in individually wrapped, child-resistant foil pouches.  Id. at 4 (¶ 14).  In August 2010, the FDA approved Suboxone Film to be marketed for use in the treatment of opioid addiction.  Id. at 4 (¶ 15).  Although Suboxone Tablet, Subutex Tablet, and Suboxone Film generated “substantially all” of Indivior’s revenue, once Suboxone Film received approval, Indivior actively promoted only Suboxone Film.  Id. at 5 (¶ 19).

In 2010, Suboxone Film was not a preferred drug under the Massachusetts Medicaid (MassHealth) program and, therefore, had restrictions on approval for reimbursement.  Id. at 5 (¶ 20); P. Ex. 8, at 3 (MassHealth document requiring prior authorization for Suboxone Film as of April 2011 and indicating “[t]here is no clinical advantage” of Suboxone Film over Suboxone Tablets, which is available without prior authorization).  According to the Director of Pharmacy for MassHealth, Dr. Paul Jeffrey, Suboxone Film was not included on the preferred drug list because it was not the least costly alternative available.  I.G. Ex. 7 (Dr. Jeffrey Testimony), at 14-15 (describing Indivior’s initial

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attempts to persuade MassHealth to make Suboxone Film a preferred drug).⁵  “MassHealth was the largest Medicaid program in the country by volume of addiction-treatment-drug business.  Thus, Indivior placed high importance on persuading MassHealth to expand coverage of Suboxone Film.”  I.G. Ex. 2, at 5 (¶ 20).

Like many drugs, Indivior’s products posed the risk that children would accidentally ingest them, referred to as “unintended pediatric exposure.”  Id. at 4 (¶ 17).  Indivior executives, including Petitioner, received data from poison control centers about unintended pediatric exposure for all buprenorphine drugs.  Id. at 5 (¶ 18).  Petitioner was familiar with the issue of unintended pediatric exposure, and Indivior’s use of unintended pediatric exposure analyses.  Id. at 5-6 (¶ 21).  Petitioner attended meetings with Indivior personnel (sometimes meeting with FDA personnel) that included discussions about Suboxone Film potentially reducing the risk of unintended pediatric exposure due to its packaging, despite no studies on this issue having been performed.  Id.  Petitioner also emailed fellow Indivior personnel, reporting that the FDA had apparently denied Indivior the ability to make a promotional claim that Suboxone Film provided additional safety regarding unintended pediatric exposure, noting (among other things) that no studies on the issue had been performed.  Id. at 6 (¶ 21).

In 2012 and thereafter, Indivior contracted with Researched Abuse, Diversion, and Addiction-Related Surveillance System (RADARS) to analyze data regarding unintended pediatric exposure for all buprenorphine drugs and used the RADARS analyses to market Suboxone Film.  Id. at 5 (¶¶ 18-19).  Petitioner approved Indivior’s retention of RADARS to have access to the poison control center data for use in analyzing unintended pediatric exposure.  Id. at 6 (¶ 22).  Indivior’s Medical Affairs Manager, who “reported directly” to Petitioner, was Indivior’s “primary point of contact” concerning RADARS’s pediatric exposure analyses.  Id. at 5 (¶ 18).

On or about September 28, 2012, Indivior’s Medical Affairs Manager advised Petitioner and other executives that a MassHealth official had reached out, requesting a meeting.  I.G. Ex. 2, at 6 (¶ 23).  The Medical Affairs Manager wrote:  “I am very excited at this opportunity to share the pediatric data” from RADARS.  Id.  She asked to attend the meeting alone as “the situation . . . is very delicate.”  Id.  She assured the executives that the meeting would be successful and “things will change in Massachusetts.”  Id.

On or about October 9, 2012, the Medical Affairs Manager met with Dr. Jeffrey, and provided him with a RADARS analysis of nationwide data of unintended pediatric exposure.  Id. at 6 (¶ 24); I.G. Ex. 7, at 35-36.  After the meeting, the Medical Affairs Manager reported to Petitioner and others that the MassHealth official was “very

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responsive to the pediatric data” and that she had asked RADARS to analyze the rates of unintended pediatric exposure to buprenorphine tablets in Massachusetts, anticipating that the state-specific results would be comparable to the nationwide results.  I.G. Ex. 2, at 6-7 (¶ 24); see also I.G. Ex. 7, at 36 (explaining why Dr. Jeffrey considered state-specific data more pertinent than national data).

The following day, RADARS gave the Medical Affairs Manager the Massachusetts-specific analysis, but the results were not what she had expected.  I.G. Ex. 2, at 7 (¶ 25).  The RADARS analysis showed that, among the three categories of drugs (Suboxone Film, Suboxone Tablet, and Subutex Tablet), Suboxone Film did not have the lowest rate of unintended pediatric exposure.  Id.  Rather, Suboxone Film fell between Suboxone Tablets (higher) and Subutex Tablets (lower).  Id.  Thus, the Massachusetts-specific data showed that buprenorphine-only tablets like Subutex Tablets—which are packaged in bottles with child-resistant caps, in the same manner as Suboxone Tablets and many other drugs—had the lowest rate of unintended pediatric exposure.  Id.

After receiving this data, the Medical Affairs Manager sent an email to RADARS, copying Petitioner, asking if she could “just add the [buprenorphine-only] and combo tablets to see the difference from [Suboxone] film?”  Id. at 7 (¶ 26).  Petitioner responded to the Medical Affairs Manager individually, remarking that the RADARS analysis “actually appear[ed] to make [buprenorphine-only] tablets look best or am I mi[s]reading?”  Id. at 7-8 (¶ 26).  RADARS replied-all, indicating that it would obtain additional calculations and data.  Id. at 8 (¶ 26).  The record does not show whether RADARS provided the Medical Affairs Manager with additional calculations and data in response to her inquiry.

Nevertheless, the Medical Affairs Manager went ahead and changed the state-specific analysis provided by RADARS by adding the two tablet rates together, which made it appear that Suboxone Film had the lowest rate of pediatric exposure when, in fact, it did not.  Id. at 8 (¶ 27).  On or about October 16, 2012, the Medical Affairs Manager emailed the falsified data to MassHealth, asserting that Suboxone Film presented the lowest rate of unintentional pediatric exposure when, in fact, Subutex Tablets had the lowest rate in Massachusetts, according to the RADARS data – a fact on which Petitioner had previously remarked.  Id.  The Medical Affairs Manager also falsely claimed that she had received the calculations from RADARS when, in fact, she had done the calculations herself.  Id.  She forwarded a copy of her email to Petitioner, stating that she had sent the email to MassHealth to “help us get some movement in Mass.”  Id.  Petitioner did not respond to the email.  Id.

On or about November 19, 2012, in response to a follow-up question from MassHealth about her false and misleading email, the Medical Affairs Manager sent MassHealth a chart, “indicating that Suboxone Film had a substantially lower rate of pediatric exposure than Suboxone Tablets.”  Id. at 8 (¶ 28).  “The chart did not include a third line of data

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known to the Medical Affairs Manager that showed buprenorphine-only tablets (such as Subutex Tablets and generic equivalents) with a lower rate of pediatric exposure than Suboxone Tablets, and with less of a difference in the rate of pediatric exposure than Suboxone Film.”  Id. at 8-9 (¶ 28).  In light of her prior misleading email, “the chart without the third line of data failed to reveal facts material to MassHealth prior to its updated formulary decision.”  Id. at 9 (¶ 28) (emphasis added).  By not including the data relating to buprenorphine-only tablets, the Medical Affairs Manager “reinforced her false and misleading claim that Massachusetts-specific data showed Suboxone Film as having the lowest rate of unintended pediatric exposure in the state.”  Id. at 9 (¶ 28); see also I.G. Ex. 7, at 40-41 (Dr. Jeffrey explaining why not including the buprenorphine-only tablets data in the chart mattered).

The Medical Affairs Manager did not copy Petitioner when she emailed the misleading chart to MassHealth; but, around the same time, a separate Indivior employee emailed Petitioner about the chart, stating:  “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!”  I.G. Ex. 2, at 9 (¶ 28).  Petitioner replied, “That chart is now published so nock [sic] yourself out!”  Id.

The Medical Affairs Manager subsequently received additional data that showed Suboxone Film did not have the lowest rate of unintended pediatric exposure in Massachusetts for one quarter of 2012 but chose not to share that data with MassHealth.  I.G. Ex. 2, at 9 (¶ 29).  She told other Indivior employees that her “rationale for withholding the additional data from MassHealth was, ‘don’t ask, don’t tell.’”  Id.

In December 2012, MassHealth announced that it would provide access to Suboxone Film to members who live in households with children under the age of six.  Id. at 9-10 (¶ 30); see also P. Ex. 3.  Dr. Jeffrey testified that the pediatric exposure data was the “pivot point” on which MassHealth changed its policy concerning Suboxone Film.  I.G. Ex. 7, at 38.  Indivior failed to correct the false and misleading statements made to MassHealth until December 2015, two years after the government’s investigation began.  I.G. Ex. 2, at 10 (¶ 31).  Petitioner approved sending a correction letter to MassHealth at that time.  Id.

Based on the foregoing, Petitioner was charged under the responsible corporate officer doctrine with the misdemeanor offense of causing the introduction and delivery for introduction into interstate commerce of a misbranded drug, Suboxone Film, in violation of the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. §§ 331(a) and 333(a)(1).  I.G.

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Ex. 2, at 10 (¶ 33); I.G. Ex. 3, at 1 (Plea Agreement).⁶  Petitioner entered a guilty plea.  I.G. Ex. 3.  By pleading guilty, Petitioner agreed that “as a responsible Indivior executive, [he] failed to prevent and promptly correct the distribution of the false and misleading unintended pediatric exposure data and marketing claims to MassHealth.”  I.G. Ex. 2, at 10 (¶ 32).⁷  Petitioner further agreed and acknowledged that as a result of his conviction he “may be excluded pursuant to 42 U.S.C. § 1320a-7 [section 1128 of the Act] from participation in Medicare, Medicaid, and all other Federal health care programs . . . .”  I.G. Ex. 3, at 5 (¶ 6).

On December 17, 2020, the United States District Court for the Western District of Virginia (Court) accepted Petitioner’s guilty plea.  I.G. Ex. 4 (Judgment).  The Court sentenced Petitioner to one year of probation, six months of home detention, and ordered him to pay $100,025 in fines and assessments.  Id. at 2, 4-5; see also I.G. Ex. 5, at 45-51 (sentencing decision).

On May 27, 2021, the I.G. notified Petitioner of the intent to exclude him for five years based on his conviction and invited him to provide, within 90 days, any information or documentation he wanted the I.G. to consider.  I.G. Ex. 10.⁸  Petitioner filed a response on August 30, 2021.  P. Ex. 7.  The I.G. notified Petitioner by letter dated September 30, 2021, that he would be excluded from Medicare, Medicaid, and all federal health care programs for five years under section 1128(a)(1) of the Act based on his conviction of a criminal offense related to the delivery of an item or service under a state health care program.  I.G. Ex. 1.

ALJ Proceedings and Decision

Petitioner requested an ALJ hearing.  The ALJ entered her Standing Prehearing Order (Pre-Hearing Order), stating that “[t]he I.G. will bear the burden of proof as to the basis for exclusion” and “Petitioner will bear the burden of proving any affirmative defenses.”  Pre-Hearing Order ¶ 6; see also 42 C.F.R. § 1005.15(c).  The Pre-Hearing Order further

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advised that “[t]he standard of proof in this proceeding 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.”  Pre-Hearing Order ¶ 6; see also 42 C.F.R. § 1005.15(d) (establishing that the burden of persuasion in exclusion cases is a preponderance of the evidence).

The ALJ also issued an Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions (Order Following Pre-Hearing Conference), which set forth the parties’ responsibilities and deadlines for pre-hearing exchanges.  The I.G. filed a brief (I.G. Br.) and ten exhibits (I.G. Exs. 1-10).  Petitioner filed a brief (P. Br.), eleven exhibits (P. Exs. 1-11), and Objections to the I.G.’s Proposed Exhibits (P. Objs.).  The I.G. filed a reply brief, as well as evidentiary objections and responses to Petitioner’s objections.  Petitioner filed a reply to the I.G.’s evidentiary objections.

Both parties indicated that an in-person hearing was not necessary and neither party offered to present witness testimony at an in-person hearing.  I.G. Br. at 19; P. Br. at 24.  Accordingly, the ALJ decided the matter based on the written record.  ALJ Decision at 2.

The ALJ first addressed the parties’ respective evidentiary objections.  The ALJ overruled Petitioner’s objections to I.G. Ex. 5 (Petitioner’s sentencing hearing transcript), I.G. Ex. 6 (prosecutor’s sentencing memorandum), and I.G. Ex. 7 (Dr. Jeffrey’s testimony).⁹  ALJ Decision at 3-4.  While acknowledging that “attorney arguments will not be considered as evidence,” the ALJ found that Petitioner’s sentencing hearing transcript and the prosecution’s sentencing memorandum provided relevant information that was not substantially outweighed by unfair prejudice.  Id.  The ALJ further found that while Dr. Jeffrey’s testimony was provided at the sentencing hearing of Indivior’s CEO (a separate matter), that testimony was admitted without objection at Petitioner’s own sentencing hearing.  Id. at 4 (citing I.G. Ex. 5, at 8 (“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 . . .”).  The ALJ admitted I.G. Exs. 1-10, with I.G. Exs. 5-7 admitted over Petitioner’s objections.

The ALJ overruled the I.G.’s objections to P. Exs. 1, 3, 4, and 8, finding the evidence provided relevant background information.  ALJ Decision at 4-5.  The ALJ sustained the I.G.’s objections to P. Ex. 5 (MassHealth notice regarding Suboxone Film’s preferred status in January 2016) and P. Ex. 9 (MassHealth preferred drug list including Suboxone Film in February 2022), finding the evidence irrelevant to whether there was a legal basis

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to exclude Petitioner based on a conviction which related to drug misbranding that occurred years earlier.  Id. at 5.  The ALJ also sustained the I.G.’s objections to P. Exs. 10 and 11 (emails between Petitioner and his Indivior colleagues regarding the use of pediatric exposure data in marketing Suboxone Film), finding the evidence irrelevant and would only serve as a “collateral attack” on Petitioner’s conviction.  Id. at 6.  Thus, the ALJ admitted all of Petitioner’s exhibits, except P. Exs. 5, 9, 10, and 11.  Id.¹⁰

Turning to the merits of the case, the ALJ determined that the I.G. had a basis to exclude Petitioner under section 1128(a)(1) of the Act because Petitioner was convicted of a criminal offense (misdemeanor drug misbranding) related to the delivery of an item (Suboxone Film) under a state health care program (MassHealth).  ALJ Decision at 10-13.  The ALJ found “Petitioner admitted to causing the introduction or delivery for introduction of a misbranded drug into interstate commerce.”  Id. at 11 (citing I.G. Ex. 3, at 1).  The ALJ noted that “the Medical Affairs Manager, who was Petitioner’s subordinate, made false and misleading statements about the safety of Suboxone Film to MassHealth,” and “[d]espite having seen the initial data that showed the correct exposure rates [for tablets and film] 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.”  Id. at 11-12 (citing I.G. Ex. 2, at 7).

In finding the requisite nexus between Petitioner’s drug misbranding offense and the delivery of Suboxone Film under the MassHealth program, the ALJ explained:

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.  The evidence shows that a Medicare or a state health care program was directly impacted by the actions of Petitioner and Indivior.

Id. at 13 (citations omitted).  Having found the I.G. met its burden of showing a legal basis for excluding Petitioner under section 1128(a)(1), the ALJ concluded that the I.G. was required to exclude Petitioner for a minimum of five years.  Id. at 13-14, 16-17.  This appeal followed.

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Board Proceedings

Before the Board, Petitioner argues that the I.G. did not have a lawful basis to exclude him under section 1128(a)(1) of the Act because, according to Petitioner, (i) the evidence shows Petitioner’s misbranding offense is unrelated to the delivery of Suboxone Film under the MassHealth program; (ii) the ALJ erroneously admitted the testimony of Dr. Jeffrey and excluded evidence regarding MassHealth’s subsequent treatment of Suboxone Film; (iii) the ALJ’s “extreme interpretation” of section 1128(a)(1) is contrary to the statutory text and “administrative precedent”; (iv) the ALJ erred by not applying the rule of lenity; (v) the ALJ erred by failing to consider “relevant distinctions” between Petitioner’s conduct and the conduct of Indivior’s CEO; and (vi) the exclusion raises constitutional due process concerns.  RR at 16-38.  Petitioner further argues that had he been excluded under the permissive exclusion provisions in section 1128(b), certain mitigating factors could have reduced or eliminated his five-year exclusion.  Id. at 38-40.

The I.G. filed a response brief in opposition (I.G. Opp’n), arguing that the Board should affirm the ALJ Decision upholding the I.G.’s exclusion of Petitioner, and excluding certain exhibits because the ALJ Decision is supported by substantial evidence and free of legal error.  Petitioner requested and was permitted leave to file a reply brief (P. Reply).

Standard of Review

We review a disputed issue of fact as to whether the ALJ’s decision is “supported by substantial evidence on the whole record.”  42 C.F.R. § 1005.21(h).  We review a disputed issue of law as to whether the ALJ’s decision is “erroneous.”  Id.  The term “substantial evidence” means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).  “Under the substantial evidence standard, the reviewer must examine the record as a whole and take into account whatever in the record fairly detracts from the weight of the evidence relied on in the decision below.”  James O. Boothe, DAB No. 2530, at 2-3 (2013) (citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)).

Analysis

I.    The ALJ’s evidentiary rulings are not legally erroneous.

Petitioner challenges several of the ALJ’s evidentiary rulings regarding documentary evidence.  “The governing regulations grant ALJs broad authority to ‘determine the admissibility of evidence.’”  Nancy L. Clark, DAB No. 2989, at 8 (2020) (quoting 42 C.F.R. § 1005.17(a)).  ALJs are not bound by the Federal Rules of Evidence, but “must exclude irrelevant or immaterial evidence.”  42 C.F.R. § 1005.17(b), (c); CRD

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Procedures § 20 (“The ALJ determines the admissibility of the evidence.  The ALJ is not bound by the Federal Rules of Evidence; however, the ALJ may apply the Federal Rules of Evidence where appropriate, for example, to exclude unreliable evidence.”).  It is well-settled that “hearsay is admissible in administrative proceedings generally and can be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.”  Clark at 8 (citations omitted).  The Board defers to the evidentiary rulings of ALJs unless there is a “compelling reason” not to do so.  Id. at 8-9 (citing HeartFlow, Inc., DAB No. 2781, at 19 (2017)).

A.    The ALJ properly admitted the transcript of Dr. Jeffrey’s testimony.

Petitioner contends the ALJ erred by admitting the testimony of MassHealth’s Director of Pharmacy, Dr. Jeffrey – testimony given at the sentencing hearing of Indivior’s CEO – because Petitioner was “denied” the opportunity to cross-examine Dr. Jeffrey.  RR at 25-29.  Petitioner, however, was not “denied” the opportunity to cross-examine Dr. Jeffery, either at his own sentencing hearing (where the testimony was admitted without objection) or in the ALJ proceedings below.  Accordingly, we find no error in the ALJ’s ruling admitting the transcript of Dr. Jeffrey’s testimony (I.G. Ex. 7).  ALJ Decision at 4.

Indivior’s CEO, Shaun Thaxter (Mr. Thaxter), was convicted of misdemeanor misbranding under the responsible corporate officer doctrine based on the same events that resulted in Petitioner’s conviction.  Cf. Shaun Thaxter, DAB No. 3053 (2021).  Other than their respective roles at Indivior, the facts underlying Mr. Thaxter’s conviction are essentially the same as those underlying Petitioner’s conviction.  Id. at 3-8.  Relevant to this matter, Dr. Jeffery testified at Mr. Thaxter’s sentencing hearing about the reasons why Suboxone Film was not initially included on MassHealth’s preferred drug list, Indivior’s efforts to persuade MassHealth to expand coverage of Suboxone Film, Dr. Jeffrey’s communications with the Medical Affairs Manager (who reported directly to Petitioner), the submission of the misleading pediatric exposure data to MassHealth by the Medical Affairs Manager, and MassHealth’s subsequent decision to expand coverage of Suboxone Film in December 2012.  I.G. Ex. 7, at 14-15, 35-38, 40-41.

The federal district court judge that presided over Mr. Thaxter’s sentencing hearing also presided over Petitioner’s sentencing hearing.  Cf. I.G. Exs. 5 and 7.  The record reflects that Petitioner’s counsel decided not to require federal prosecutors to recall Dr. Jeffrey at Petitioner’s sentencing hearing and conceded, before the Court, that Dr. Jeffrey’s testimony may be considered in connection with Petitioner’s sentencing.  I.G. Ex. 5, at 8 (“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 . . .”).  Accordingly, Dr. Jeffrey’s testimony was admitted into evidence, without objection, at Petitioner’s sentencing hearing.  I.G. Ex. 5, at 7-10.  As the ALJ found, Petitioner waived the right to confront Dr. Jeffrey at his own sentencing hearing when he

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consented to the admissibility of that testimony without cross-examination.  ALJ Decision at 4.

Petitioner’s contention that Dr. Jeffrey’s testimony was admissible without cross-examination for purposes of his sentencing hearing, but inadmissible in the ALJ proceedings has no merit.  The lack of cross-examination by Petitioner during his criminal proceeding does not make Dr. Jeffrey’s testimony inadmissible before the ALJ.  See, e.g., Narendra M. Patel, M.D., DAB No. 1736, at 16 (2000) (recognizing that petitioner had the opportunity to cross-examine the affiant of a written statement during the underlying criminal proceedings but declined to do so, and the lack of cross-examination did not render the written statement inadmissible in the subsequent ALJ proceeding), aff’d, Patel v. Thompson, 319 F.3d 1317 (11th Cir. 2003).  Dr. Jeffrey’s testimony was made part of the record in Petitioner’s criminal case.  I.G. Ex. 5, at 8-10.   It was not prepared by the I.G. for purposes of the ALJ proceedings and does not constitute “written direct testimony.”  See, e.g., Shelia Ann Reed, DAB No. 3059, at 7-8 (2022) (affirming ALJ’s determination that state investigator’s arrest warrant affidavit, which was prepared and filed in petitioner’s underlying criminal case, was not “written direct testimony”).  The I.G. sought to introduce the transcript of Dr. Jeffrey’s prior testimony (I.G. Ex. 7) as documentary evidence of the facts and circumstances underlying Petitioner’s misdemeanor misbranding conviction.  We find the ALJ properly admitted the transcript of Dr. Jeffrey’s testimony, not as written direct testimony, but as documentary evidence relevant and material to evaluating the nature of the charges brought against Petitioner and the criminal offense of which he was convicted.  See Reed at 7-10 (rejecting argument that investigator’s affidavit prepared and filed as part of underlying criminal case was inadmissible in exclusion proceeding because it had not been subject to cross-examination).¹¹

Petitioner argues that “this forum’s precedent” required the exclusion of Dr. Jeffrey’s testimony.  RR at 25-26 (citing Beth Ann Lee, R.N., DAB CR2735 (2013); Patricia Ann Smith, L.P.N., DAB CR2805 (2013)).  The two ALJ decisions cited by Petitioner are “neither precedential nor binding on the Board or other ALJs.”  Edwin L. Fuentes, DAB No. 2988, at 15 (2020), aff’d, Fuentes v. Becerra, No. 4:20-cv-26, 2021 WL 4341115 (W.D. Va. Sept. 23, 2021).  Moreover, in both cases, an ALJ excluded “written direct testimony” (i.e., declarations) prepared specifically for the exclusion proceedings, when the I.G. had indicated it had no witness testimony to offer.  See Lee at 2; Smith at 2.  By contrast, in this case, Dr. Jeffrey gave testimony at Mr. Thaxter’s sentencing hearing and that hearing transcript (I.G. Ex. 7) was admitted into evidence at Petitioner’s own

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sentencing hearing.  It was not prepared for purposes of Petitioner’s exclusion proceedings and does not constitute “written direct testimony.”  See Reed at 7-8.

Still further, Petitioner was not “denied” the right to cross-examine Dr. Jeffrey in the ALJ proceeding.  Petitioner never requested the opportunity to examine Dr. Jeffrey before the ALJ.  Petitioner was aware that the I.G. did not intend to call any witnesses and did not submit written direct testimony of any witness.  I.G. Br. at 19 (indicating that the I.G. had no testimony to offer “at an in-person hearing” (emphasis added)).  Petitioner was also aware that the I.G. intended to rely on the transcript of Dr. Jeffrey’s testimony, which the I.G. had submitted with its brief as I.G. Ex. 7.  In fact, Petitioner objected to I.G. Ex. 7, arguing that the transcript should be excluded because he had no opportunity to cross-examine Dr. Jeffrey at Mr. Thaxter’s sentencing hearing and understood the I.G. was not calling Dr. Jeffrey to testify in person.  P. Objs. at 5-6.  Petitioner, however, had the opportunity to examine Dr. Jeffrey before the ALJ, but chose not to do so.  Petitioner never asked the ALJ for the opportunity to examine Dr. Jeffrey and instead represented, in his own brief, that an in-person hearing to present witness testimony was unnecessary.  P. Br. at 23.¹²  Petitioner cannot render Dr. Jeffrey’s prior testimony inadmissible by declining to examine him.  See, e.g., Yvon Nazon, M.D., DAB No. 1376, at 8-9 (1992) (rejecting petitioner’s argument that he was denied the opportunity to cross-examine witnesses about their prior statements when he did not request subpoenas despite being informed of their identities before the ALJ hearing and knowing they would not be called to testify by the I.G.), aff’d, Nazon v. Shalala, No. 93 C 1070 (N.D. Ill. Oct. 26, 1993).¹³

In short, Petitioner cannot complain that he was “denied” the right to cross-examine Dr. Jeffrey when he (i) consented to the admissibility of Dr. Jeffrey’s testimony at his own sentencing hearing without cross-examination; and (ii) never sought to examine Dr. Jeffrey before the ALJ.  Cf. Reed at 8-9 (rejecting argument that petitioner should have been allowed to cross-examine state investigator that submitted arrest warrant affidavit in petitioner’s underlying criminal case where petitioner never sought a  subpoena to conduct such an examination); Clark at 5-6 (rejecting argument that

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petitioner should have been allowed to cross-examine assistant attorney general and other individuals, whose hearsay statements were contained in an internal memorandum that was the basis for charging petitioner with a crime, where petitioner did not request a subpoena to compel those individuals to testify).  Petitioner has provided no compelling reason to disturb the ALJ’s evidentiary ruling.  We find no error in the ALJ’s decision to admit into evidence the transcript of Dr. Jeffrey’s testimony, which was part of the record in Petitioner’s underlying criminal case and relevant to evaluating the legal basis for his exclusion under section 1128(a)(1).

B.    The ALJ properly excluded documents regarding MassHealth’s subsequent treatment of Suboxone Film years after the events that resulted in Petitioner’s conviction.

Under the governing regulations, ALJs “must exclude irrelevant or immaterial evidence.”  42 C.F.R. § 1005.17(a), (c).  Here, the ALJ excluded as irrelevant a MassHealth notice to prescribers dated January 2016 regarding its decision to make Suboxone Film the preferred buprenorphine/naloxone product effective February 8, 2016 (P. Ex. 5) and a copy of MassHealth’s drug list indicating Suboxone Film’s preferred status in February 2022 (P. Ex. 9).  ALJ Decision at 5.  The ALJ found the exhibits irrelevant because they “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.”  Id.

According to Petitioner, the exhibits are relevant to show that MassHealth reached its decision to expand coverage of Suboxone Film “independent of the misbranding” and, therefore, show Petitioner’s conviction is “not program related.”  RR at 21, 22.  Petitioner’s conviction, however, was not predicated on MassHealth’s decision to make Suboxone Film a preferred product effective February 8, 2016.  The criminal information (I.G. Ex. 2) makes no mention of MassHealth’s January 2016 decision regarding Suboxone Film or the drug’s current preferred status.  Rather, it was MassHealth’s decision in December 2012 to expand access to Suboxone Film for members living in households with children under six years of age that formed the predicate for Petitioner’s misbranding conviction.  I.G. Ex. 2, at 9-10 (¶ 30); see infra at 15-21.  The fact that Suboxone Film, under different factual circumstances, became a preferred product under the MassHealth program years after the events resulting in Petitioner’s conviction does not change the fact that the drug was initially marketed to MassHealth using false and misleading data in violation of the FDCA resulting in the introduction or introduction for delivery of the misbranded drug under the MassHealth program.¹⁴  Petitioner provided no compelling reason for the Board to disturb the ALJ’s evidentiary ruling excluding P. Exs. 5 and 9 and we find no error in that ruling.

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II.      The ALJ’s determination that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a state health care program is supported by substantial evidence and free of legal error.

A.    The record evidence establishes the requisite nexus between Petitioner’s drug misbranding offense and the delivery of Suboxone Film under the MassHealth program.

Section 1128(a)(1) of the Act requires Petitioner’s exclusion because he was convicted of a criminal offense (misdemeanor drug misbranding) related to the delivery of an item (Suboxone Film) under a state health care program (MassHealth).  Act § 1128(a)(1).  Petitioner does not dispute that he was convicted of a drug misbranding offense but contends that his offense was not “related to the delivery of an item or service” under a covered program within the meaning of section 1128(a)(1).  RR at 16-25.  “The 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 Boothe, DAB No. 2530, at 3; James Randall Benham, DAB No. 2042, at 5 (2006)); see also Scott D. Augustine, DAB No. 2043, at 5-6 (2006) (explaining based on the plain meaning of “related” that an offense is “related to” an item or service under a covered program if there is a common-sense connection between the offense and the delivery of an item or service under the program) (collecting cases).¹⁵

When determining whether the requisite nexus exists, an ALJ may consider “evidence as to the nature of an offense,” including the “facts upon which the conviction was predicated.”  Shah at 7 (citations omitted).  In determining whether the requisite nexus exists, ALJs are “not limited to considering the bare elements or labels of the criminal statutes under which the individual was convicted.”  Funmilola Mary Taiwo, DAB No. 2995, at 8 (2020) (citing Shah at 7 (“The Board has long held . . . that an ALJ is free to look beyond the narrow constructs of a state’s criminal statutes.”)); see also Lyle Kai, R.Ph., DAB No. 1979, at 5 (2005) (“[I]t is not the labeling of the offense . . . which

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determines whether the offense is program-related.”) (citations omitted), aff’d, Kai v. Leavitt, No. 05-00514 (D. Haw. July 17, 2006).  “[T]he test for whether a common-sense nexus exists is ‘based on all relevant facts’ and ‘not merely a narrow examination of the language within the four corners of the final judgment and order of the criminal trial court.’”  Yolanda Hamilton, M.D., DAB No. 3061, at 10 (2022) (alteration in original) (quoting Shah at 8).

Here, the ALJ concluded that Petitioner’s criminal offense was related to the delivery of Suboxone Film under the MassHealth program.  ALJ Decision at 13 (“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 this misbranded drug to its members.”).  In reaching this conclusion, the ALJ appropriately considered the nature of Petitioner’s criminal offense and the facts upon which his conviction was predicated, including the facts set forth in the Information (I.G. Ex. 2) and testimony provided by MassHealth’s Director of Pharmacy (I.G. Ex. 7).  We find the ALJ’s determination that Petitioner was convicted of a criminal offense related to the delivery of an item or service under a state health care program, requiring his exclusion under section 1128(a)(1) of the Act, is legally correct and supported by substantial evidence.

In 2010, Suboxone Film was not a preferred drug under the MassHealth program because it was not the least costly alternative available and, therefore, faced restrictions on approval for reimbursement.  I.G. Ex. 2, at 5 (¶ 20); I.G. Ex. 7, at 13-15.  Because MassHealth was the largest Medicaid program in the country by volume of addiction-treatment-drug business, Indivior “placed high importance” on expanding coverage of Suboxone Film under the MassHealth program.  I.G. Ex. 2, at 5 (¶ 20).

There is no serious question that Indivior, through its Medical Affairs Manager, who reported directly to Petitioner, provided false and misleading data about the safety of Suboxone Film to MassHealth to persuade it to change its policy and make Suboxone Film a preferred drug.  ALJ Decision at 12 (“The purpose of submitting the inaccurate data was to persuade MassHealth, a Medicaid program, to expand the coverage of Suboxone Film.”); RR at 5 (describing efforts by Indivior employees, including the Medical Affairs Manager, to persuade MassHealth to make Suboxone Film a preferred drug).  The Medical Affairs Manager forwarded a copy of the false and misleading email she had sent to MassHealth’s Director of Pharmacy to Petitioner, and stated that she had sent the email to MassHealth to “help us get some movement in Mass.”  I.G. Ex. 2, at 8 (¶ 27).  In pleading guilty to the introduction of misbranded drugs in interstate commerce, Petitioner admitted that, “as a responsible Indivior executive, [he] failed to prevent and promptly correct the distribution of the false and misleading unintended pediatric exposure data and marketing claims to MassHealth.”  I.G. Ex. 2, at 10 (¶ 32) (emphasis added).

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Based on his failure to prevent and promptly correct the dissemination of false and misleading marketing claims and data about Suboxone Film to MassHealth, Petitioner pled guilty to introducing misbranded drugs into interstate commerce in violation of federal law.  I.G. Ex. 2, at 10 (¶¶ 32-33); I.G. Ex. 3, at 1-2.  In pleading guilty, Petitioner admitted that as “a responsible Indivior executive, [he] caused the introduction and delivery for introduction into interstate commerce of Suboxone Film, a drug that was misbranded in that the drug’s labeling was false and misleading.”  I.G. Ex. 2, at 10 (¶ 33) (emphasis added).¹⁶  Importantly, there is no evidence in the record that Suboxone Film was misbranded except in connection with the false and misleading statements Indivior made to MassHealth.  Indeed, most of the facts relevant to this matter appear in the Information under the subheading, “PROMOTION AND DISTRIBUTION OF SUBOXONE FILM TO MASSHEALTH WITH MISLEADING LABELING.”  Id. at 5-10 (¶¶ 19-30).

Similarly, there is no evidence that Petitioner caused the introduction and delivery for introduction of this misbranded drug into interstate commerce except under the MassHealth program, after MassHealth announced it was expanding access to the misbranded drug to its members.  Id. at 9-10 (¶ 30).  In other words, Petitioner’s drug misbranding offense was predicated on misstatements Indivior made to MassHealth about Suboxone Film that led MassHealth to expand access to the misbranded drug to its members, causing the introduction or delivery for introduction of the misbranded drug into interstate commerce—not through private insurers or other entities—but under the MassHealth program.  Accordingly, we find no error in the ALJ’s conclusion that the requisite nexus exists between Petitioner’s misbranding offense and the delivery of an item (Suboxone Film) under a state health care program (MassHealth).

The ALJ’s conclusion is consistent with the Board’s analysis of the same issue in Thaxter, DAB No. 3053.  Mr. Thaxter was convicted of misdemeanor misbranding under the responsible corporate officer doctrine based on the same underlying events that resulted in Petitioner’s conviction, namely the failure to prevent and promptly correct the distribution of false and misleading data and marketing claims about the safety of Suboxone Film to MassHealth.  Id. at 7.  The facts and circumstances set forth in Mr. Thaxter’s criminal information are, in all material respects, identical to the facts and circumstances set forth in Petitioner’s criminal information (I.G. Ex. 2).  Cf. Thaxter at 3-7.  Based on the facts established by Mr. Thaxter’s criminal information and the

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testimony provided by Dr. Jeffrey, the Board affirmed the ALJ’s decision finding that Mr. Thaxter was convicted of a criminal offense (misdemeanor misbranding) related to the delivery of an item (Suboxone Film) under a state health care program (MassHealth), requiring his exclusion under section 1128(a)(1) of the Act.  Id. at 11-12.  We find no factual differences in Petitioner’s case that would warrant a different result here.¹⁷

The ALJ Decision is also consistent with Boothe, DAB No. 2530, which upheld a mandatory exclusion under section 1128(a)(1) because an executive’s criminal offense had a common-sense nexus to his company’s business objective to deliver items and services under New York’s Medicaid program.  In Boothe, the chief operating officer of a managed care organization (MCO) was convicted of falsely representing to the administrator of the Medicaid program that his company complied with marketing guidelines that prohibited the MCO from offering certain financial incentives to its marketing representatives.  See Boothe at 1-2, 4.  The executive’s misrepresentation allowed the MCO to continue to participate in the Medicaid program, despite noncompliance with marketing guidelines that “could have jeopardized” its participation in the program.  Id. at 3-4.  The Board noted the executive’s offense “helped ensure that [the MCO] continued delivering items and services to Medicaid beneficiaries and receiving payment from Medicaid for those items and services.”  Id. at 4.  The Board found those facts “sufficient to establish the requisite nexus” between the executive’s criminal offense and the delivery of an item or service under a state health care program.  Id.  In doing so, the Board explained that an offense may be “related to” the delivery of an item or service under a covered program even without showing that the offense “directly involve[d] the delivery of items or services” or “actually harmed the program in any way.”  Id. at 4 (citing Salvacion Lee, M.D., DAB No. 1850 (2002); Berton Siegel, D.O., DAB No. 1467 (1994); Neil R. Hirsch, M.D., DAB No. 1550, at 22-23 (1995), aff’d, Hirsch v. Shalala, No. 96-4008 (C.D. Ill. Nov. 4, 1996); Paul D. Scollo, D.P.M., DAB No. 1498, at 9-11 (1994)).

Similarly, Petitioner’s failure to prevent and promptly correct Indivior’s dissemination of false and misleading data to MassHealth about Suboxone Film led MassHealth to expand access to Suboxone Film to its members (despite the fact that it was not the least costly alternative available) and thereby helped ensure that Indivior’s product, Suboxone Film, would be more widely available and delivered under the MassHealth program.  We agree with the ALJ that these facts are sufficient to establish the requisite common-sense nexus between Petitioner’s criminal offense and the delivery of items under a state health care program.

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B.    Petitioner’s assertion that MassHealth expanded access to Suboxone Film independent of his misbranding offense is wholly lacking in evidentiary support and an impermissible collateral attack on his conviction.

Petitioner contends the ALJ erred in finding the requisite nexus between his misbranding offense and the delivery of Suboxone Film under the MassHealth program because, according to Petitioner, the Information “contradicts” the ALJ’s “assumptions” (i) that MassHealth expanded coverage of Suboxone Film based on the false and misleading pediatric exposure data and marketing claims Indivior made to MassHealth, and (ii) that the expanded coverage would cause MassHealth to pay for additional treatments.  RR at 18 (citing ALJ Decision at 13).  Pointing to MassHealth’s December 2012 letter announcing its expansion of coverage for Suboxone Film (P. Ex. 3), Petitioner claims that MassHealth did not expand coverage of Suboxone Film based on the facts that led to his conviction, but instead based its decision on Indivior’s “accurate” nationwide pediatric exposure data.  RR at 18-19 (citing I.G. Ex. 2, at 9-10 (¶ 30), P. Ex. 3).  According to Petitioner, “MassHealth stated that it relied only on the accurate data, and the Information confirms as much.”  Id. at 20.  We reject Petitioner’s argument because it not only lacks evidentiary support but also constitutes an impermissible collateral attack on his conviction.

MassHealth never “stated that it relied only on the accurate data.”  While its December 2012 prescriber letter included a footnote citing to an abstract concerning “Indivior’s nationwide pediatric exposure-rate data” (I.G. Ex. 2, at 9-10 (¶ 30)), the letter did not purport to catalog all the information MassHealth considered in reaching its decision.  P. Ex. 3.  And, as the ALJ pointed out, the abstract referenced in the footnote included the same incomplete chart that, according to the Information, “failed to reveal facts material to MassHealth prior to its updated formulary decision.”  ALJ Decision at 12 (citing I.G. Ex. 2, at 8-9 (¶ 28); P. Ex. 2, at 28-29; P. Ex. 3) (internal quotation marks omitted).  Petitioner contends this finding by the ALJ is erroneous because the letter does not specifically reference the chart.  RR at 19 & n.14 (citing P. Ex. 3; P. Ex. 2, at 28).  While it may be true that the letter does not specifically reference the chart, the ALJ correctly noted that the abstract cited in the prescriber letter includes the same incomplete chart referenced in the Information.  Compare P. Ex. 2, at 28-29, with I.G. Ex. 2, at 9 (¶ 28) (image on the right).

Still further, Petitioner was convicted of drug misbranding despite MassHealth’s reference to nationwide pediatric exposure data in its December 2012 letter.  I.G. Ex. 2, at 9-10 (¶ 30).  Notwithstanding Petitioner’s contentions about the accuracy of nationwide data, it was his failure to prevent or promptly correct Indivior’s dissemination of false and misleading state-specific data to MassHealth that led to Petitioner’s misbranding conviction.  Id. at 10 (¶¶ 32-33).  As our discussion above indicates, the ALJ’s conclusion that there was a common-sense nexus between Petitioner’s misbranding offense and the delivery of Suboxone Film under the MassHealth program is amply supported by the

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record evidence, regardless of any reference to “nationwide pediatric exposure-rate data” in the December 2012 prescriber letter.

We further reject Petitioner’s assertion that the Information “confirms” MassHealth relied only on accurate data.  RR at 18.  The Information, in fact, supports the ALJ’s finding that MassHealth changed its policy regarding Suboxone Film based on the false and misleading data and marketing claims provided to MassHealth.  See I.G. Ex. 2, at 8-10 (¶¶ 27-30).  The Information, among other things, details the following:  Indivior’s desire to persuade MassHealth to approve Suboxone Film as a preferred drug under the MassHealth program (¶¶ 20, 23); Indivior’s submission of nationwide pediatric exposure-rate data that prompted MassHealth to request Massachusetts-specific exposure rates (¶ 24); the Medical Affairs Manager’s manipulation of Massachusetts-specific data and the false and misleading email she then sent to MassHealth to “get some movement in Mass.” (¶¶ 25-27); the incomplete chart the Medical Affairs Manager then provided to MassHealth that “failed to reveal facts material to MassHealth prior to its updated formulary decision” (¶ 28 (emphasis added)); the Medical Affairs Manager’s failure to provide MassHealth with additional data showing Suboxone Film did not have the lowest pediatric exposure-rate based on her policy of “don’t ask, don’t tell” (¶ 29); and finally MassHealth’s decision in December 2012 to expand access to Suboxone Film to households with children less than six years of age (¶ 30).  All of this culminated in Petitioner’s conviction for having “caused the introduction and delivery for introduction into interstate commerce of Suboxone Film, a drug that was misbranded in that the drug’s labeling was false and misleading.”  Id. at 10 (¶¶ 32-33).  Again, there is no evidence that Petitioner caused the introduction and delivery for introduction of this misbranded drug into interstate commerce except in connection with the MassHealth program and the false and misleading state-specific data provided to MassHealth that Petitioner failed to prevent and promptly correct.  Id. at 9-10 (¶¶ 30-33).

To the extent there was any question about why MassHealth changed its policy to expand access to Suboxone Film to members living in households with children less than six years of age, MassHealth’s Director of Pharmacy testified under oath about those reasons.  See I.G. Ex. 7, at 36 (explaining why Dr. Jeffrey considered state-specific data more pertinent than national data), 38 (explaining that the Massachusetts-specific pediatric exposure data provided by Indivior was the “pivot point” on which MassHealth changed its policy).  We find substantial evidence in the record as a whole supports the

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ALJ’s finding that MassHealth expanded coverage of Suboxone Film based on Indivior’s false and misleading pediatric exposure data and marketing claims.¹⁸

We further reject Petitioner’s argument that Dr. Jeffrey’s testimony “confirms” the false and misleading data Indivior provided to MassHealth was “irrelevant” given the evidence that Suboxone Film had lower rates of pediatric exposure than the rates for Suboxone Tablets.  P. Reply. at 3-4 (arguing that the exposures rates for Suboxone Film were lower than the rates for Suboxone Tablets and that Dr. Jeffrey was concerned only “if the exposure to the film was greater than the exposure of the tablets” (quoting I.G. Ex. 7, at 38-39)).  Petitioner’s argument is not only an impermissible collateral attack on his conviction but mischaracterizes the record evidence and ignores the undisputed fact that Suboxone Film had a higher rate of pediatric exposure than buprenorphine-only tablets (like Subutex), a fact that Petitioner himself recognized when RADARS provided the Massachusetts-specific data to Indivior.  I.G. Ex. 2, at 7-8 (¶¶ 25-26).  The RADARS “data showed that buprenorphine-only tablets—which are packaged in bottles with child-resistant caps, in the same manner as Suboxone Tablet and many other drugs—had the lowest rate of unintended pediatric exposure among the three categories in Massachusetts.”  Id. at 7 (¶ 25); see also ALJ Decision at 8 (“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.”).  Thus, the data for buprenorphine-only tablets that Indivior concealed from MassHealth was not only relevant, but directly contradicted Indivior’s assertion that Suboxone Film had the lowest rate of unintended pediatric exposure.  As Dr. Jeffrey testified, this data “absolutely” mattered to him, and if Indivior’s Medical Affairs Manager had sent the data showing that film had a greater rate of pediatric exposure than tablets (which includes buprenorphine-only tablets), then he would have “stopped any process to change [MassHealth’s] policy decision around the film.”  I.G. Ex. 7, at 38-39 (Dr. Jeffrey testifying about a “hypothetical” based on the actual RADARS data that MassHealth did not receive).

Petitioner further argues that the ALJ erred in finding that MassHealth’s decision to expand access to Suboxone Film “caused MassHealth to ‘pa[y] for’ additional Suboxone Film treatments.”  RR at 22.  According to Petitioner, “the ALJ relied solely on the fact

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that MassHealth ‘paid for’ Suboxone Film” to establish the requisite nexus between his misbranding offense and the delivery of Suboxone Film under the MassHealth program.  Id. at 24.  Petitioner’s argument misconstrues the ALJ’s decision.  As our discussion above indicates, the ALJ did not rely solely on the fact that MassHealth paid for Suboxone Film to establish the requisite nexus under section 1128(a)(1).  In her decision, the ALJ noted the undisputed fact that Suboxone Film is a health care item used in the treatment of opioid addiction and is paid for by State health care programs, including MassHealth.  ALJ Decision at 13; see also RR at 24 (stating that MassHealth paid for Suboxone Film).  The ALJ further found that Petitioner’s misbranding offense “directly impacted” the MassHealth program.  Id.  But, in making this finding, the ALJ noted it is unnecessary to show that a particular delivery of drugs was billed to a covered program to establish the requisite nexus under section 1128(a)(1).  Id. (citing Kai, DAB No. 1979, at 10).  Thus, contrary to Petitioner’s assertion, the ALJ rejected the notion that it was necessary to show payment to establish that an offense is “related to” the delivery of an item or service under a covered program.  We find no error in the ALJ’s analysis, which accords with Board precedent that has consistently rejected the argument that the I.G. must establish the actual delivery of items or services (or harm to the program) to establish that an offense is “related to” the delivery of an item or service under a covered program.  See, e.g., Thaxter, DAB No. 3053, at 20-21; Boothe, DAB No. 2530, at 4 (collecting cases); see also W. Scott Harkonen, M.D., DAB No. 2485, at 21 (2012), aff’d, Harkonen v. Sebelius, No. C 13-0071, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013).

Contrary to Petitioner’s assertion, the Board’s decision in Catherine L. Dodd, R.N., DAB No. 1345 (1992), does not preclude Petitioner’s mandatory exclusion under section 1128(a)(1).  RR at 22-23 (arguing that Dodd required the I.G. to establish that MassHealth’s decision to expand access to Suboxone Film resulted in increased deliveries or charges for the drug), 31-32.  In Dodd, the ALJ found the requisite nexus under section 1128(a)(1) was not established where petitioner pled guilty to making false entries in patient records, but the record evidence did not establish whether any of the patients referenced in the guilty plea were beneficiaries or recipients of Medicare or Medicaid.  See id. at 9-10.  The Board affirmed the ALJ’s decision but noted that its holding does not mean it is always necessary to link an offense to specific program beneficiaries.  Id. at 10.  As the Board explained, the link to individuals in Dodd was necessary because the conviction on which the exclusion was based was the falsification of certain patient records.  Id.  Here, Petitioner’s conviction was not tied to any specific individuals, but arose from misrepresentations about Suboxone Film directed to the MassHealth program that led MassHealth to expand access to the misbranded drug to its members under the MassHealth program.  Thus, as the ALJ recognized, it is not necessary for the I.G. to link Petitioner’s misbranding offense to any specific beneficiary or delivery.  ALJ Decision at 13.

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Despite his insistence to the contrary, Petitioner’s assertion that the facts underlying his misbranding offense have “nothing to do with” MassHealth’s decision to expand access to Suboxone Film (RR at 18) is an impermissible collateral attack on his conviction.  See Thaxter at 12, n.10 (rejecting Mr. Thaxter’s assertion that MassHealth did not rely on “misstated information” when it expanded access to Suboxone Film, but only relied on accurate national data that Indivior provided as an impermissible collateral attack); 42 C.F.R. § 1001.2007(d) (prohibiting collateral attacks on the conviction underlying an exclusion).  The purpose of section 1001.2007(d) “is to prevent excluded individuals from relitigating the validity of their convictions.”  Joann Fletcher Cash, DAB No. 1725, at 6 (2000) (citing Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994)).  The regulation “prohibit[s] . . . any attempt to defend against the exclusion derived from the conviction by denying or minimizing the crime itself.”  Mohamad Ahmad Bazzi, DAB No. 2917, at 9 (2018) (citing 42 C.F.R. § 1001.2007(d)).  The regulation “recognizes that it is ‘the fact of the conviction which causes the exclusion. The law does not permit the Secretary to look behind the conviction.’”  Michael D. Miran, Esta Miran, & Michael D. Miran Ph.D. Psychologist P.C., DAB No. 2469, at 4 (2012) (quoting Edmonson, DAB No. 1330, at 4); see also Richard E. Bohner, DAB No. 2638, at 14 (2015) (“Petitioner’s attempts to downplay the underlying factual basis of . . . [his] indictment amount to a prohibited collateral attack on his conviction.”), aff’d, Bohner v. Burwell, No. 2:15-cv-4088, 2016 WL 8716339 (E.D. Pa. Dec. 2, 2016).  For this additional reason, we find the ALJ properly rejected Petitioner’s assertion that MassHealth relied only on accurate data in deciding to expand access to Suboxone Film insofar as it constitutes an impermissible collateral attack on his conviction.

III.    The ALJ’s interpretation of the Act § 1128(a)(1) is legally correct and consistent with Board precedent. 

A.    The ALJ recognized the distinction between permissive and mandatory exclusions.

Relying on Friedman v. Sebelius, 686 F.3d 813 (D.C. Cir. 2012), a case involving a different misbranding scheme and very different circumstances than his own, Petitioner argues that the ALJ failed to grasp that “at least some misdemeanor misbranding must not be program related” and instead adopted “an extreme construction of Section 1128(a) that appears to encompass any misdemeanor misbranding conviction.”  RR at 30.  Petitioner’s characterization of the ALJ’s decision is not accurate.  The ALJ did not conclude that mandatory exclusion is required whenever one introduces a misbranded drug into interstate commerce that is paid for by a federal or state health care program.  Id. at 30-31.  As described above, the ALJ carefully considered the facts and circumstances underlying Petitioner’s criminal offense and, applying the appropriate legal standard, concluded that “Petitioner’s conviction is related to the delivery of an item or service under Medicare or a state healthcare program.”  ALJ Decision at 14; see also supra at 15-18.  The ALJ recognized the distinction between permissive exclusions and mandatory

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exclusions and that Friedman “does not foreclose the possibility of [a misdemeanor misbranding offense] meeting the requirements of a mandatory exclusion under section 1128(a)(1).”  ALJ Decision at 14.

As the ALJ recognized, section 1128(b)(1) applies to certain criminal offenses that are not related to the delivery of items or services under covered programs, or to crimes “other than those specifically described in subsection (a)(1) [of section 1128] . . . .”  Act § 1128(b)(1)(A); see also Lorna Fay Gardner, DAB No. 1733, at 5-6 (2000) (“The legislative history of these provisions demonstrates that Congress intentionally drew a distinction between program-related and nonprogram-related offenses.”); Jack W. Greene, DAB No. 1078, at 9 (1989) (explaining that the permissive exclusion provisions under section 1128(b)(1) “focus on different circumstances from those raised here, such as . . . where the conviction does not relate to the Medicare program or a State health care program”) (emphasis added), aff’d, Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990); Parrino v. Price, 869 F.3d 392, 400 (6th Cir. 2017) (rejecting argument that upholding mandatory exclusion for misdemeanor drug misbranding offense under section 1128(a)(1) would render permissive exclusion provisions superfluous).  Once a conviction is determined to be within the scope of section 1128(a)(1), the I.G. is required by the Act to impose a mandatory exclusion.  See Kimbrell Colburn, DAB No. 2683, at 9 (2016) (“[F]ederal courts have ‘repeatedly held’ that, when a criminal offense meets the criteria for a mandatory exclusion, the I.G. must impose a mandatory exclusion ‘even if an individual’s conduct also falls within the scope of a permissive exclusion provision.’” (quoting Timothy Wayne Hensley, DAB No. 2044, at 15 (2006) and collecting cases)).  As discussed above, the ALJ correctly concluded that Petitioner’s misdemeanor criminal offense was a program-related offense triggering mandatory exclusion under section 1128(a)(1).

B.    The ALJ’s decision upholding Petitioner’s mandatory exclusion based on his program-related offense is consistent with Board precedent.

Petitioner further asserts that “longstanding agency practice confirms” section 1128(a) does not reach Petitioner’s misbranding conviction because, according to Petitioner, (i) the I.G. “never previously subjected an individual to mandatory exclusion where that individual was convicted of a strict liability, no-intent misdemeanor under the RCO doctrine”; and (ii) the I.G. had never “interpreted mandatory exclusion to reach misdemeanor misbranding offenses in the absence of a restitution or forfeiture order….”  RR at 32.  According to Petitioner, this alleged “practice” of the I.G. established a “precedent,” and the I.G.’s departure from this purported “precedent” without a “reasoned explanation” means his exclusion “must be set aside.”  Id. at 32-33. There is no merit to this argument, which amounts to an attempt by Petitioner to impose requirements and limitations under section 1128(a)(1) that do not exist.  See Thaxter at 21-23.

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Each element of Petitioner’s argument is contradicted by Board precedent.  First, I.G. exclusion determinations are not “precedent”; even individual ALJ decisions reviewing I.G. exclusions do not create any binding legal precedent.  See Fuentes, DAB No. 2988, at 15 (“Individual ALJ decisions are neither precedential nor binding on the Board or other ALJs . . . .”).  I.G. exclusion determinations that are not challenged and, therefore, are not reviewed by an ALJ, much less the Board, do not create any “precedent.”  They are not “cases” at all, and we are unable to discern the underlying facts or basis for exclusions in unreviewed matters.  Accordingly, Petitioner’s attempt to characterize any individual I.G. exclusion determination or ALJ decision that has not been reviewed by the Board as an “administrative precedent” is misplaced.

Second, as the ALJ recognized, the I.G.’s enforcement actions against other individuals under other circumstances have no bearing on whether the I.G. had a valid basis to exclude Petitioner based on the facts and circumstances in his case.  ALJ Decision at 15 (quoting Benny R. Bailey, DAB No. 2935, at 10 (2019) (“The ALJ’s review was limited to the exclusion action before her, not to determining the I.G.’s reasons for not applying mandatory authority in a different case.”), aff’d, Bailey v. Azar, No. 6:20-CV-00166 (E.D. Ky. Aug. 6, 2021)).¹⁹  The ALJ is bound to apply the exclusion statute and regulations, consistent with Board precedent, regardless of what may have transpired in other matters.  See Bailey at 10; see also Lena Lasher, aka Lena Contang, aka Lena Congtang, DAB No. 2800, at 3 (2017) (quoting Lee G. Balos, DAB No. 1541, at 9 (1995) (“The issue before us (as before the ALJ) is not whether the I.G. erred in determining that mandatory exclusions were not applicable in some other cases, but whether Petitioner’s convictions required the I.G. to impose a mandatory exclusion in this case.”), aff’d, Lasher v. U.S. Dep’t of Health & Hum. Servs., 369 F. Supp. 3d 243 (D.D.C. 2019), aff’d, No. 19-5114, 2020 WL 9256389 (D.C. Cir. Nov. 12, 2020).

This does not mean ALJs (or the Board) can ignore legal precedent; but, Petitioner has made no showing that any conflicting precedent exists.  Petitioner has made no showing that any prior permissive exclusion involved an executive convicted of a drug misbranding offense predicated on false and misleading statements made to a covered program which led that program to expand access to the misbranded drug to its members, thus causing the introduction or delivery for introduction of the misbranded drug into interstate commerce under the covered program itself.  “Those are the facts established by the record evidence in this case, and which led the ALJ to correctly conclude that the I.G. was required to exclude Petitioner under section 1128(a)(1).”  Thaxter at 23.

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Third, Petitioner’s narrow focus on the general description of the offense (i.e., “a strict liability, no-intent misdemeanor under the RCO doctrine”) (RR at 32), rather than the underlying facts of his case, contradicts Board precedent.  The Board has repeatedly held that the basis for an exclusion stems from the nature and circumstances of the underlying conviction, not the label or even the elements of the crime.  See, e.g., Siegel, DAB No. 1467, at 7 (“[I]t is not the labeling of the offense under the state statute which determines whether the offense is program-related.” (underlining replaced by italics)); see also Taiwo, DAB No. 2995, at 8 (collecting cases).  Moreover, “section 1128(a)(1) . . . does not require any particular mental state.”  Shanti Jain, M.D., DAB No. 1398, at 7 (1993) (underlining replaced by italics); see also Dewayne Franzen, DAB No. 1165, at 8 (1990) (“Section 1128(a)(1) does not require that the individual must intend to commit a criminal offense . . . for an exclusion to be proper.”) (underlining replaced by italics).  Still further, the fact that Petitioner was convicted of a misdemeanor, rather than a felony, is inconsequential under section 1128(a)(1).  See Craig Richard Wilder, DAB No. 2416, at 6-7 (2011) (“Nothing in the language of section 1128(a)(1) requires Petitioner’s conviction to be for a felony rather than a misdemeanor . . . .”); Gardner, DAB No. 1733, at 5-6.  Thus, Petitioner’s assertion that a mandatory exclusion cannot be imposed when the underlying conviction is “a strict liability, no-intent misdemeanor under the RCO doctrine” attempts to impose conditions and restrictions under section 1128(a)(1) that do not exist.  The Board has long held that it will not “read into the exclusion provisions requirements that are not contained in the literal language of the law.”  Kai at 10 (quoting Robert C. Greenwood, DAB No. 1423, at 4 (1993)).

Fourth, the I.G. has, on numerous occasions, excluded individuals convicted of misdemeanor drug misbranding offenses under section 1128(a)(1) of the Act.  See, e.g., Thaxter, DAB No. 3053 (10-year exclusion); Eduardo Miranda, M.D., DAB No. 2755 (2016) (13-year exclusion); Mohamed Basel Aswad, M.D., DAB No. 2741 (2016), aff’d, Aswad v. Hargan, 2018 WL 704370 (D.N.M. Feb. 2, 2018) (13-year exclusion); Leo Parrino, DAB No. 2587 (2014), aff’d, Parrino v. Price, 869 F.3d 392 (6th Cir. 2017) (5-year exclusion); Vincent Koh, DAB CR5262 (2019) (5-year exclusion); Christopher Keegan, DAB CR3242 (2014) (10-year exclusion).

Notwithstanding these examples, Petitioner claims that the I.G. had only ever excluded individuals convicted of misdemeanor misbranding under the responsible corporate officer doctrine under its permissive exclusion authority.  RR at 34.  In support of this assertion, Petitioner cites only to Friedman, where the I.G. excluded three pharmaceutical executives under section 1128(b)(1) based on their misdemeanor misbranding offenses.  RR at 34 (citing Friedman, 686 F.3d at 820).  But the facts and circumstances in Friedman are materially distinguishable from the facts and circumstances of Petitioner’s offense.  Specifically, Friedman did not involve an entity’s direct misrepresentations to a state Medicaid program, so that the program would expand access to its misbranded drug.  The misbranding offense in Friedman was not directed at any particular health care plan

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and involved the delivery of a misbranded drug without regard to any particular health care program.  Friedman, 686 F.3d at 816.

Finally, Petitioner’s contention that section 1128(a)(1) does not “reach misdemeanor misbranding offenses in the absence of a restitution or forfeiture order” (RR at 32) again attempts to read into section 1128(a)(1) conditions and limitations that do not exist under the plain language of the statute.  Although program loss is an aggravating factor that the I.G. may consider to lengthen the period of exclusion beyond the five-year minimum, see 42 C.F.R. § 1001.102(b)(1) (establishing program loss of $50,000 or more as one of several aggravating factors), it is not a required element of section 1128(a)(1).  It is well-established that a criminal offense may be “related to” the delivery of an item or service under a covered program even if the offense did not cause the program actual harm.  See, e.g., Boothe, DAB No. 2530, at 4; Scollo, DAB No. 1498, at 9-11; cf. Harkonen, DAB No. 2485, at 21.  Thus, Petitioner’s attempt to distinguish the mandatory exclusion cases cited by the I.G. because some of those cases also involved program loss (relevant to establishing an aggravating factor and a lengthier exclusion) has no merit.  Whether the I.G. had a lawful basis to exclude Petitioner under section 1128(a)(1) does not turn on whether program loss was established in his case.  Nothing in the language of section 1128(a)(1) requires a finding of actual harm to a covered program or a finding of monetary loss to the program caused by the crime to find the requisite nexus between the offense and the delivery of an item or service under the program.  Accordingly, we reject Petitioner’s assertion that section 1128(a)(1) does not reach misdemeanor misbranding offenses absent a restitution or forfeiture order.

C.    The ALJ applied the appropriate standard of review.

Petitioner further contends the ALJ erred when she asserted that “the arbitrary and capricious standard of review is not the standard of review applicable to administrative appeals of IG exclusions.”  RR at 33 (citing ALJ Decision at 15) (emphasis added). Taking this single sentence out of context, Petitioner contends that the ALJ took the erroneous position that the I.G. is “free to take arbitrary and capricious action that ignores agency precedent.”  Id. at 34.  That is not what the ALJ decided, and her comment does not “require reversal.”  Id.  Relying on Bailey, the ALJ was responding to Petitioner’s framing of the issues based on the “arbitrary and capricious” standard of review—the standard of review applied in the context of judicial review.  See Bailey, DAB No. 2935, at 10-11; see also Robert Hadley Gross, DAB No. 2807, at 5-6 (2017), appeal docketed, No. 17-1801 (D.D.C. Sept. 22, 2017).

Petitioner’s arguments are based on a fundamental misunderstanding about the ALJ’s role in an exclusion proceeding.  The ALJ was correct to note that her review authority is “fundamentally different” than that of a federal district court.  Bailey at 11; see ALJ Decision at 15.  The scope of the ALJ’s review is governed by regulation and limited to whether the “basis for” the exclusion exists, and whether “[t]he length of the exclusion is

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unreasonable.”  42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a).  The ALJ conducts a de novo review “as to the evidence and factual determinations” relevant to the scope of this review.  See Fuentes, DAB No. 2988, at 10.  As the Board explained in Fuentes:

An agency adjudicator reviewing an agency action de novo is not bound by the record developed in prior stages and is not tasked to review the process engaged in by prior decision-makers.  Rather, the adjudicator must determine the relevant facts based on the record developed before the adjudicator and then independently evaluate whether the action undertaken by the prior decision-maker comports with applicable legal authorities.

DAB No. 2988, at 10.  Thus, the ALJ determines the relevant facts based on the record developed before the ALJ and then independently evaluates whether the exclusion comports with applicable legal authorities.

The Board’s role in an exclusion case is also governed by regulation and is limited to reviewing whether the ALJ’s decision on an issue of fact is “supported by substantial evidence on the whole record,” and whether the ALJ’s decision on an issue of law is “erroneous.”  42 C.F.R. § 1005.21(h).  “The [Board’s] decision constitutes the ‘final decision’ of the Secretary.”  Fuentes v. Becerra, No. 4:20-cv-26, 2021 WL 4341115, at *5 (W.D. Va. Sept. 23, 2021).  A party may seek judicial review of the Board’s final decision in federal district court.  42 C.F.R. § 1005.21(k)(1); see also Act § 1128(f)(1) (providing that “any individual or entity that is excluded (or directed to be excluded) from participation under this section is entitled to . . . judicial review of the Secretary’s final decision . . . .”).  A federal district court will review the Board’s decision under the “arbitrary and capricious” standard.  See Bailey at 10; see also Friedman, 686 F.3d at 826-27.  Thus, as the Board has previously explained, the “arbitrary and capricious” standard of review is not the standard applicable to “administrative appeals of I.G. exclusions.”  Bailey at 10.

IV.    Petitioner’s other arguments lack merit.

A.    The ALJ did not err in rejecting Petitioner’s “rule of lenity” argument.

Petitioner argues that “to the extent that any ambiguity exists” under section 1128(a)(1), the rule of lenity requires resolution of that ambiguity in his favor.  RR 35.  Petitioner does not argue that the language of section 1128(a)(1) is ambiguous or articulate the basis for finding any ambiguity under section 1128(a)(1).  Petitioner nevertheless contends the ALJ erred in rejecting his rule of lenity argument.  RR at 36.  We find no error by the ALJ because (i) the rule of lenity applies only to criminal statutes, not civil statutes such as section 1128(a)(1); and (ii) there is no ambiguity in section 1128(a)(1).  See Douglas Schram, R.Ph., DAB No. 1372, at 13 (1992) (rejecting petitioner’s reliance on the rule of

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lenity because it applies only to criminal statutes, section 1128(a)(1) is a civil statute, and there is no ambiguity as to the scope of section 1128(a)(1)).

Petitioner offers no relevant legal authority for his contention that the rule of lenity may be applied to construe section 1128(a)(1) of the Act.  The Supreme Court cases Petitioner cites (P. Reply at 15-16) are inapposite as they involved the construction of criminal statutes, some of which have both criminal and noncriminal applications.  See, e.g., Leocal v. Ashcroft, 543 U.S. 1, 11 n.8 (2004) (noting, in dicta, that the rule of lenity may apply to resolve ambiguity in a criminal statute even in a noncriminal setting because criminal statutes must be construed consistently regardless of the context in which they are encountered).  None of the Supreme Court cases cited by Petitioner hold that the rule of lenity may be applied to resolve ambiguities in a civil statute.  As the Board has long held, section 1128(a)(1) of the Act is a civil statute.  See Schram at 13; see also Thaxter at 36 (holding that the I.G.’s exclusion authority under section 1128 of the Act is civil and remedial—not criminal or punitive); Cash, DAB No. 1725, at 10 (same).

Still further, Petitioner has not shown that language in section 1128(a)(1) is susceptible to two different reasonable interpretations, nor do we find any ambiguity in that provision.  See, e.g., Schram at 13 (“[T]here is no ambiguity in the Act as to the scope of section 1128(a)(1).”); Napoleon S. Maminta, M.D., DAB No. 1135, at 7-8 (1990) (finding no ambiguity in the “plain language” of section 1128(a)(1)).  Accordingly, we find no error in the ALJ’s rejection of Petitioner’s rule of lenity argument.

B.    Factual differences relating to Mr. Thaxter’s misdemeanor misbranding conviction are immaterial.

Petitioner asserts that “the ALJ was under the misimpression that [he] and Mr. Thaxter were convicted based on the same underlying facts,” and that the ALJ “failed to consider significant differences” between their respective convictions and the conviction of Indivior.  RR at 36 (citing ALJ Decision at 4 & n.1).  Petitioner contends that “key differences” between his case and Mr. Thaxter’s case warrant a different result here.  Id. at 37.  First, the ALJ did not find that Petitioner and Indivior were convicted of the same crime and did not rely on Indivior’s conviction in finding the requisite nexus between Petitioner’s offense and the delivery of an item or service under a covered program.  Moreover, in the context of discussing the admissibility of Mr. Thaxter’s sentencing transcript (I.G. Ex. 7), the ALJ noted that Mr. Thaxter was excluded under section 1128(a)(1) “based on the same underlying facts” as Petitioner.  ALJ Decision at 4.  We find nothing in the record suggesting that the ALJ failed to consider differences between Petitioner’s exclusion case and Mr. Thaxter’s related exclusion case.²⁰  While there are

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some factual differences between Petitioner’s case and Mr. Thaxter’s case, Petitioner’s efforts to differentiate his case from Mr. Thaxter’s do not provide grounds to overturn his exclusion.  RR at 37-38.

Petitioner argues that the language in his plea agreement acknowledging that he may be excluded under the Act § 1128 (without specifying any subsection) is different from the language in Mr. Thaxter’s plea agreement acknowledging that he may be excluded under the Act § 1128(a)(1).  RR at 37 (citing I.G. Ex. 3, at 5 (citing 42 U.S.C. § 1320a-7)).  This is not a material difference.  Petitioner and Mr. Thaxter both agreed and acknowledged that they “may be excluded,” and Petitioner’s acknowledgment is broader than Mr. Thaxter’s.  Moreover, the Board addressed the language in Mr. Thaxter’s plea agreement and determined that it did not preclude him from challenging his exclusion.  See Thaxter at 25 (“We understand this language serves as notice, not as an express waiver of Petitioner’s right to challenge his exclusion.”).  Thus, it was not the language in Mr. Thaxter’s plea agreement acknowledging the possibility of an exclusion that resulted in his exclusion, but the fact that the record evidence established the requisite nexus between his misbranding offense and the delivery of Suboxone Film under the MassHealth program.

Petitioner also attempts to differentiate Mr. Thaxter’s role at Indivior, and involvement in the Medicaid approval process, from his own role at Indivior.  RR at 37-38.  According to Petitioner, Mr. Thaxter, as CEO of Indivior, was responsible for “the overall operation of the company, including the sales division,” whereas Petitioner, as the Global Medical Director, was only responsible for “management of medical functions and was siloed from the sales-related functions.”  Id.²¹  Regardless of their specific roles, Petitioner and Mr. Thaxter were both held criminally liable as responsible corporate officers for the false and misleading statements made to MassHealth by Indivior’s Medical Affairs Manager (Petitioner’s subordinate).  I.G. Ex. 2, at 10 (¶¶ 31-33); Thaxter at 7.  If anything, Petitioner was in a better position to prevent and promptly correct the false and misleading marketing claims made to MassHealth by his subordinate because, unlike Mr. Thaxter, Petitioner received a copy of her false and misleading email shortly after it was sent to MassHealth.  I.G. Ex. 2, at 8 (¶ 27); Thaxter at 6, 12.

In any event, Petitioner’s “specific role” in the offense and “the degree of his responsibility” are not material to any issue in this case.  Kai, DAB No. 1979, at 7.  As

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explained in Kai, “[a]n exclusion under section 1128(a)(1) is a derivative exclusion; it is based on the fact of a criminal conviction.”  Id. at 8.  Thus, “it is the scheme, and the fact that Petitioner’s conviction was based on his participating in that scheme, that is material, not Petitioner’s particular role in the scheme.”  Id. at 11; see also Colburn, DAB No. 2683, at 8 (“Section 1128(a)(1) does not require an offense in which the excluded person played a decision-making or other direct or influential role in the delivery of medical items or services to program beneficiaries.”); Boothe, DAB No. 2530, at 4 (“An offense may be ‘related to’ the delivery of an item or service even if the [excluded individual’s] offense did not directly involve the delivery of items or services.”).  Similarly, Petitioner’s personal knowledge of the facts underlying his conviction and the notion that he did not approve the criminal conduct are irrelevant.  See Paul D. Goldenheim, M.D., et al., DAB No. 2268, at 13-17 (2009), rev’d on other grounds, Friedman v. Sebelius, 686 F.3d 813 (D.C. Cir. 2012); Greenwood, DAB No. 1423, at 5.  “[T]he exclusion statute does not require any knowledge on the part of a petitioner of the relationship between the offense and the program but only that the factual relationship between the offense and the program exist.”  Kai at 7 (citing Greenwood at 5).

Finally, Petitioner asserts that, unlike Mr. Thaxter, he was not ordered to pay any forfeiture or restitution because, according to Petitioner, his conduct caused no harm to MassHealth or any entity.  RR at 38.  We reject the notion that Petitioner’s conduct was harmless, but even if that were true, an exclusion under section 1128(a)(1) does not require proof of program loss.  In Thaxter, financial loss to the MassHealth program was relevant to establishing the aggravating factor under 42 C.F.R. § 1001.102(b)(1) and in evaluating the length of Mr. Thaxter’s ten-year exclusion.  Thaxter, at 28-32.  Neither the ALJ nor the Board relied on Mr. Thaxter’s forfeiture payment to establish the requisite nexus under section 1128(a)(1).  Id. at 11-13.  Here, Petitioner’s exclusion period was not extended by any aggravating factor, so it was not necessary for the I.G. to establish the amount of program loss in this case.  Moreover, as explained above, a criminal offense may be “related to” the delivery of an item or service under a covered program even if the offense did not cause the program actual harm.  See, e.g., Boothe, DAB No. 2530, at 4; Scollo, DAB No. 1498, at 9-11.  Accordingly, Petitioner’s attempt to differentiate his case from Mr. Thaxter’s based on the lack of an established amount of program loss is misplaced.

C.    Mitigating factors that may be relevant to permissive exclusions are irrelevant here.

Petitioner argues that the I.G.’s determination to proceed under section 1128(a), rather than the permissive exclusion provisions under section 1128(b), substantially prejudiced him by “increasing the presumptive length of any exclusion” and by denying the I.G. the opportunity to consider certain mitigating factors that “could have reduced or eliminated altogether” Petitioner’s exclusion period.  RR at 38-39 (citing 42 U.S.C. § 1320a-7(c)(3)(D) [Act § 1128(c)(3)(D)]); 42 C.F.R. § 1001.201).  Petitioner’s argument has no

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merit.  As explained above, Petitioner’s exclusion was mandatory under section 1128(a)(1) of the Act and, therefore, the I.G. was required to exclude Petitioner for the minimum period of five years.  Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).  Moreover, because the I.G. did not apply any aggravating factors to lengthen Petitioner’s exclusion period beyond the five-year minimum, the I.G. was barred from considering any mitigating factors.  42 C.F.R. § 1001.102(c) (“Only if any of the aggravating factors set forth in paragraph (b) of this section justifies an exclusion longer than 5 years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than 5 years.”).  We find no error in the ALJ’s conclusion that Petitioner must be excluded for the minimum five-year period because there was a basis for his exclusion under section 1128(a)(1) of the Act.  ALJ Decision at 11.

D.    Petitioner’s constitutional arguments provide no basis to reverse the ALJ Decision.

Petitioner contends that a mandatory exclusion based on a misdemeanor conviction under the responsible corporate officer doctrine violates the Due Process Clause of the United States Constitution.  RR at 9 n.7.  The ALJ concluded she had no authority to decide Petitioner’s constitutional arguments.  ALJ Decision at 16 (citing Urology Grp. of NJ, LLC, DAB No. 2860, at 14 (2018)).  The regulations governing this matter prohibit the ALJ (and the Board) from invalidating or refusing to follow federal statutes or regulations.  42 C.F.R. § 1005.4(c)(1); see also Thaxter, DAB No. 3053, at 36 (holding that the Board has no authority to decide constitutional challenges to the validity of the statutes and regulations underlying the I.G.’s exclusion authority).  Petitioner’s contention that his exclusion violates the Due Process Clause is “an attack upon the Act and regulations on which neither the ALJ nor the Board may rule.”  Harkonen, DAB No. 2485, at 22; see also Esohe Agbonkpolor, DAB No. 3002, at 9 (2020); Taiwo, DAB No. 2995, at 9-10.

Nevertheless, as Petitioner acknowledges, a similar due process argument was rejected in Friedman, 686 F.3d at 824, which involved the exclusion of pharmaceutical executives in connection with misdemeanor drug misbranding offenses under the responsible corporate officer doctrine.  In rejecting the constitutional argument, the Friedman court wrote:

[A]lthough exclusion may indeed have serious consequences, we do not think excluding an individual under [the Act § 1128(b)] on the basis of his conviction for a strict liability offense raises any significant concern with due process.  . . .  Surely the Government constitutionally may refuse to deal further with senior corporate officers who could have but failed to prevent a fraud against the Government on their watch.

686 F.3d at 824.  The same can be said about an executive who could have but failed to prevent and promptly correct the distribution of false and misleading safety data to a

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Medicaid program which caused that program to expand access to a misbranded drug in violation of federal law.

Conclusion

For the reasons stated above, we affirm the ALJ Decision.

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Endnotes

¹  Section 1128 of the Act is codified at 42 U.S.C. § 1320a–7.  The current version of the Act can be found at http://www.socialsecurity.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.  Cross-reference tables for the Act and the United States Code can be found at http://uscode.house.gov/table3/1935_531.htm and https://www.ssa.gov/
OP_Home/comp2/G-APP-H.html.

²  As permitted by the Act, the Secretary has delegated to the I.G. the authority to enforce section 1128’s exclusion provisions.  Act § 1128A(j)(2); 48 Fed. Reg. 21,523, 21,662 (May 13, 1983); 53 Fed. Reg. 12,909, 12,993 (Apr. 20, 1988).  The I.G. in turn has issued regulations, codified in 42 C.F.R. Parts 1001 and 1005, implementing the delegated exclusion authority.  See, e.g., 42 C.F.R. §§ 1001.101, 1005.1.

³  Background information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ’s findings.  The facts underlying Petitioner’s criminal offense are largely drawn from the facts set forth in the Information (I.G. Ex. 2).  In his plea agreement, Petitioner acknowledged and agreed that the facts set forth in the Information are “true and correct.”  I.G. Ex. 3, at 2.

⁴  To avoid confusion with the briefs filed before the ALJ, we will refer to the “Notice of Appeal and Opening Brief for Petitioner” filed with the Board as Petitioner’s Request for Review (RR).  The page numbers cited here refer to the numbered pages of the brief.

⁵  Dr. Jeffrey, as the Director of Pharmacy, was the official who decided which drugs received preferred status under the MassHealth program.  I.G. Ex. 7, at 12-13.

⁶  “Under the ‘responsible corporate officer’ (RCO) doctrine, a ‘corporate agent, through whose act, default, or omission the corporation committed a crime’ in violation of the [FDCA] may be held criminally liable for the wrongdoing of the corporation ‘whether or not the crime required “consciousness of wrongdoing”’ by the agent.”  Friedman v. Sebelius, 686 F.3d 813, 816 (D.C. Cir. 2012) (quoting United States v. Park, 421 U.S. 658, 670 (1975)).  “Criminal liability under the RCO doctrine extends ‘not only to those corporate agents who themselves committed the criminal act, but also to those who by virtue of their managerial positions or other similar relation to the actor could be deemed responsible for its commission.’”  Id. at 816-17.

⁷  Petitioner agreed that “all of the facts set forth in the Information are true and correct.”  I.G. Ex. 3, at 2.

⁸  The I.G. withdrew an initial notice of exclusion dated March 31, 2021, after Petitioner initiated a legal action in federal district court alleging that the initial notice violated his procedural due process rights.  See RR at 12; see also I.G. Exs. 8, 9; P. Ex. 6.

⁹  I.G. Ex. 7 is a copy of Indivior’s CEO’s sentencing hearing transcript, which included the testimony of Dr. Jeffrey.  Although I.G. Ex. 7 included other material, including attorney argument, the only portion of I.G. Ex. 7 relevant to this matter and considered by the ALJ is the testimony of Dr. Jeffrey.  Before the Board, Petitioner challenges only the admissibility of I.G. Ex. 7, specifically the testimony of Dr. Jeffrey.  RR at 25-29.

¹⁰  Before the Board, Petitioner challenges only the ALJ’s exclusion of P. Ex. 5 and P. Ex. 9.  RR at 21.

¹¹  Although Dr. Jeffery’s testimony is hearsay, “hearsay is admissible in administrative proceedings generally and can be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.”  Clark at 8 (citations omitted).  Petitioner did not object to Dr. Jeffrey’s testimony on hearsay grounds but, even if he had, Dr. Jeffrey’s testimony, which was given under oath in a federal court proceeding, demonstrates sufficient indicia of reliability.

¹²  To whatever extent Petitioner wished to examine Dr. Jeffrey about his prior testimony, Petitioner would have needed to request a subpoena from the ALJ to compel Dr. Jeffrey to testify.  See 42 C.F.R. § 1005.9(a) (“A party wishing to procure the appearance and testimony of any individual at the hearing may make a motion requesting the ALJ to issue a subpoena if the appearance and testimony are reasonably necessary for the presentation of a party’s case.”).  Petitioner plainly had an opportunity to request a subpoena for Dr. Jeffrey at or about the time Petitioner filed his written objections to I.G. Ex. 7.

¹³  The Third Circuit cases cited by Petitioner (RR at 28, P. Reply at 5) are inapposite because they involved claimants that had no opportunity to cross-examine the authors of written evidence received by the ALJ after an administrative hearing.  See Wallace v. Bowen, 869 F.2d 187, 193 (3d Cir. 1989); Mase v. Comm’r of Soc. Sec., No. 21-10024, 2022 WL 1184801, at *3-4 (D.N.J. Apr. 21, 2022).  Mase is particularly inapt as the court’s holding turned on its conclusion that the ALJ did not ensure claimant knowingly and intelligently waived her right to representation, resulting in an ineffective waiver of post-hearing rights.

¹⁴  The record reflects that MassHealth currently covers Suboxone Film based on a competitive contract bid that Indivior won long after the events that resulted in Petitioner’s conviction.  I.G. Ex. 7, at 46-47 (Dr. Jeffrey recollecting that Indivior won the competitive contract bid in or around 2016).

¹⁵  Supreme Court decisions construing the meaning of “relate to” or “relating to” in other contexts have reached similar conclusions about the breadth of the language.  See Metropolitan Life Ins. Co. v. Mass., 471 U.S. 724, 739 (1985) (explaining that the phrase “relate to” has a “broad commonsense meaning” and a statutory provision containing the phrase has “broad scope”); Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383-84 (1992) (“The ordinary meaning of [“relating to”] is a broad one—‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with . . . .’”) (quoting Black’s Law Dictionary 1158 (5th ed. 1979)).  “Courts that have addressed the Secretary’s ‘nexus’ or ‘common sense connection’ analysis [in the exclusion context] have upheld it.”  Aiman M. Hamdan, M.D., DAB No. 2955, at 6 (2019) (collecting cases); see also Friedman, 686 F.3d at 820, 822 (noting that “related to” and “relating to” are “functionally identical” and describing the phrase “relating to” in another section of 1128 as “deliberately expansive,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to a “crabbed and formalistic interpretation”) (alteration in original) (internal quotation marks and citations omitted).

¹⁶  According to the Information: “The FDCA provides that a drug is misbranded if, among other things, its labeling is ‘false or misleading in any particular.’  21 U.S.C. § 352(a).  ‘Labeling’ includes ‘brochures, booklets . . . letters . . . exhibits [and] literature . . . descriptive of a drug’ whether or not it physically accompanies the drug when distributed.  See 21 U.S.C. § 321(m); 21 C.F.R. § 202.1(l)(2).”  I.G. Ex. 2, at 2 (¶ 8) (alteration and omissions in original).

¹⁷  We address in greater detail below Petitioner’s attempt to distinguish Thaxter.  See infra Part IV.B.

¹⁸  Petitioner notes that the ALJ erred when she wrote that “Petitioner chose to submit data in a way to make Suboxone film look more effective.”  RR at 20 n.15 (emphasis added) (citing ALJ Decision at 11 (citing I.G. Ex. 2, at 7)).  We agree this statement is erroneous because (i) there is no evidence that Petitioner personally submitted any data to MassHealth, and (ii) this case involves no issue about the effectiveness of Suboxone Film.  Taken in context of the paragraph in which the clause appears, it seems the ALJ had intended to convey, consistent with I.G. Ex. 2, at 7-8 (¶¶ 26-27), that Petitioner’s subordinate, the Medical Affairs Manager, chose to submit data in a way to make Suboxone Film appear safer.  We do not find the ALJ’s erroneous statement is reflected in any of her factual findings or legal conclusions and, therefore, we find any error by the ALJ in this regard was harmless.  See 42 C.F.R. § 1005.23 (“The ALJ and the [Board] at every stage of the proceeding will disregard any error or defect in the proceeding that does not affect the substantial rights of the parties.”).

¹⁹  As further explained below, Petitioner’s contention that this “shocking assertion” by the ALJ demonstrates an “indifference to precedent” misconstrues the ALJ’s discussion and takes her words out of context.  RR at 33.

²⁰  Petitioner’s exclusion was reviewed by an ALJ different from the ALJ who considered Mr. Thaxter’s exclusion.

²¹  Petitioner’s offense may not have required an element of criminal intent, but it is disingenuous to suggest that he bore no responsibility for his subordinate’s misconduct.  See Paul D. Goldenheim, M.D., et al., DAB No. 2268, at 14-15 (2009) (rejecting argument that misdemeanor misbranding conviction under the FDCA was solely based on the defendant’s title or position; rather, as the Board explained, criminal liability was based on the “defendant’s failure to exercise the responsibility and authority attendant to his or her corporate position”), rev’d on other grounds, Friedman v. Sebelius, 686 F.3d 813 (D.C. Cir. 2012).